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The Mother of All Conglomerates

It’s not uncommon at all to find conglomerates – companies involved with many distinct business lines – in Singapore that are involved with impressive arrays of different businesses.

Within our nation’s stock market benchmark the Straits Times Index (SGX; ^STI), we already have a list of companies with huge market capitalisations (by Singapore’s standards, anyway) that are bona fide conglomerates. Some names that might easily come to the top of people’s heads would probably include Keppel Corporation (SGX: BN4) and Jardine Cycle & Carriage (SGX: C07).

The former, with its market capitalisation of S$19.3 billion, has three core business segments – Offshore & Marine, Infrastructure, and Property – in which it helps build vessels and offshore rigs, operates power plants, runs data centres and logistics facilities, and develops, owns, and manages properties. Meanwhile, the latter is worth S$16.4 billion as a whole and through its 50% interest in Indonesia-listed Astra (incidentally, Astra accounts for more than 90% of Jardine Cycle & Carriage’s annual revenues and profits), has its fingers in a huge number of pies: Automobile dealerships; banking; insurance; palm oil production; mining; heavy equipment sales. And that’s not even all that Astra does.

So yes, there are indeed large and economically important conglomerates found in the shores of Singapore. But even the largest and most impressive of conglomerates here would pale in comparison in what’s likely to be the mother of all conglomerates – the Omaha, Nebraska, U.S. based Berkshire Hathaway (NYSE: BRK-A) (NYSE: BRK-B).

As a business, Berkshire’s worth more than US$318 billion (that’s around S$400 billion – and almost 1.2 times Singapore’s 2013 annual gross domestic product of US$275 billion!). And for serious students of investing, it would be no secret to find that the brains behind it all is Warren Buffett, arguably the best investor of our generation. Buffett took control of Berkshire back in the ‘60s when it was still just a sleepy textile manufacturer. Over the years, Buffett methodically channeled the textile operations’ cash flows into other more worthy businesses, which in turn produced even more cash for Buffett to acquire even more businesses – and so the virtuous cycle goes.

Today, Berkshire has more than 80 different operating businesses in areas that range from automobile insurance to mobile-home manufacturing, from gourmet candies to rail roads, and from underwear to aircraft ownership. That’s not to mention the shares that Berkshire owns in other 50-odd publicly-listed companies that includes global giants like Coca-Cola, American Express, and IBM.

With such a wide swath of businesses that covers a huge slice of the overall American economy, it makes Buffett’s views on the future of the largest economy in the world particularly noteworthy. Of course, there’s also Buffett’s investing wisdom (which he hasn’t shied away from sharing publicly), mixed with a folksy sense of humour, that has captivated investors worldwide.

It’s for reasons like these that Berkshire Hathaway’s annual general meeting – traditionally held in Omaha, Nebraska – draws thousands upon thousands of investors each year to make the trek down to the central part of the U.S.A. to take part in the event.

And, I must confess that I too, have made the trek down this year as some readers here at Fool Singapore might already have known – my colleague David Kuo had mentioned about this trip in his most recent issue of Fool Singapore’s weekly stock market and investing commentary, Take Stock Singapore.

Over the next few days, I’d be providing coverage of Berkshire’s shareholder meeting, which takes place on Saturday night and the wee-hours of Sunday morning for readers in Singapore. And for those who would love to follow the meeting live, there’s a wonderful opportunity to do so here. So, please stay tuned if you’d like to learn more about the latest behind Buffett as well as the mother of all conglomerates that he has built!

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The information provided is for general information purposes only and is not intended to be personalised investment or financial advice. Motley Fool Singapore writer Chong Ser Jing owns shares in Berkshire Hathaway.