This is a Harvard Business Case analysis. Refer to the guide for case analysis for details.
Warren E. Buffett, 1995 (Product number: UV0006-PDF-ENG)
Set in August 1995, enables students to assess Berkshire Hathaway’s bid for the 49.6% of GEICO Corporation that it does not already own. Students perform a simple valuation of GEICO shares and consider the reasonableness of the 26% acquisition premium. There are no obvious synergies, and Berkshire Hathaway has announced that it will run GEICO with no changes. Student analysis can include the investment philosophy and remarkable record of Berkshire’s CEO, Warren E. Buffett.
Technical skills for active investments (The following is not necessary for passive investment)
(1-1) Determine and compare the expected returns and required returns, and then determine if the asset is undervalued or overvalued.
Notice: the case, “GMO-Value versus Growth Dilemma,” already covered this part. But, the case (Warren Buffett) will reinforce this skill.
(1-2) Determine Intrinsic values – and then determine if the asset is undervalued or overvalued by comparing with market prices.
Understanding passive versus active investment philosophy
Establishing the statement of your “own” investment philosophy