Search Warren Buffet In preparing to discuss this case, please pay particular attention to the issues described below. Of course, feel free to consider and evaluate any other issues that come to mind as well; the point of this list is to alert you to things that I am particularly likely to ask you to discuss in class.
A and dispense with most traditional introductory material. The sixth largest company in the United States by market capitalization has accumulated a cult following through an amazing long term record of corporate performance as well as an unwavering commitment to rationalism that has at times altered mainstream conventional wisdom.
Berkshire Hathaway released its most recent earnings report on Friday August 5th. The information presented will generally include a comparison of Q2 results, first half results, and full year results to gauge trends and be organized by the divisions typically laid out in Annual Report.
Berkshire Hathaway SEC Filings The story in the insurance business continues to be a shift towards primary and out of reinsurance underwriting, although the shift is not occurring as fast as the headline numbers indicate.
But year to date, premiums have risen strongly and continued rising in the second quarter on the property side of the business. Profitability at GenRe, while not disastrous, was weak compared to is past performance, while Berkshire Hathaway Reinsurance profitability is skewed from foreign currency results influencing the profitability of retroactive contracts.
While both reinsurance units performed reasonably well in the environment that exists, the quarter certainly confirms that the industry continues to face significant headwinds.
GEICO had a terrific quarter. Of particular encouragement is that the higher prices GEICO has been seeking to receive to compensate for higher accident rates appear to be sticking. In turn, both the percentage of those premiums that GEICO paid out in losses and the percentage paid in expenses declined and the combined ratio fell bps from last year.
That improvement is fairly consistent with what happened in the first quarter. The remaining primary insurers saw continued strong growth even without yet including the malpractice insurer in New York that Berkshire is attempting to acquire.
Profitability, though, has been worse this year because of less favorable reserve developments than last year. There is little surprise that investment income is weak considering current interest rates and there is no indication that relative to invested assets, investment income should improve.
On the contrary, it will likely continue to weaken in the third quarter. Offsetting lower investment yields are higher balances, driven by increased float. Burlington Northern Santa Fe BNSF has had a challenging year so far, in part because the economy appears to be weaker than last year, but to a larger degree because the performance of the railroad is tied so closely to the strength of the energy industry.
Weaker demand from the energy industry shows up in the volume declines in both coal and industrial products, but it also appears in the price declines from a lower fuel surcharge.
Removing the effects of lower the fuel surcharge and fuel expenses and revenue would have declined by 8. While Union Pacific continues to have modestly higher margins, the operating performance has certainly narrowed between the competitors.
One factor that continues to be worth watching is the reinvestment each company makes in its network. As Berkshire Hathaway Energy has not paid its parent regular dividends, many were curious whether or not BNSF would be managed in a similar way and reinvest its profits back into the network.
Beyond that, there is not a great deal to say about the performance of the utilities this year. That predictability is, of course, a big part of their appeal. Currency fluctuations did have an impact on the Northern Powergrid and AltaLink parts of the business.The efficient market hypothesis is a theory that market prices fully reflect all available information, i.e.
that market assets, like stocks, are worth what their price is. The theory suggests that it's impossible for any individual investor to leverage superior intelligence or information to outperform the market, since markets should react to information and adjust themselves.
Berkshire Hathaway Berkshire Hathaway is a holdings company operated by Warren Buffett and Charles Munger. The company was founded in the ’s as a textile mill, and through a series of mergers became known as Berkshire Hathaway.
Set in May , this case invites you to assess Berkshire Hathaway’s bid, through MidAmerican Energy Holdings Company, its wholly owned subsidiary, for the regulated energy-utility PacifiCorp. A finance professor made a startling discovery about the stock market: Over a year span, 96% of all stocks collectively performed no better than risk-free 1-month Treasury bills.
3. How well has Berkshire Hathaway performed? How well has it performed in the aggregate? What about its investment in MidAmerican Energy Holdings?
4. What is your assessment of Berkshire’s investment in Buffett’s “Big Four”: American Express, Coca-Cola, Gillette, and Wells Fargo?
5. Berkshire’s Performance vs.
the S&P Annual Percentage Change Year in Per-Share Book Value of Berkshire in Per-Share Market Value of Berkshire in S&P