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(solution) Berkshire Hathaway's Investment Strategy Berkshire Hathaway


I need help with the attached assignment. I have attached the case study.


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.

 

For this activity, answer:

 

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?

 

Things to Remember!

 

Your case study should be two to three pages in length (not including title and reference pages).

 

Your paper should be double-spaced, with 1-inch margins, in-text citations and references for all

 

resources following proper APA formatting.

 


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