School of Business Investment Program
January 15th, 2019
Hannah Bentz Fixed Income Manager Eric Spector Markets Analyst
Footnotes
Berkshire Hathaway School of Business Investment Program Agenda
Investment Thesis Recent News/ Sector Outlook
Company Overview & History Competitors
Management & Governance Financial Highlights
Company Strategy Valuation
SWOT Recommendation Berkshire Hathaway School of Business Investment Program Investment Thesis
● Company: ○ Has focused on finding good companies at fair values ○ Now serves as an insurance conglomerate ○ Investment Portfolio made up 48 different brands ○ High valuations have kept Buffett, Combs and Weschler on the sidelines over the most recent segment of the bull market ○ Due to emotional market reactions, BRK/B shares have been discounted
● Macro: ○ Consistently has beaten the S&P 500 throughout every economic cycle ○ Well diversified with a long-term focus ○ An impending recession or further market corrections could present buying opportunities for Berkshire, eventually growing the security’s intrinsic value
Footnotes
Berkshire Hathaway School of Business Investment Program Company History
● Founded in Rhode Island. Now headquartered in Omaha, Nebraska. ● Buffett ended up buying the entire company in 1965 after conflict with CEO ● Acquired several insurance companies and has focused on finding good companies at fair values
1839 1930 1965 1967 1996 2017 Founded as a Buffett is born Buffett buys Starts Acquires Class A leading textile Berkshire investing in Geico shares top company insurance $300,000 companies
Footnotes School of Business Berkshire Hathaway Investment Program Company Overview
"We simply attempt to be fearful when others are greedy and to be greedy only when others are fearful." - Warren Buffett
Headquartered in Omaha, Nebraska
Serves as an insurance company
Uses liquidity to invest
Has beaten the S&P by nearly 10% annually since 1965
Berkshire Hathaway School of Business Investment Program Leadership
Warren Buffett Charlie Munger Todd Combs Ted Weschler Chief Executive Officer Vice Chairman Investment Manager Investment Manager and Executive Chairman - Munger was born in - Joined Berkshire in - In July 2010, at - Born to a stock broker Omaha, Nebraska. As a 2010 and is linked to $2,626,311, Weschler amidst Great teenager he worked at replace Warren Buffett was the top bidder to Depression. Buffett & Son as Chief Investment win a private lunch with Warren Buffett - Studied under Benjamin - Vice Chairman since 1978 Officer
Graham - Buffett’s close friend as the - Serves on the board of - Buffett was impressed - Has grown book value two have known each JP Morgan by his background and by 19.0% annually other for more than 60 - Buffett is impressed offered him a position since 1965 years
Footnotes School of Business Berkshire Hathaway Investment Program Holdings
Apple
BNSF Railway
Geico
Lubrizol
School of Business Berkshire Hathaway Investment Program Company Strategy
Value Investing
Long-term strategic focus
Margin of safety
Capitalize on strong cash position
Shareholders School of Business Berkshire Hathaway Investment Program SWOT Analysis
Strengths Weaknesses ● Strong cash position ● Apple investment ● Outperforms S&P throughout ● Mark to market accounting any cycle ● Diversified ● Insurance Business
Opportunities Threats ● Over $110 Billion in cash ● Buffett and Munger’s age ● Lower valuations ● US Economic Slowdown ● Share Buybacks ● PG&E ● Berkshire, JPM, and Amazon deal
Berkshire Hathaway School of Business Investment Program Sector Outlook School of Business Berkshire Hathaway Investment Program Technical Analysis
Berkshire Hathaway School of Business Investment Program Competitors
Berkshire Hathaway School of Business Investment Program Competitors
Price to Book ROA and ROE
Debt EV/EBITDA AA-
E
Berkshire Hathaway School of Business Investment Program Financial Highlights
Assets (Orange)
Cash (Green)
Debt (Yellow)
Net Income (Blue)
Berkshire Hathaway School of Business Investment Program Valuation
Valuation ● Analyst Average: $237.68 ● Conservative DCF: $209.06 ● EV/EBITDA Multiple: $234.12 ● Return potential is 6-22% ● Private Equity ● VaR would not change
Berkshire Hathaway School of Business Investment Program Recommendation
To buy 61 shares at $197 for a total investment of $12,017.