This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
See Cramer's multi-million dollar portfolio for FREE and get his new book Get Rich Carefully! Learn More

Warren Buffett Quietly Reshaping Berkshire Hathaway

NEW YORK (TheStreet) -- Warren Buffett's Berkshire Hathaway (BRK.A) rarely loses a deal fight, which makes Monday's news that the legendary investor was outbid for reinsurer Transatlantic Holdings (TRH) seem like a strange sight.

However, the fact that Berkshire lost out in a hotly contested bid to a competitor a nearly a tenth of its size in Alleghany Corporation (Y) should not be so surprising given the Omaha, Neb.-based holding company's move away from its traditional reinsurance and insurance base and its shift to a more diversified portfolio of industrial companies.

Warren Buffett.

After Berkshire's $9 billion acquisition of chemicals company Lubrizol earlier this year, adding to its $26.5 billion purchase of railroad Burlington Northern Santa Fe in 2009 and $4.5 billion acquisition of industrials conglomerate Marmon in 2007, the company has altered a quarter of its overall revenue and profit.

"This isn't an insurance company anymore, it's a defensive conglomerate," says Tom Lewandowski an analyst at Edward Jones about Berkshire's transformation through recent deals.

While the billions spent on takeovers in recent years may look like a tack in strategy from minority investments and an insurance focus, Lewandowski says, "Berkshire has got where they are today because they haven't really changed a lot." Berkshire, as an investment management company, simply is sticking to its style of buying companies that need a giant funding source and have an attractive risk return, even if the nature of its investments are changing, says Lewandowski.

>>View Warren Buffett's Portfolio

Overall, the company, which may soon generate $20 billion in annual cash from its operations, needs to put that money to work for its shareholders who've grown accustomed to seeing shares rise faster than the S&P 500 Index. Signaling the need to make new types of industrials takeovers and bank investments, the company's total insurance group's revenue and profitability is still below pre-crisis levels.

With quarterly cash stockpiles over $34 billion, Berkshire's been able to spend billions in new types of investments as the global economic slump has turned many of America's blue chips into attractively priced, even distressed investments.

Stock quotes in this article: BRK.B, TRH, Y, GE, GS, BAC 

Select the service that is right for you!

COMPARE ALL SERVICES
Action Alerts PLUS
Try it NOW

Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
  • Weekly roundups
TheStreet Quant Ratings
Try it NOW
Only $49.95/yr

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
  • Upgrade/downgrade alerts
Stocks Under $10
Try it NOW

David Peltier, uncovers low dollar stocks with extraordinary upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
  • Weekly roundups
Dividend Stock Advisor
Try it NOW

Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Alerts when market news affect the portfolio
  • Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
Real Money Pro
Try it NOW

All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.

Product Features:
  • Real Money + Doug Kass Plus 15 more Wall Street Pros
  • Intraday commentary & news
  • Ultra-actionable trading ideas
Options Profits
Try it NOW

Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • 100+ monthly options trading ideas
  • Actionable options commentary & news
  • Real-time trading community
  • Options TV
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
DOW 16,408.54 -16.31 -0.10%
S&P 500 1,864.85 +2.54 0.14%
NASDAQ 4,095.5160 +9.2910 0.23%

Brokerage Partners

Rates from Bankrate.com

  • Mortgage
  • Credit Cards
  • Auto
Advertising Partners

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs