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
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investing which he defines as the present value of future expected performance. This is one of the reasons Berkshire Hathaway saw a $2.55 billion gain in their market value the day of acquiring PacifiCorp. Many times you see the firm buying out the company especially when paying a premium go down the day they acquire a company. However‚ investors did their own calculation and valued PacifiCorp at much higher than the $5.1 billion purchase price and looked at the Duke Enegy deal to acquire Cinergy
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Warren E. Buffett‚ the chairperson of Berkshire Hathaway (BH)‚ is the world’s greatest investor of the current era. From 1965 to 2007‚ BH has compounded annual gain of 20.3% while S&P has 9.3% (Berkshire Hathaway Inc.‚ 2009). Most investors get normal returns and believe the market is in semi strong form. However Buffett believes the market is inefficient and acts on his own investment philosophy. This report will analysis BH’s acquisition of PacifiCorp‚ evaluate Buffett’s performance against
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purchase PacifiCorp back in 2005 according to my investment analysis. Financial Health of PacifiCorp Initially‚ when analyzing PacifiCorp’s financials alone‚ one would assume that Warren Buffet made an overly optimistic decision (Exhibit 1); however‚ when comparing the financial leverage and return on assets to other companies within the same industry‚ one can see that PacifiCorp did not perform poorly on average (Exhibit 2). Just judging PacifiCorp alone‚ investors would assume that PacifiCorp did
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In May 2005 Warren Buffets’ Berkshire Hathaway’s subsidiary company MidAmerican Energy Holdings successfully took over the electrical utility company PacifiCorp. The company was purchased for $5.1 billion in cash plus debt assumption of $4.3 billion. The deal is the result of Buffet’s intense search‚ over several years to find an attractive acquisition. This case study evaluates the impact the acquisition has on the share price of both Berkshire Hathaway Ltd and Scottish Power. A valuation is conducted
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Berkshire Hathaway is an American multinational conglomerate holding company that oversees and manages various subsidiary companies (Berkshire Hathaway‚ 2011). The current members of the Board of Directors are Warren Buffett‚ Charlie Munger‚ Walter Scott Jr.‚ Thomas Murphy‚ Howard Graham Buffett‚ Ronald Olson‚ Donald Keough‚ Charlotte Guyman‚ David Gottesman‚ Bill Gates‚ Stephen Burke‚ and Susan Decker (Berkshire Hathaway Inc.‚ 2011). The primary job of the Board of Directors is to see that the
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Individual Assignment BERKSHIRE HATHAWAY Assignment Report Submitted by: Sudipt Tewari G13051 ~ Submitted to Prof. A. Kanagaraj In partial completion of Investments course Date of submission –April 20th‚ 2014 Case Summary: Berkshire Hathaway‚ Inc.’s chairman and CEO Warren Buffett‚ is the world’s third richest man. He invested in Berkshire Hathaway in 1962‚ and by 1963‚ Buffett was Berkshire’s largest shareholder. Buffett started purchasing other businesses
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Berkshire Hathaway From Wikipedia‚ the free encyclopedia Jump to: navigation‚ search Berkshire Hathaway Inc. Type Public (NYSE: BRKA‚ NYSE: BRKB) Founded 1839 (as Valley Falls Company) Founder Warren Buffett Headquarters Omaha‚ Nebraska Area served USA Key people Warren E. Buffett (Chairman) & (CEO) Charles T. Munger (Vice Chairman) Industry Property and casualty insurance‚ Diversified investments Products Conglomerate focused on insurance Market cap US$ 196
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GEICO announced plans to purchase several million shares of its outstanding common stock for $60 per share. Among GEICO’s largest stockholders was Berkshire Hathaway‚ Inc.‚ an investment company. Executives of the two companies decided that Berkshire would tender approximately 350‚000 if its GEICO shares in the stock buyback plan‚ which would allow Berkshire to treat the transaction as a proportionate redemption. In a proportionate redemption‚ the percentage equity interest of on company in a second
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Berkshire Hathaway Inc. to: William Cochran from: subject: Pacificorp Acquistion analysis and recommendation date: The following memo analyzes MidAmerican’s potential acquisition of PacifiCorp. Contents included involve a financial analysis‚ qualitative analysis‚ valuation‚ and acquisition recommendation. After careful review‚ MidAmerican should acquire PacifiCorp at the current offering price of $9.4 billion ($5.1 billion in cash and $4.3 billion in attached liabilities and preferred
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