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Warren strike - Study Case (Word+Excel) Case 2: Warren E. Buffett. Berkshire Hathaway Question 1: The possible meaning of the novelty in the stock set of Berkshire Hathaway on the day of the suffice is that the sells of GEICO were under respectd at a price of $55,75 and Berkshire Hathaway paid a $14,25 bounty per share. However, even though Berkshire Hathaway paid $70 per share, that price was plant out than the fair value of GEICO but the shareholders couldnt unloose the passing game down. Consequently, Berkshire Hathaway increased its market value by $718 trillions because the inborn value of GEICO was higher than the price it was sell for. The company had dandy 1,177,750 shares and on august 25 BH share price changed by positive $609.60. At the end of the session, the price was $25,400. 1,117,750 * 609.60 = 717,956,400 gain. In addition, BH already owned 50.4% of GEICO. GEICO had on april 30 1995 a derive of 67,889,574 shares outstanding. BH is buy 49.6% of the come outstanding shares: 67,889,574 * 49.6% = 33,673,229 shares Before the acquisition, BH had a value of number shares * opening price 1,177,750*24,790.40= $29,196.89 million And GEICO had a value of 33,673,229*55.75=$1,877.28 million Resulting to the BH+GEICO = 29,196.89+1,877.28 = $31,074.

17 million After the acquisition, BH had a value of Total shares* resolution price 1,177,750*25,400= $29,914.85 million And GEICO had a value of 33,673,229*70=$2357.13 Resulting to the total BH+GEICO = 29,914.85+2357.13 = $32,271.98 million and the difference is 32,271.98-31,074.17 = $1,197.81 The difference is coming from the GEICO shares Difference/total GEICO shares 1,197.81 million / 33,673,229! =$35.57 mispricing per share and GEICO shareholders entirely got $14.25 of this value. The $21.32 went to BH shareholders. Question 4: Buffets investment school of thought disagrees with modern financial possibility because in his CEO letter to shareholders in BHs annual report he emphasized...If you motivation to get a blanket(a) essay, order it on our website: OrderEssay.net

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