Berkshire Hathaway Case Study Summary

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Berkshire Hathaway Annual letter analysis: 2011 • Book Review • Summary Book Review Berkshire financial results The per share book value of both Class A and B stocks of the company increased by 4.6%, which is 19.8% compounded annually since last 47 years. The book value has increased from $19 to nearly $100,000, which is impressive. Some highlights 1. He is confident that his eventual successors will do a good job. 2. Berkshire has bought Lubrizol, a chemical company with pre-tax profits of $1085 million under the impeccable leadership of Mr. James Ham brick 3. All Berkshire’s major non-insurance businesses – BNSF, Iscar, Lubrizol, Marmon and MidAmerican Energy – had record years. 5. Berkshire has invested $5 billion in preferred stock in…show more content…
Let’s do the math. If IBM’s stock price averages, say, $200 during the period, the company will acquire 250 million shares for its $50 billion. There would consequently be 910 million shares outstanding, and we would own about 7% of the company. If the stock conversely sells for an average of $300 during the five-year period, IBM will acquire only 167 million shares. That would leave about 990 million shares outstanding after five years, of which we would own 6.5%. On Acquisitions When Buffett buys a business, he not only invests in the business itself but also in the people who run it and this is the reason behind his reluctance to get rid of businesses when they under-perform. He explains this by saying that, where he gives a commitment to a vendor who remains in the business that he will see it through thick and thin, he will stick with that commitment. However, when it comes down to the nitty-gritty and there is no hope for improvement, he will cut his losses. He estimates that this has only happened twice in 47 years. The U.S.…show more content…
His past experience with predictions didn’t go well, whether it is the $2 bn investment in Energy Future Holdings bonds or his optimism for housing recovery to be recovered within a year or so. So there is a possibility that he could be wrong about the overall economy as well. Berkshire’s investments It owns the following percentage in these companies which is worth more than $1 billion. American Express Company 13.0 % The Coca-Cola Company 8.8 % ConocoPhillips 2.3% International Business Machines Corp 5.5% Johnson & Johnson 1.2% Kraft Foods 4.5% Munich Re 11.3% POSCO 5.1% The Procter & Gamble Company 2.6% Sanofi 1.9% Tesco 3.6% U.S. Bancorp
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