Berkshire Hathaway Inc. is a famous company which also involves in many different business segments. It was originally operated as a cotton manufacturing company. In 1965, Warren Buffet declared to take over it and he became the chairman and CEO of Berkshire Hathaway. Since then, this company started to be well known by the world.
Market value implication On May 24, 2005, Buffet announced that MidAmerican Energy Holding Company, a subsidiary of Berkshire Hathaway would acquire PacifiCorp which is an electric utility company. He decided to use $5.1 billion in cash and $4.3 billion in liabilities and preferred stock to acquire it. According to the data, on the day of announcement, Berkshire Hathaway’s Class…show more content… MidAmerican Energy Holding Company Berkshire Hathaway took a major stake in MidAmerican Energy Holdings in 2000. We can see from the exhibit 6 of the case, the net earnings of MidAmerican Energy Holdings had increased 76% in 2001 and 165% in 2002. We also found the statistic that the earnings per share of MidAmerican Energy Holdings were increased from $2.6 in 2000 to $20 in 2012. From this aspect, we can conclude that the investment in MidAmerican Energy Holdings performs well.
“Big Four” “Big Four” is the investments of Berkshire which contains American Express, Coca-Cola, Gillette and Wells Fargo. As the data provided in exhibit 3 of the case, we could calculate the compound annual growth rate to measure the performance of “Big Four”. At first we pick up the cost and market value of these four. We get the ending value of “Big Four is $24,681 and the beginning value is $3,830. With the number of 12.5 years, we get the annual growth rate of the “Big Four” is 16.07% which is larger than 10.5%, the annual average total return on all large stocks at that period. Through this we could find that the performance of “Big Four” is quite good. (The formula of compound annual growth rate is show in Table 4.
Buffett’s investment philosophy
Conclusion: Berkshire Hathaway’s shareholders would be willing to endorse this acquisition. Acquiring an electric utility company will diversify the whole investment basket of Berkshire Hathaway. From the advantage
Warren E. Buffett, 2005 1. What is the possible meaning of the changes in stock price for Berkshire Hathaway and Scottish Power plc on the day of the acquisition announcement? Specifically, what does the $2.55 billion gain in Berkshire’s market value of equity imply about the intrinsic value of PacifiCorp? Answer: - The possible meaning of the change of the stock is that the facts that are created in the deal had a positive effect on both the buyers ( BRK) and the sellers which…
Henry Stupp, Colin Riley FNCE 4850002 Case Study Warren E. Buffett, 2005 Executive Summary Background / Problems Warren Buffett, The CEO of Berkshire Hathaway, historically delivers to his shareholders noteworthy excess returns, however, with how massive this firm has become, it is becoming increasingly more difficult to deliver similar results. In his annual letter to his shareholders, Buffett explains that his “elephant” strategy is the…
acquisition by ... [DOC]Warren E. Buffett, 2005 (TN) textbook-testbank.com/wp-content/.../TN1_Warren_E_Buffett_2005.doc Specifically, what does the $2.55 billion gain in Berkshire's market value of equity ... what do you think PacifiCorp was worth on its own before its acquisition by ... Case Warren Buffett 2005_百度文库 wenku.baidu.com/view/852bde3a0912a21614792956.html 17 Dec 2011 - The acquisition of PacifiCorp renewed public interest in its sponsor, Warren Buffett. In many ... “I will keep…
Contents Introduction: 4 1.1 Compare and contrast different organizational structures and culture 4 1.1.1 Structure 4 1.1.2 Culture 7 1.2 Explain how the relationship between an organization’s structure and culture can impact on the performance of the business 7 1.2.1 Structure 7 1.2.2 Culture 8 1.2.3 Summary 8 1.3 Discuss the factors which influence individual behavior at work 9 1.3.1 Discipline 9 1.3.2 Awards 9 1.3.3 Attitude 10 2.1 Compare the effectiveness of different leadership styles in different…
Wells Fargo BOD 1. In Wells Fargo, there are 20, 17, 15, 16, 16 directors from the fiscal years 2008 to 2012 respectively. We can say that there is a decreasing trend in the size of Wells Fargo’s board of directors, and the annual meeting of stockholders of 2013 will elect 14 directors, which means the number will be further reduced. The board size may affect a firm’s performance, an increase in board membership can bring both advantages and disadvantages to a company. On one hand, larger board…
decisions (De Long et al., 1990). Traditional financial theories are often based on the assumption that all the investors are rational. The burgeoning behavioral finance departs from classical financial theory by dropping this basic assumption (Carty, 2005). In recent years, there has been a growing interest in…
involve risky, inherently ambiguous judgements between unclear alternatives.’ Do you agree? Justify your answer using decision-making theory and relevant examples from at least two industries. Some might ask how people such as Bill Gates and Warren Buffett are separated from other people. Disregarding the obvious capital those individuals are in control of, it can be said that their entrepreneurial intuition regarding business decisions is what allowed them to succeed the way they have. With that…
Winner Take All Politics – Paul Pierson and Jacob Hacker. “It’s called the American dream – because you have to be asleep to believe it” – George Carlin The level of inequality in the United States is primarily dictated by public policy. That is the conclusion drawn and substantiated by Paul Pierson and Jacob Hacker in ‘Winner Take All Politics: How Washington Made the Rich Richer—and Turned Its Back on the Middle Class’. The authors frame inequality as a mystery. They set out to debunk the myths…
Memo to: Oaktree Clients From: Howard Marks Re: Getting Lucky The Role of Luck LL CA R PI IG T H AL TS M R AN ES A ER G V EM ED E . NT ,L .P . Sometimes these memos are inspired by a single event or just one thing I read. This one – like my first memo 24 years ago – grew out of the juxtaposition of two observations. I’ll introduce one here and the other on page seven. Contrary to my wife Nancy’s observation that my memos are “all the same,” the subject here…
