This chapter focuses on the diversified business interests of Berkshire Hathaway. By 1986, Berkshire owned a range of companies, from candy to insurance. With the company’s next two acquisitions came further diversification. The first was the Scott Fetzer Company, which brought in a new mix of businesses, including Ginsu knives, Kirby vacuums, and the World Book encyclopedia. Berkshire’s other 1986 acquisition was the Fechheimer Brothers Company, a manufacturer and distributor of uniforms since 1842, catering to the public service industries: corrections, fire, military, police, postal, and transit. Today, Berkshire’s subsidiaries engage in a multitude of unrelated businesses, each contributing in its own way to Berkshire. In an effort to organize the diversity, four business sectors are outlined in Buffett’s annual letter to Berkshire shareholders, and each sector is broken down into further subdivisions. The first sector, insurance, is Berkshire’s oldest and the most important in terms of historical contributions to business value. The second, regulated or capital-intensive industries, is the newest sector and is becoming increasingly important in terms of revenues and earnings. The third sector is finance and financial products, the smallest of the four, though significant in absolute size. The final sector is a broad cluster of companies, encompassing various types of manufacturing, service, and retailing, including Fechheimer and Scott Fetzer.
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