Berkshire hathaway investment strategy

Assignment Help Business Management
Reference no: EM131536838

Berkshire Hathaway's Investment Strategy

Berkshire Hathaway Inc. has almost a "personality cult" organizational culture which essentially revolves around one man and his investing prowess. The man's name is Warren Buffett, the "Oracle of Omaha." Historically, Berkshire Hathaway's business model has been to purchase insurance companies. One great thing about insurance companies is the "cash float," which works as follows. Suppose that a person purchases a $100,000 whole life insurance policy from Berkshire Hathaway and pays premiums of $4,000 per year to Berkshire for this policy. The Berkshire Hathaway company is obligated to pay the $100,000 death benefit when the person dies; in the meantime it gets to invest the $4,000 per year "float." Warren Buffett, who has been a very savvy investor, has made a huge fortune from investing this float money. But recently, Berkshire Hathaway has been moving away from purchasing insurance companies with large floats and has been buying major industrial businesses instead. In 2010, for example, it completed a $44 billion purchase of one of the nation's largest railroads, Burlington Northern Santa Fe (BNSF). Berkshire paid for this acquisition with $15.8 billion in cash it had on hand, and the remainder in Berkshire Hathaway stock. Mr. Buffett, who was born in 1930, is now well beyond the age when most workers retire.

Answer the following:

  • How does Mr. Buffett's age affect Berkshire Hathaway's recent strategic moves such as buying Burlington Northern Santa Fe Railroad instead of another large insurance company?
  • What does Berkshire Hathaway's purchase of BNSF Railroad say about where Buffett thinks the price of energy (oil and gasoline) is going to be in the future?
  • How does the energy efficiency of shipping goods via rail compare with shipping goods via truck or airplane?

Reference no: EM131536838

Questions Cloud

How much would your stakeholders suffer if they lost you : How much would your stakeholders suffer if they lost you? How much do you currently contribute to society and what would society lose if you were not here?
Introduction and situational analysis : Describe the ethical dilemma, giving appropriate background information. The term "dilemma" implies that there are pros and cons to various options
What problems are often experienced by individuals : What problems are often experienced by individuals and their families as a result of this illness (e.g. anxiety, depression, stigma, stress, non-adherence)?
Prepare another account on assumption that trading year ends : On 30th September, 1960, the Arconia Co. Ltd. issued £30,000 4% debentures, interest bemg payable on 31st March and 30th September.
Berkshire hathaway investment strategy : Berkshire Hathaway Inc. has almost a "personality cult" organizational culture which essentially revolves around one man and his investing prowess.
Evaluate potential generic strategies for the organization : Evaluate potential generic strategies for the organization. Evaluate potential grand strategies for the organization
Spark interest in potential investors-stakeholders : Write a 500-750 word executive summary that seeks to spark interest in potential investors/stakeholders.
Give the journal entries for the grossing up given payments : Net income from investments during 1961-£690. (Tax is 7/9 in the £) For some years, the Adjo Trading Company Ltd. has made provision in its books for taxation.
Can you relate to the bloggers multi-ethnic family history : Assignment: Thoughts on "American" Ethnicity- Can you relate to the blogger's multi-ethnic family history? Do you identify with a particular ethnic group?

Reviews

Write a Review

Business Management Questions & Answers

  Which would not be an activity a return facilitator handles

Which of the following would not be an activity a return facilitator handles? CRM helps firms gain competitive advantage by all of the following except.

  Evaluate merit of her claim

When MaryJo refuses to accede to her employer's wishes, she is fired. She files a claim with the EEOC, alleging that her employer failed to accommodate her religious beliefs. Evaluate the merit of her claim.

  Define your company as well as its operations relative size

Define your company as well as its operations, relative size and so forth. Give causes for your decision to go International.

  Discuss the critical management issues

Discuss the critical management issues that strategy-making brings into play

  Evaluate expected monetary value emvyou are planning to

evaluate expected monetary value emvyou are planning to make modifications to an existing application. you have

  How your corporation could earn above-average returns

Determine ways in which the vision, mission, and stakeholders of a firm impact that firm's overall success.

  Explaining material factors and individualism of countries

What are the prevailing attitudes toward time, change material factors and individualism?

  Key cultural or organizational legacy

Discuss 3 factors or characteristics that you think makes this individual (CEO) an effective leader. What do you think will be the key cultural or organizational legacy this leader will leave behind?

  Perform reconnaissance and probing using common tools

To complete lab 1, access and complete the lab activities under topic 1: Perform Reconnaissance and Probing Using Common Tools. To complete lab 2, access and complete the lab activities under topic 1: Performing a Vulnerability Assessment.

  Diverse documents so that the selected documents

Consider a group of documents that has been selected from a much larger set of diverse documents so that the selected documents are as dissimilar from one another as possible.

  Challenges in designing a pay for performance

Define the challenges in designing a Pay for Performance (P4P) program. Discuss the impacts of P4P on provider payment reform. Describe the health care providers' reactions to Value-Based Purchasing Programs. Determine the benefits of P4P on patients..

  Forecast the values of sales

Apply Holt-Winters Double exponential smoothing (without seasonality) to forecast the values of sales X for periods 13 and 14, using α = 0.2 and β = 0.3. Assume 12 months of sales data, as shown in the table below:

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd