Bottom Line Up Front: In a single metaphor tucked into his 1994 Berkshire Hathaway (BRK.B) (BRK.A) shareholder letter, then-CEO Warren Buffett explained a core idea that still separates long-term capital builders from short-term speculators: owning a piece of something extraordinary beats owning all of something mediocre. When Buffett wrote that it is “far better to own a significant portion of the Hope Diamond than 100% of a rhinestone,” he wasn’t just talking about portfolio construction: he was explaining why Berkshire has spent decades accumulating partial stakes in rare, dominant businesses instead of chasing total control of forgettable ones.
The Details: By 1994, Berkshire Hathaway was already the parent of several wholly owned subsidiaries, but Buffett was careful to emphasize that Berkshire’s partial ownership stakes were just as critical to its success. These weren’t passive bets or trading positions. They were long-term economic partnerships with businesses that possessed durable advantages, global scale, and pricing power – what Buffett referred to as “rare gems.” The key wasn’t owning them outright. The key was owning enough of them to let their economics meaningfully flow through to Berkshire shareholders.
Buffett illustrated this with Coca-Cola (KO), one of Berkshire’s most famous investments. In 1994 alone, Coca-Cola sold roughly 280 billion eight-ounce servings worldwide and earned slightly less than a penny on each one. That doesn’t sound impressive until you zoom out. Through Berkshire’s 7.8% ownership stake, Buffett calculated that Berkshire effectively had an economic interest in 21 billion of those servings. Those fractions translated into nearly $200 million in what Buffett called “soft-drink earnings”—a reminder that small per-unit profits become enormous when attached to global scale and repeat consumption.
The same logic applied to Gillette. Berkshire owned about 7% of the razor and blade giant, which at the time controlled roughly 70% of the global market by revenue. That translated into an indirect claim on roughly $250 million of Gillette’s sales in 1994. Once again, Buffett didn’t need to own the entire business to benefit from its dominance. He just needed exposure to the part of the business that mattered most: its ability to quietly collect cash from billions of routine, almost boring purchases.
Wells Fargo (WFC) offered a third example, and perhaps the clearest demonstration of Buffett’s thinking. With a 13% ownership stake in what was then a $53 billion bank, the conglomerate effectively owned what Buffett described as a $7 billion “Berkshire Bank.” That slice alone earned about $100 million in 1994. No takeover. No operational control. Just a meaningful share of a well-run institution with strong fundamentals.
This is where the Hope Diamond metaphor lands. A rhinestone can be owned outright, polished endlessly, and still never become valuable. The Hope Diamond doesn’t need improvement; it just needs time and protection. Buffett understood that rare businesses don’t need heroic management or constant reinvention. They need capital, patience, and the freedom to compound. Owning 5% or 10% of something truly exceptional can outperform owning 100% of something ordinary that constantly demands attention and capital.
What made this approach even more powerful, Buffett noted, was that Berkshire wasn’t limited to owning just one or two of these rare gems. Over time, it assembled a growing collection. Each stake added another stream of earnings, each with its own moat, customer base, and growth runway. The result wasn’t concentration risk: it was diversified dominance.
For investors, the lesson cuts against a deeply ingrained instinct. Many people prefer full ownership, control, and simplicity. Buffett preferred quality. He was willing to share ownership if it meant partnering with a business that had already won its market and could keep winning without him. In an era obsessed with total control, founder narratives, and flashy turnarounds, Buffett’s 1994 message still feels quietly subversive.
Three decades later, Berkshire’s success suggests the metaphor wasn’t just clever—it was predictive. The real advantage wasn’t owning everything. It was owning enough of the very best, and letting time do the rest.
On the date of publication, Caleb Naysmith did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.
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