Berkshire Hathaway

In: Business and Management

Submitted By sudipttewari
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Individual Assignment

BERKSHIRE HATHAWAY

Assignment Report Submitted by: Sudipt Tewari | G13051 |

Case Summary: Berkshire Hathaway, Inc.’s chairman and CEO Warren Buffett, is the world's third richest man. He invested in Berkshire Hathaway in 1962, and by 1963, Buffett was Berkshire’s largest shareholder. Buffett started purchasing other businesses, which were primarily insurance companies, with profits from the declining original textile business. In 1985, the original textile business was shut down and Berkshire Hathaway diversified into higher margin businesses.
Now, Berkshire Hathaway is active in a variety of sectors, including insurance, regulated utilities and retailing. One of the companies that Berkshire Hathaway holds is GIECO (Government Employees Insurance Company). In 1995, GIECO was wholly owned by Berkshire Hathaway. By 2005, its market share was increased from 1.9 percent to 6.1 percent with underwriting revenues of additional $590 million in cash from operating earnings in spite of decline in insurance industry. Another major company under Berkshire Hathaway is Nebraska Furniture Mart. It is a large furniture store, which holds NFM Mega Mart and Homemakers Furniture.
Warren Buffett utilizes a constant strategy to manage these companies including Berkshire Hathaway by holding shares for a long time. Berkshire Hathaway does not pay any dividends to the shareholders but reinvests surplus instead to maximize the value of the company. Under this strategy, each company is growing constantly and some of them such as GIECO and Nebraska Furniture Mart are the major player in their industry.
Berkshire Hathaway has employed an ownership structure that has without a doubt proven its long-term advantage. Warren Buffett CEO of Berkshire Hathaway has a well-built philosophy when it comes to understanding businesses and the financial markets in which…...

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