Stock and Berkshire Hathaway Essay

Since the IPO the stock have had a generally speaking stable trend. According to Yahoo! Finance, the stock have grown +8.41% points since December 9th, 2011 until the market was closed on Friday December 7th, 2012. Daily the stock is raging from 16.91 to 17.19 per share, and in a 52 week range from 13.90 to 24.75. The following image is showing

Earnings were down 23.6 percent in the first half of the year. The stock was trading around $17 per share, a far cry from the $40 neighborhood the stock had visited the year before.

TW: During the crash, it fell by approximately by 20-30%. It has since seen some recovery in the neighborhood of 10-15%, but it’s still a good

The stock market has always intrigued me and I have since been eager to learn more about it. Starting back in January of this year, I ordered three textbooks on stock trading to become more informed on the subject. After reading these books, I gained further insight on stock trading which led me to open my own brokerage account where I could buy and sell stocks. I started by playing a stock simulation which was very similar in concept to StockTrak, a program we used in this class. I found that this helped provide me with a hands on experience which helped familiarize me with stock trading and learning how to manage and use my money efficiently. I continued to play this simulation for about two months and during this time my portfolio grew about 4%, which provided me a confidence boost and motivated me to invest in my real money into the stock market. In March of 2015, I officially began trading in the stock market and I continued to learn along the way. As of now, I have roughly nine months of stock trading experience. As stated previously, I have always had in interest in the stock market, but I never acted upon it until as recently as earlier this year. My interest in the stock market was peaked because I enjoy taking risks and the stock market

Specifically, what does the $718 million gain in Berkshire’s market value of equity imply about the intrinsic value of GEICO?

Most corporate financing decisions in practice reduce to a choice between debt and equity. The finance manager wishing to fund a new project, but reluctant to cut dividends or to make a rights issue, which leads to the decision of borrowing options. The issue with regards to shareholder objectives being met by the management in making financing decisions has come to become a major issue of recent times. This relates to understanding the concept of the agency problem. It deals with the separation of ownership and control of an organisation within a financial context. The financial manager can raise long-term funds internally, from the company’s cash flow, or externally, via the capital market, the market for funds

Lockheed Martin stock has been appreciating in value since the beginning of the company in 1995 when both Lockheed and Martin Marietta merged. On March 16th, 1995 the stock price of Lockheed Martin stock was a mere $25.13. On April 1st 2010, the stock was valued at $83.61, a difference of more than 3.3 times. (Lockheed Martin, Historical Price Lookup). Lockheed Martin has issued dividends to stockholders consistently, however they are relatively small in value. The issuing of dividends varies from company to company, as some firms issue regular and predictable amounts while others issue none, or sporadic dividends to shareholders.

Specifically, what does the $718 million gain in Berkshire’s market value of equity imply about the intrinsic value of GEICO?

Warren Buffett and Berkshire Hathaway Inc. have announced the authorized equity holdings of Berkshire Hathaway. As shown in many announcements, over half of Company’s overall equity holdings are heavily focused on just four top holdings, as follows: Wells Fargo & Co., International Business Machines Corp., Coca-Cola Co. and American Express Co.

According to the case, there are stock price changes for Berkshire Hathaway and Scottish Power plc on the day of the acquisition announcement. Also, the bid price for PacifiCorp is $9.4 billion. After knowing this announcement, Berkshire Hathaway’s Class A shares price went up and make them gained in market value $2.17 billion. In Berkshire and other investors’ point of view, After Berkshire takeover PacifiCorp, it might have a good development and future so that the stock price went up. Berkshire believed that PacifiCorp can have good earning returns in the future. The intrinsic value is more valuable than its cost so they are willing to pay $9.4 billion to acquire.

Berkshire's Class A shares sold for $125,000 as of September 16, 2008, making them the highest-priced shares on the New York Stock Exchange, in part because they have never had a stock split. Shares closed over $100,000 for the first time October 23, 2006. Berkshire Class B shares trade at a fraction (1/30) of the Class A prices. Despite its size, Berkshire is not included in broad stock market indices such as the S&P 500.

At the end of 1998, the market equity of UST was $6,470.8 million based on the average shares outstanding and year-end stock price. If UST borrows $1 billion debt immediately, the total value of the levered firm would be $6,470.8 million unlevered value plus $380 million tax shield, which is $6,850.8 million.

The Balance Sheet of Berkshire Hathaway shows significant liquidity and a strong capital base, reflecting the very strong financial condition of the company. Berkshire's shareholders equity was $108.4 billion and consolidated cash and invested assets was approximately $126.1 billion at December 31, 2006. The company's liabilities totaled 3.7 billion at December 31, 2006. The net earnings of Berkshire Hathaway were $11.015 billion in 2006 and the income taxes for the year were $5.505 billion. The invested assets of the company are predominately held within its insurance business and the company believes it is capable of covering its contractual obligations. The market value of Berkshire Hathaway as of March 17, 2006 was approximately 136 billion.

According to the case, there are stock price changes for Berkshire Hathaway and Scottish Power plc on the day of the acquisition announcement. Also, the bid price for PacifiCorp is $9.4 billion. After knowing this announcement, Berkshire Hathaway’s Class A shares price went up and make them gained in market value $2.17 billion. In Berkshire and other investors’ point of view, After Berkshire takeover PacifiCorp, it might have a good development and future so that the stock price went up. Berkshire believed that PacifiCorp can have good earning returns in the future. The intrinsic value is more valuable than its cost so they are willing to pay $9.4 billion to acquire.

Unfortunately, determining value can be difficult with the recent glut of hyper growth start ups. Valuing a private or public company follow similar mathematical procedures, but private companies often do not disclose key financial information. That said, the mind boggling valuations over the past 5 years are more indicative of the markets than the true value of the company itself.