Stock and Berkshire Hathaway

3191 words 13 pages
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 $2.17-billion gain in Berkshire’s market value of equity imply about the intrinsic value of PacifiCorp?

The significant change in stock prices for Berkshire Hathaway and Scottish Power plc is partially due to the wide variety of products produced under these names. The approval of these investments and products are indicated by the overall market because they are creating value for both the buyer and the seller. Berkshire Hathaway is responsible for eight different types of product ranging from insurance and financial products to retail including
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By doing this it only adds even more value to Berkshire Hathaway as MidAmerican is a leading provider of natural gas for more than 2.4 million customers. The investment has surely paid off as the 2010 annual report showed 1.13 billion dollars of earnings for Berkshire from MidAmerican.

4. What is your assessment of Berkshire’s investments in Buffett’s “Big Four”: American Express, Coca-Cola, Gillette (now part of Procter and Gamble), and Wells Fargo?

With a little more than 150,000,000 shares of American Express, Berkshire Hathaway owns about 12.6% of the company. It initially cost about $1,300,000,000 to invest in these shares. As of today the market value is right around $7,500,000,000. As you can see, Investing in American Express has turned out to be a smart move for Buffet as they have seen over $6.2 Billion in profit. American Express shows a consistent trend year after year of making a profit and continues to be a safe and attractive purchase.

Berkshire owns around 200,000,000 shares of Coca-Cola coming out to be about 8.6% ownership of the company. The cost of these shares was about $1,300,000,000 and the market value of the shares today has grown to be almost $13,400,000,000. Again we see a smart investment, with Coca-Cola producing a $12.1 billion dollar profit for Berkshire. Coca-Cola continues to be a leader in effectively running their finances as it seems their stock


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