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The Owl Fund William C. Dunkelberg Student Managed Fund Initiating Coverage Report 20 April 2020

``` Downside Current Price Upside Inc. Scenario Price Target Scenario

Being “Greedy When Others are Fearful” $171.00 $191.20 $240.00 $258.00 -10% 25% 35%

• The market-wide selloff due to the seemingly uncontrolled spread of the Symbol NYSE: BRK.B coronavirus and the economic standstill as a result of measures to 52-Week Range $159.5 – 231.61 control the spread has unfairly decreased the value of Berkshire Hathaway. Considering the coronavirus sell-off, the Company is now so YTD Performance (15.6%) attractively valued it is too appealing of an opportunity to pass . Market Cap (M) $463,136 • A reluctance to accelerate share repurchases and a tax-benefit write off Enterprise Value (M) $163,944 associated with an equity in DC Solar cause BRK’s multiple Net Debt (M) ($302,964) to contract in May’19. Yield 0.0% • BRK’s Service & Retailing and Manufacturing segments are the most LTM P/E 19.4x exposed to impacts of the coronavirus, but the resiliency of its LTM P/Bk 1.09x and McLane Company segments should minimize the impact of the economic slowdown on the operating earnings of the firm. Unrealized ROE 21.1% losses in the firm’s equity portfolio may adversely affect the earnings of ROA 10.7% the firm, but Buffett reminds investors “to focus on operating earnings,”

since unrealized gains and losses are incredibly volatile. FY (Jan) 2019A 2020E 2021E • Competitive advantages across its insurance portfolio, along with resiliency in its BNSF segment and an exorbitant amount of cash on its EPS balance sheet position BRK to quickly emerge on the right side of the Q1 2.89 2.50 2.70 current market environment. YoY Change (13.5%) 8.0% • BRK currently trades at a 1.08x LTM P/Bk multiple, a 21.4% discount Q2 3.18 2.43 2.42 to its three-year average. Through our sum-of-the parts analysis, we YoY Change (23.6%) (0.4%) except the stock to reach a target price of $240.00, a ~25.0% return. Q3 3.49 2.62 2.91 YoY Change (24.9%) 11.1% COMPANY OVERVIEW Q4 2.37 2.63 2.82 After Hathaway Manufacturing Company and Berkshire Fine Spinning YoY Change 11.0% 7.2% Associates merged in 1955 to create Berkshire Hathaway, Inc. (BRK), Year 11.93 10.28 11.11 and his investment team came to rescue the floundering textile company in 1965 before embarking on a wave of John Ourand that built up the global holdings company we know today. (202) 423-1248 Headquartered in Omaha, NE, BRK dwarfs competitors as the largest [email protected] company by revenue, and indirectly manages 391,500 employees. Through its decentralized operating model, the company Sarah Merzen reports through six segments: Insurance (26.7% of FY’19 revenue, (215) 559-4915 includes its GEICO ownership), Burlington Northern Santa Fe, LLC [email protected]

(9.3%), Berkshire Hathaway Energy (7.9%), Manufacturing (24.7%), McLane Company (19.9%), and Service and Retailing (11.6%). 82.4% Carson Shaner of its FY’19 revenues came from the U.S., with 3.0% from and (267) 324-8373 14.6% from RoW. The Company reports 1Q’20 earnings on May 2nd. [email protected]

Source: Bloomberg, FactSet, CapitalIQ. The William C. Dunkelberg Owl Fund does and seeks to do business with companies covered in its research reports. Thus, investors should be aware that the Fund may have a conflict of interest that could affect the objectivity of this report. All prices are current as of the end of previous trading session from date on which report was issued. The Owl Fund William C. Dunkelberg Student Managed Fund

TABLE OF CONTENTS BUSINESS OVERVIEW ...... 3 Insurance...... 3 Burlington Northern Santa Fe ...... 4 Berkshire Hathaway Energy ...... 4 Manufacturing ...... 5 McLane Company ...... 5 Service and Retailing ...... 5 INDUSTRY OVERVIEW ...... 6 ~ Floating Over the Economy ~ ...... 6 Dry Powder Shopping Szn ...... 7 UNDERVALUATION & THESIS...... 8 A WORD ON THE SELLOFF ...... 9 “Focus on the Forest – Forget the Trees” ...... 9 CATALYSTS & DRIVERS ...... 10 Increased Premiums + Lower Losses = Optimal Float ...... 10 : Weakening Balance Sheets Drive Retro Reinsurance...... 11 ADDITIONAL COMMENTARY ...... 12 Racks on Racks on Racks ...... 12 Naming the Next in Charge… Which Road will the Oracle Take? ...... 13 PEER GROUP ANALYSIS ...... 14 In this House, We Diversify...... 14 ECONOMIC MOATS & RISKS TO THE INVESTMENT THESIS ...... 19 VALUATION ANALYSIS ...... 20 SCENARIO ANALYSIS ...... 20 FINANCIAL ANALYSIS ...... 21 Revenue...... 21 Earnings ...... 22 Cash Flow/Share Repurchases ...... 22 Margins...... 23 Debt ...... 23 Float ...... 23 APPENDIX ...... 24

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The Owl Fund William C. Dunkelberg Student Managed Fund

BUSINESS OVERVIEW

As a , BRK has left its mark across the BRK FY'19 Revenue Breakdown economy by taking stakes in a diverse group of . Insurance Any investment decision out of BRK must come from the desk of the CEO, Warren Buffett, with guidance from Charlie 12% BNSF Munger, VP of the Board. The Company then generates 27% profits through this custom-built portfolio, but can also earn Berkshire 20% income via its insurance float-funded investment portfolio. $255B Hathaway Energy Manufacturing Unlike companies that actively manage firms 9% they purchase, BRK tries to avoid interfering with its 8% McLane Company operating businesses’ day-to-day activities outside naming 25% management, and instead trusts in Buffett’s due diligence. Service and The information below should serve as a guide to what lies retailing within this star-studded portfolio: Insurance (26.7% of FY’19 Revenue) Underwriting: Got risk? BRK should have something to cover that. Through GEICO, The Berkshire Hathaway Primary Group, and The Berkshire Hathaway Reinsurance Group, BRK underwrites primary insurance and reinsurance against property, casualty, life, accident, and health risks. When BRK writes a premium, it agrees to pay losses associated with the aforementioned risks, but may hold onto that liability for decades. In the meantime, it puts the premium- generated funds to work in its investment portfolio. • GEICO (52.5% of segment) – Based in Chevy Chase, MD, GEICO specializes in underwriting insurance for automobile-related risks for private passengers around the country. Through its subsidiaries, the Company also covers risks associated with motorcycles, ATVs, boats, and small trucks. As of CY’18, A.M. Best research determined GEICO controlled 13.4% of the automobile insurance market, the second-most dominant player after . Given the lack of diversity among competing automobile insurance policies, GEICO uses a strategy where individuals apply for coverage online or on the phone. • Berkshire Hathaway Primary Group (13.5% of segment) – This group of subsidiaries mirrors GEICO’s underwriting operations, but instead of focusing on auto policies, it covers the risk gamut, including protection against general liability, commercial property, healthcare liability, workers compensation, and other risks. Each company independently underwrites claims, as management in Omaha stays “hands-off.” • Berkshire Hathaway Reinsurance Group (24.1% of segment) – In the reinsurance business, BRK assumes the risk of another insurance company: it’s in(surance)ception. With the bulk of underwriting coming from the National Indemnity Company and the General Re Corporation, the group based out of Stamford, CT writes contracts against property, casualty, health, and life risks. Investing: Once BRK receives income from premiums and nets out any claims it needs to pay (including loss adjustment expenses and unpaid losses), it refers to the residual value as a “float.” Even though float represents funds BRK doesn’t technically own, some claims can take decades to pay, so BRK immediately invests the extra amount it earns. Unlike with underwriting activities, Buffett and other investment managers hand-select their favorite equity and fixed income securities. The portfolio has historically contained a greater proportion of equity holdings, and returns are reported with broader insurance income. • Equity Securities (73.6% of portfolio) – As of its most recent 13F filing on Valentines Day, BRK held 52 equity securities worth $190.6B. Beginning in CY’18, ASU 2016-01 forced BRK to include any unrealized gains or losses from equity securities on its Income Statement. Please find a full list of its holdings in Exhibit I. • Fixed Maturity Securities (5.7%) – BRK holds bonds from foreign governments (~87.0% rated over AA), investment grade corporations, and the U.S. Government (all rated over AA+), with cash and other ST securities.

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The Owl Fund William C. Dunkelberg Student Managed Fund

Burlington Northern Santa Fe (9.3%, BNSF)

Burlington Northern Santa Fe, LLC (BNSF) operates the largest freight railroad system in North America. Based out of Fort Worth, TX, its rail network spans 32,500 miles across 28 states and three Canadian provinces through 25 intermodal facilities and over 40 ports. The 1995 merger between Burlington Northern Inc. and Santa Fe Pacific Corp. birthed BNSF, and Buffett made it his in CY’10 in the ashes of the Financial Crisis. BNSF focuses on transporting agriculture, consumer, industrial, and coal products. • Consumer Products (35.3% of segment) – Consumer products accounted for 5. intermodal shipments in CY’19, mainly consisting of automotive parts and finished vehicles being shipped from manufacturers to dealerships, and food products headed towards a range of end markets. • Industrial Products (27.2% of segment) – Making up 1.9M carloads in CY’19, these shipments break into five sub-segments: Construction, Building, Petroleum, Chemicals, and Food & Beverage. • Agricultural Products (21.0% of segment) – With 1.1M carloads of commodities in CY’19, BNSF leverages partnerships with farmers to transport food & beverage products, ethanol fuel, chemicals for fertilizer, and other field crop products. • Coal (16.5% of segment) – From 1.8M shipments in CY’19, this segment also entails crude oil, liquefied petroleum gas, and other refined product transportation. Of the coal product moved, over 90.0% comes from the Powder River Basin. Berkshire Hathaway Energy (7.9%, BHE) With 90.9% of equity ownership in Berkshire Hathaway Energy Company, BRK controls subsidiaries across the energy value chain; from generation, transmission, and storage, to distribution and supply. Its companies conduct business in the regulated utility, pipeline, electricity distribution & transmission, and residential real estate industries. • Utilities (61.4% of segment earnings) – BHE’s four regulated utilities companies include PacifiCorp (provides electricity to UT, OR, WY, WA, ID and CA), MidAmerican Energy Company (serves electricity and natural gas to IA, IL, SD and NE), (serves Southern NV), and Sierra Pacific Power Company (Northern NV). Combined, the utilities serve 5.1M customers, and own 29,000 net megawatts of generation capacity (operating and under construction). These utilities face seasonal demand shifts with higher electricity revenues in the summer months (air conditioning), offset by higher natural gas revenues in the winter (heating). • Other Energy (38.6% of segment) – BHE’s other subsidiaries include Northern Natural Gas Company, which owns a 14,600-mile-long pipeline system, including the largest U.S. interstate natural gas pipeline by miles between West and MI’s Upper Peninsula. The Kern River Gas Transmission Company, another BHE pipeline business, carries natural gas 1,700 miles from Rocky Mountain supply to UT, NV, and CA. BHE’s electric distribution activities operate in Great Britain through Limited and Northern Powergrid plc, which covers ~10,000 square miles near Yorkshire and the broader NE region. For transmission, AltaLink L.P. helps electricity travel around ~87,000 square miles in Calgary, Alberta. BHE also holds HomeServices of America, Inc., which acts as the largest domestic residential real estate broker. 20 April 2020 4

The Owl Fund William C. Dunkelberg Student Managed Fund

Manufacturing (24.7%)

• Industrial Products (48.8% of segment) – The first sub-segment of BRK’s diverse manufacturing reach produces chemical, power generation, component, and other tools for industrial use. The largest industrial companies include Precision Castparts Corp. (creates metal components for aerospace and energy use), The Corporation (produces additives and other materials products for transportation and consumer products), and the IMC International Metalworking Companies (manufactures metal cutting tools). The sub- sector also includes Marmon Holdings, Inc., CTB International Corp., and LiquidPower Specialty Products Inc. • Building Products (32.4% of segment) – As the name suggests, this sub-segment contains companies engaged in homebuilding activities, from the decorative parts to the finished home itself. The largest operating businesses are (constructs on-and-off-site homes), (one of the largest carpet manufacturers), and (produces insulation products for industrial and consumer use, with roofing services). Its other brands include MiTek Industries, Inc., Benjamin Moore & Co., and . • Consumer Products (21.0% of segment) – These companies primarily produce casual and athletic clothing items, with a portfolio consisting of (basic clothing and sports equipment), Garan (clothing for children), and The BH Holdings Group. Other non-apparel manufactured consumer brands include , Inc., The Company, Albecca Inc., and Richline Group, Inc. McLane Company (19.9%) Beginning as a mom-and-pop retailer in 1894, McLane Company rose to prominence in the 20th Century thanks to its food wholesaling services. After becoming property of in 1990, BRK scooped it up in CY’03 for $1.5B. Today, the business offers grocery, foodservice, and beverage distribution services throughout the U.S. to a very concentrated end-market. ~20.0% of its FY’19 revenues came from WMT, with ~12.0% from 7-Eleven, and ~11.0% from Yum! Brands. • Grocery Distribution – McLane leverages its logistics and merchandising capabilities to help transport grocery products from suppliers to ~50,250 retail clients, mainly consisting of convenience stores and warehouse clubs. Based in Temple, TX, the grocery supply chain operates with 25 distribution facilities and 20 states. • Foodservice Distribution – Foodservice replicates the same supply chain specialties as the grocery distribution operations, but instead of focusing on grocery end markets, the Carrollton, TX-based segment sends meal prep materials to ~35,350 fast-food and casual restaurants nationwide. This transportation takes advantage of 46 facilities through 22 states. Both the foodservice and grocery distribution businesses historically operate with high sales figures alongside hefty operating costs and low profit margins. • Beverage Distribution – Under the umbrella of Empire Distributors, McLane provides wholesale distribution for beer, wine, and other distilled spirit products. The unit provides booze to 26,400 retail stores, with a geographic concentration in the SE U,S, and Colorado. Service and Retailing (11.6%)

• Service (45.8% of segment) – Not diverse enough for a Financials company? Welcome to the services businesses. Through ~52,000 employees BRK has exposure to aircraft training and ownership, restaurant franchising, logistics, and media services. The heavyweight brands in this segment include FlightSafety International Inc. (flight simulation products), NetJets Inc. (shared aircraft ownership programs), and TTI, Inc. (semiconductor and other electronic components). XTRA Corporation and make up other notable service businesses. • Retailing (54.2% of segment) – BRK’s retail lineup features the likes of The Berkshire Hathaway Automotive Group, Inc. (operates 106 automotive retail franchises), and the Furniture Mart (one of four BRK home furnishing retailers). Other retail businesses include Borsheim Jewelry Company, Inc., See’s Candies, The , Ltd., , and Detlev Louis Motorrad. 20 April 2020 5

The Owl Fund William C. Dunkelberg Student Managed Fund

INDUSTRY OVERVIEW ~ Floating Over the Economy ~ covers financial loss due to damages on real or personal property, brought about by perils such as fires or storms. Real property is actual land while personal property includes any item not attached to land such as clothing, jewelry, furniture, etc. Casualty insurance is a protection against financial loss resulting from a legal liability stemming from bodily injury or property damage from an accident caused by an insured. The P&C insurance industry can be separated to commercial and personal insurance lines: • Commercial is more volatile than personal lines with economic activity, and can have a different impact from the coronavirus on each of its subsegments. The commercial line can be further separated to: - Core coverages include property physical damage, property business continuity, casualty, worker’s compensation, and motor fleet. (See Exhibit VI for specific ST & LT impact on each line). - Professional liability covers cybersecurity, healthcare professionals, and directors & officers. - Specialty lines insure specific industries such as energy, aerospace and marine, and construction as well as political risk and event cancellation. • Personal insurance includes auto insurance, homeowners, travel, and product & delivery insurance.

Total U.S Insurance Industry Cash & Invested Assets

$7,000.0 $6,452 $6,538 9.0% $6,141 $5,762 $5,818 $6,000.0 $5,229 $5,350 $5,521 6.0% $5,023 $5,000.0 3.0%

$4,000.0 0.0% 2010 2011 2012 2013 2014 2015 2016 2017 2018 P&C insurance companies’ income/loss is simply the collection of premiums plus investments income from bonds and stocks, minus claims for losses with unallocated expenses such as salaries and taxes. They collect premiums upfront, pay the claims later, and the money held in between is referred to as “float.” This “free money,” as Warren Buffett call it, increases with the volume of “intelligent underwriting,” and firms can grow their float by breaking even on net underwriting revenues each period. In soft markets like today, P&C insurance companies should not bet on firms by increasing their underwriting on risky businesses even if that shrank their float. • Insurance companies typically invest this float in high-grade bonds and fixed income. However, this stable low- risk, low-return model has suffered lately with near-all-time-low interest rates, which in return lowered these insurers’ historical returns. An investment that could have earned ¢5-6 per dollar years ago would now return ¢2-3 per dollar in the best-case scenario, assuming they do not invest in countries with negative interest rates. If interest rates remain low in the long-term, many P&C insurers will face a drop in their investment income. As a result, the industry started to shift to higher-yielding investments including risker bonds. alternative investments, and equity securities. According to the National Association of Insurance Commissioners (NAIC), the U.S insurance industry asset distribution is overall unchanged, with the majority of assets in bonds, though we think the exposure to new assets with riskier profiles in the past few years is noteworthy. Although the YoY growth in the industry’s cash and invested assets declined in CY’18, the appetite for higher risk, less liquid assets did not change amid the declining low interest rate, and we expect this to remain with current zero interest rates. In short, amid this coronavirus-induced recession, P&C insurance premiums are resilient and investment income should remain stable as low interest rates take time to hit balance sheets, and due to business’ and individuals’ necessities to purchase insurance.

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The Owl Fund William C. Dunkelberg Student Managed Fund

The Intelligent Investor Underwriter

The growth of the P&C industry depends on an increase in premiums from underwriting and rate cycle from pricing. In times of economic turmoil, prices can be adjusted to partially offset this decline in premiums. Still, premiums are generally resilient to economic slowdown. In CY’08, total industry premiums declined 1.6% and 5.0% in CY’09. In CY’19, total U.S P&C direct premium written increased by 5.5% to $677.4B led by State Farm Group. • The resiliency of the P&C business has been proven in The Power of Underwriting recessions. Commercial insurance lines typically fare worse than personal lines in economic downturns. In 2008 CY’09, commercial premiums decreased 9.0% 2009 primarily due to a fall in worker’s compensation 2010 premiums. On the other hand, personal auto 2011 premiums only fell 1.0% and homeowners 2012 premiums actually increased 2.3% in CY’09. 2013 • Assuming a worst-case scenario, even if CY’20 written 2014 premium growth fell by 5.0%, which is twice the CY’08 2015 2016 crisis amount, that will represent only a 4.5% drop in 2017 EPS consensus on average for commercial insurers. 2018 • P&C insurance companies have healthy balance sheets 2019 and liquidity with fixed income representing 60.0% to 100,000 150,000 200,000 250,000 300,000 90.0% of total investments, with over 90.0% of those Net Premiums Earned Net Premiums Written in investment grade-rated securities. Dry Powder Shopping Szn While the coronavirus pandemic is causing the entire economy to shut down and leaving millions of Americans unemployed, a corner of Wall Street can leverage this opportunity: private equity (PE) and companies with massive amounts of cash to put into work and enhance their returns. • Blackstone, Carlyle, KKR, and other PE titans Public PE firms Dry Powder collectively have $1.5T in cash ready to deploy and have been actively seeking deals among struggling $160B sectors such as energy, travel, and entertainment. This market dislocation and drop in valuation came $130B as a gift for PE firms and value investors after a massive run up in valuation. Apollo’s CEO $100B commented on his company’s value-oriented $70B approached and said, “We have a very strong balance sheet and a lot of dry powder, we also $40B try to be opportunistic.” He also mentioned he is looking into leisure and insurance sectors. $10B • Typically, PE firms buy undervalued companied with 2016 2017 2018 2019 mostly borrowed money and take them private while APO BX CG KKR actively managing them. However, sky-high valuations in recent years made it hard for these PE firms to invest and they opted to pile up cash. Value investors are also eagerly waiting for cheap valuations and investing in collapsed industries for the long run. • The largest four public PE firms collectively hold $323.0B in cash and may invest it in rescuing suffering companies in the near-term. Bloomberg estimates the deployment of $323.0B in dry power to drop by 15.0- 20.0% in CY’20 then rebound by 50.0% in CY’21. 20 April 2020 7

The Owl Fund William C. Dunkelberg Student Managed Fund

UNDERVALUATION & THESIS

• BRK currently trades at a LTM P/Bk of 1.08x, a 21.4% discount to its three-year average multiple of 1.38x. The market has deemed Berkshire’s assets to be inherently less valuable than at any point since Sep’11, a valuation we believe to be absurdly unjustified. The resiliency of its core business segments and long- term investment strategy in its equity portfolio, even in the face of the coronavirus pandemic and a potential recessionary period, should insulate the company from anything the economy throws its way. • Much of the contraction in BRK’s multiple in the past year is directly due to the market-wide coronavirus disruption, but the story starts in May’19. At the last annual meeting, investors were expecting clarity on the share repurchase program of Berkshire. For context, the Company bought back $1.6B in 1Q’19, a faster pace than the $1.3B purchased during 2H’18. During the annual meeting, Buffett said that although he is “OK buying it”, they “didn’t salivate over buying it”. This sentiment did not sit well with investors, who expected a ramp-up in the rate of repurchases in the absence of significant acquisitions. Warren Buffett has historically shown a reluctance to purchase shares, in part due to his desire to find value for shareholders (whom he often refers to as partners) in business investments instead of buying out other shareholders. • On the month, BRK’s multiple contracted 8.8%. On top of sentiment regarding the firm’s buyback program, BRK announced with its 1Q’19 earnings results that it wrote off $377.0M in income tax credits tied to a $340.0M investment in a renewable energy company, DC Solar. The write-off was due to an investigation into DC Solar that found evidence of fraudulent earnings, and Berkshire determined it would be best to write off the tax credits it had received from the investment. Although this was a one-time event of no fault to BRK, the news contributed to the multiple contraction through May’19. • Once news of significant coronavirus cases in the U.S. broke, the market fell off a cliff, pulling BRK down with it. The general economic stand-still that has occurred as a result of the outbreak led investors to flee from BRK due to fears of decreased revenues across its Manufacturing, Service & Retailing, and Railroad segments. Although the business portfolio of Berkshire is not consciously constructed to prosper through an economic shutdown, its segments are more resilient than many investors seem to believe. Once the economy begins to return to normal, its BNSF segment should see an increase in volume as more intermodal transportation of goods is required. Insurance and the McLane Company, two of its largest segments of revenue, should see little to no impact from the economic slowdown due to the inherent necessity of insurance and decreased loss exposure with less global activity, and the necessity of the McLane Company’s food service and grocery distribution services will continue to operate, especially with more individuals quarantined at home. Overall, the diversity of Berkshire’s lines of business, even with a skew towards manufacturing, should prove resilient through the current market environment. • Moving forward, BRK’s strong balance sheet and long-term investment philosophy should prevail, which we expect will drive shares to a fair value of $240.00, representing a ~25.0% return. BRK Three-Year Average LTM P/Bk

Buffett doesn’t “salivate” over buying back 1.6x shares, coupled with DC Solar write-off 1.5x 1.4x 1.3x 1.2x 1.1x Investors overreact to non-insurance business and equity holdings 1.0x performance in the corona world, forget about the ’s resiliency 0.9x Apr-17 Aug-17 Dec-17 Apr-18 Aug-18 Dec-18 Apr-19 Aug-19 Dec-19 Apr-20

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The Owl Fund William C. Dunkelberg Student Managed Fund

A WORD ON THE SELLOFF “Focus on the Forest – Forget the Trees” As stated, worries concerning the coronavirus wreaking havoc on Berkshire’s non-insurance business has sent investors running to the hills, pushing the firm’s price below book value for a temporary period – an unprecedented multiple. Investors seem to have forgotten the investing strategy Buffett has used to power Berkshire’s growth for decades: to find cheap, diverse, best-in-class businesses that supplement the parent firm’s elite financial standing, to exist for Berkshire’s “forever” investment time horizon. We think this is a great example of investors getting lost in the fathomless depths of Berkshire’s forest, placing too much emphasis on near-sighted -specific “twigs”, while failing to realize the security and resiliency of the firm’s towering “redwoods” which will stand tall long after the coronavirus. We wanted to throw in this brief history lesson to show how Berkshire’s operating businesses have experience navigating recessions, and how they’ve emerged stronger than ever. Planes, Trains, and Automobiles: Manufacturing and Railroad Resiliency BNSF holds a title for being one of the more cyclical businesses in Berkshire’s portfolio thanks to its dominant presence in intermodal shipping, or the use of two “modes” when transporting freight (e.g. rail and truck). Intermodal volumes are coming off a 4.1% slump in CY’19 volumes (due to the U.S. and China trade spat) and are already down 15.0% through the first 13 weeks of CY’20. Class I railroads are poised to shine when economic activity resumes as material cost levers limit downside, while the industry’s recession tale tells a happy ending. • Variable costs make up a significant part of a rail company’s expense base, and when faced with lower volumes, can get adjusted lower to mitigate the firm’s bottom-line impact. At Kansas City Southern, for example, ~50.0% of its operating costs consist of variable costs (fuel, compensation & benefits), ~10.0% come from semi- variable costs that management can adjust at its discretion (maintenance and other), while ~40.0% are fixed (non-train labor, corporate overhead). This cost-structure exists across the industry, including at BNSF, as exemplified in FY’09 when freight volumes fell 16.0%, revenues tumbled 22.1%, but cost-reduction abilities helped push operating expenses down 23.4%. • Outside cost levers being able to protect North American Originated Railroad Volume earnings amid volume pressure, we turn to the history books when gauging 13.0% performance following the downturn. As 8.0% the economy recovered from the great 3.0% recession in CY’10, 14.6% YoY growth (2.0%) in intermodal volumes outpaced the (7.0%) 11.5% rebound experienced by the (12.0%) (17.0%) broader market, a sure sign for BNSF, 2008 2009 2010 2019 2020 considering it led the Intermodal Carload market with a 26.0% share in CY’19. Commodity Intermodal Total Manufacturing, servicing, and retailing units followed similarly resilient trends. FY’09 revenues stung the top-lines at Marmon (-6.4%), other manufacturing subsidiaries (-49.0%), and services & retailers (-93.8%), but each of those segments came back on a tear, with 18.5%, 99.5%, and 1,600.0% respective growth rates in CY’10. • McLane Company, on the other hand, saw its revenues explode 24.6% over FY’09, before gaining 7.3% in FY’10. We expect some of the same this time around, especially after Walmart, which makes up ~20.0% of the segment’s sales, saw its own sales grow 20.0% in Mar’20 to meet consumers’ stockpiling needs. Not only did Berkshire’s non-operating businesses emerge from the crisis as stronger companies, but Buffett was able to deploy the firm’s capital in equity investments (GS, BAC, GE, etc.), alongside outright acquisitions (BNSF) to drive long-term value. Investors are acting completely irrationally in selling off a conglomerate with financially sound holdings, alongside a mountain of cash other firms dream of.

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The Owl Fund William C. Dunkelberg Student Managed Fund

CATALYSTS & DRIVERS Increased Premiums + Lower Losses = Optimal Float As mentioned above, the real money in the insurance industry comes from an insurer’s float and its effectiveness in deploying the float to generate returns. The key differentiator for BRK from other P&C firms is that BRK’s rock-solid balance sheet allows it to use its float in ways other firms can only dream of. But to use float, BRK first must generate it. Each of its insurance subsegments have a unique competitive advantage which allow them to outperform their peers and generate that money-making float. GEICO: Direct Distribution Differentiation The second-largest auto insurer in the , which captures 13.4% of the automobile insurance market, is behind only State Farm in total premiums written. Its aggressive advertising, thanks in part to the ubiquitous gecko, drove its annual premium increase of 10.6% over the last decade, significantly outpacing the industry average of 4.0%. Although its loss ratio expanded in 4Q’19, this was primarily driven by increased severity of claims, a facet of the loss portfolio that is difficult to predict and is highly volatile. Direct Distribution Auto Insurance Underwriting As a first step in lowering its expense base, GEICO Expense Ratio implements a direct-to-consumer business model. By eliminating the middleman, it allows GEICO to keep its 30.0% prices low and its expenses lower. Over the last ten years, 25.0% GEICO’s loss ratio has outperformed the industry by 7.5 points. Its in-house handling of claims provides another 20.0% competitive advantage by ensuring superior customer 15.0% service and eliminating the expenses of a claim handler. 10.0% • In FY’19, GEICO reported its underwriting expense ratio at 14.5%, a 60 bps increase from FY’18, but 5.0% lower than PGR and State Farm’s 19.9% 32.2% -- underwriting expense ratios, respectively. FY'15 FY'16 FY'17 FY'18 FY'19 Maintaining lower expense ratios provides two GEICO PGR State Farm direct benefits: more competitive pricing and greater float generation. With a lower cost base, GEICO can provide incredibly competitive pricing, hence its “15 minutes could save you 15.0% or more” tagline. Assuming consistent underwriting standards, the lower expense ratio directly leads to a greater profitability and float for the segment relative to peers, driving overall insurance float. • A driving trend in the auto insurance market has been telematics, or the use of driving data to price insurance. Although GEICO has not made moves as significantly as PGR, leading to slightly higher loss ratios, its best-in- class expense ratio has provided a defense against the loss ratio, and with the announcement of expansion into telematics in Aug’19, GEICO is well-positioned to begin to drive down its loss ratio in the long-term. What About the Coronavirus? Most of the large auto insurers, including State Farm, ALL and PGR, were quick to announce premium returns to policyholders, considering decreased auto use due to stay-at-home and social distancing orders. While GEICO was slower in its announcement, it announced earlier this month that it will return 15.0% of premiums for renewals between Apr 8th and Oct 7th, which it expects to total around $2.5B. At first glance, $2.5B seems astronomical, but given the volume of premiums and the retention of 85.0% of premiums, this should not amount to a substantial decrease in operating earnings for the segment. In any case, the overall decrease in auto activity and the corresponding decrease in claims should far outpace the amount of premiums returned.

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The Owl Fund William C. Dunkelberg Student Managed Fund

Reinsurance: Weakening Balance Sheets Drive Retro Reinsurance In FY’17, Berkshire added $10.0B to its reinsurance premiums with the addition of a retroactive reinsurance from AIG. Retroactive reinsurance occurs as a result of weakening balance sheets in the primary insurance space, forcing insurers to offload risk onto large, more stable reinsurers, namely BHRG. • Most insurers invest float primarily in fixed income, which has seen a significant decrease in yield in the face of a potential recession. As a direct result of this, the balance sheets of many insurers are weakening. In order to preserve liquidity, primary reinsurers turn to more strongly capitalized reinsurers to foot the risk. BHRG has the strongest balance sheet of any reinsurer by miles, thanks in no small part to its position as a subsidiary of the conglomerate. Moving forward, the offloading of risk by primary insurers to larger reinsurers should accelerate due to the hardening of the insurance market and lower yields from investments, contributing directly to Reinsurance’s premiums due to its position as the strongest in the industry. Beyond reinsuring risks from primary insurers, how can the reinsurance segment leverage its balance sheet to generate float? That answer lies in the length and limit of its policies. • The types of policies that generate the largest amount Float at Year-End of float are “long-tail” policies, those which take the longest amount of time to pay out claims. The strength $150B 30.0% of its balance sheet also allows for significantly larger 25.0% and more complex deals, directly generating the float $100B 20.0% from the long-term nature of the contracts. Since it is 15.0% usually the only reinsurer able to handle this type of $50B 10.0% policy, it possesses ultimate pricing power in many 5.0% -- -- unique reinsurance offerings. BRK’s best-in-class 2015A 2016A 2017A 2018A 2019A balance sheet allows it to hold more long-term, high limit risks than competitors, generating Float Growth (%) significant float in the process. To demonstrate the power and value of float, a great example is the first insurance acquisition by Berkshire Hathaway back in CY’67 when it acquired National Indemnity. Berkshire shelled out a $1.9M premium over book value for the acquisition, but the float of National Indemnity at the time was $19.4M. In essence, the float that could be invested was 10x the premium paid by Berkshire, with Berkshire retaining any accumulated value from the investments. The continued generation of float, particularly by its “long-tail” policies is the oak log that burns to power the money-making equity portfolio of Berkshire. Float to Income: Investments! Investment Income Berkshire’s investment income is derived from its $6B 30.0% investment of float, so once the float is generated, how 20.0% does Berkshire realize income from investments? The $4B 10.0% answer: its famed equity portfolio. On top of returns $2B from a relatively small portfolio of fixed income -- investments, BRK’s equity portfolio generates the -- 2015A 2016A 2017A 2018A 2019A majority of earnings for the insurance segment, representing 90.6% of earnings over the last five FY’s. Investment Income Growth (%) We believe that each subsegment in Berkshire’s insurance business has a unique competitive advantage, which, when considered as a whole, is substantial enough to drive float positively moving forward. Even with limited material premium growth drivers, the strength of the firm’s balance sheet and its ability to foot policies other insurers would never risk their liquidity for, combined with best-in-class expense ratios for its largest premium driver, the insurance segment should continue to generate meaningful float and investment income for the foreseeable future.

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The Owl Fund William C. Dunkelberg Student Managed Fund

ADDITIONAL COMMENTARY Racks on Racks on Racks

Warren Buffett has famously instructed BRK Historic Cash & Short-Term Treasurys investors to be “fearful when others are Bought Precision greedy, and greedy when others are fearful.” $140B Castparts for $32B $120B After herd fearfulness deflated asset prices $26.0B P/S $100B investments and sent the S&P 500 Index tumbling 33.9% Bought BNSF $80B over the Crisis peak-to-trough, will Buffett heed his own for $26.4B $60B advice? BRK surely has the war chest to do $40B so, and in FY’19 hoarded $128.0B in cash $20B on its balance sheet, including liquid -- investments in U.S. Treasuries with short- term maturities. This makes the third fiscal year in a row cash topped $100.0B, which fosters investor grievances over the firm’s inaction. In Buffett’s defense, competition from private equity firms has pushed valuations on “good, but mundane, businesses” above what BRK is willing to pay. With those PE firms itching for ways to deploy their ~$1.5T in dry powder, Buffett’s ability to find cheap deals grows cloudier. Nonetheless, we think opportunity exists in this beaten down environment for BRK to find best-in-class businesses that will drive long-term value for the conglomerate. • Strong Track Record: The last time asset prices retreated at such an extreme degree, during the Financial Crisis, Buffett was able to leverage BRK’s massive mound of cash to take advantage of once-in-a-decade discounts. He pumped $6.5B into Mars Inc. to assist in its acquisition of Wrigley, and $3.0B in Dow Chemical Co. to help buy Rohm & Haas. He scooped up battered shares, with $5.0B and $3.0B respective injections into The Group, Inc. and , Corp. He also invested $3.0B in Co., and $2.7B in Ltd. BRK also altered its operating business by spending $26.4B in the struggling rail industry to take control of Burlington Northern Santa Fe, Corp. in Nov’09, with what Buffett called a “wager on the economic future of the U.S.” We think the current markets backdrop creates a pristine playing field for Buffett to do what he does best: “buy when people are overwhelmingly fearful.” • Potential Targets? Theories are flying high about what companies Buffett might throw his cash at next. His equity portfolio already has around a ~10.0% stake in each of the “big four” U.S. commercial – DAL, AAL, UAL, and LUV – and given the extent each of those names has sold off, it may warrant some attention from BRK. Buffett has put those thoughts to rest, however, saying “it’d be very unlikely that we would do that” due to regulatory concerns, specifically considering conflicts of interest between its ownership in AXP, which sits in a credit card partnership with DAL. • If Buffett decides to hold onto this cash mountain BRK Historic Share Repurchases a little longer, we think the firm’s depressed valuation could bring about opportunistic $2.0B share repurchase activities. Buffett and $1.5B Munger hold requirements in which such an activity is acceptable, where they must believe $1.0B BRK is “selling for less than it is worth,” and the $.5B firm is “left with ample cash” after the transaction. The $2.2B bought back in 4Q’19 was the -- 3Q'18 4Q'18 1Q'19 2Q'19 3Q'19 4Q'19 largest-ever quarterly repurchase amount. Not only does ample cash ensure all BRK’s operating businesses will remain well-capitalized in a liquidity- tight environment, but it also gives Buffett the power to act quickly when making equity investments or outright acquisitions. This bountiful amount of capital, combined with an anti-bureaucratic investment- decision process, sets BRK apart from any other Financial holding company in this opportunistic economy. 20 April 2020 12

The Owl Fund William C. Dunkelberg Student Managed Fund

Naming the Next in Charge… Which Road will the Oracle Take?

Ajit Jain Gregory Abel After holding positions at IBM and McKinsey & Co., Abel left an accounting gig at PwC to join BRK utility Jain joined BH Insurance in CY’86, and today serves subsidiary CalEnergy in CY’92. He jumped through as the Vice Chairman of Insurance Operations. Jain the BHE ranks, becoming president in CY’98, CEO has arguably received the most public praise from in CY’08 and succeeded David Sokol as Chairman Buffett, who gives him credit for helping expand the in CY’11. Today he acts as the Vice Chairman for firm’s massive float. Jain is currently 68 years old. non-insurance ops, and is in his late-50’s.

May’19: Abel & Jain take Q’s: At the FY’18 annual meeting, Abel and Jain joined Buffett and Munger to May’18: Abel & Jain in Action: At the FY’17 annual meeting, Buffett field shareholder questions, and Buffett noted they may be present on said the CEOs of BRK’s subsidiaries stage in future meetings will now report to Abel or Jain, giving them more day-to-day experience with tasks usually allocated to him Jan’18 : Two Key Promotions: Buffett moved Gregory Abel from Feb’14: Internal Successor Chosen: CEO of BHE to Vice Chairman of non- In the FY’14 letter to shareholders, insurance ops., while jumped Buffett wrote “the board and I believe we now have the right person to from the top insurance position to become the VC of the group. This succeed me as CEO.” The rest of the move narrowed those two down as letter didn’t leave many breadcrumbs, the most-likely successors, especially but did call Ajit Jain and Greg Abel after Buffett mentioned they “have “proven performers” Be rkshire in their blood”

Warren Buffett

After taking control of the failing textile company After Munger and Buffett, both from Omaha, hit it Berkshire Hathaway in CY’65, the business quickly off at a dinner party in CY’59, the two kept in touch became Buffett’s brainchild. He first began to while the former practiced law, before becoming the diversify the Company’s operations in CY’67 with Vice chairman of Berkshire in CY’78 – a title he still the purchase of National Indemnity, which kicked- holds today. Since joining the BRK family, Munger off the firm’s ability to generate float to make has been Buffett’s right-hand-man, helping him

additional investments. Through his investment break his “cigar-butt” investing habits, and instead principals of understanding the business you’re focusing on best-in-class businesses that have buying, keeping money locked up for long periods, more than one puff left in them. Munger also served and identifying cheap companies, he has generated as the chairman of Corporation outsized returns for BRK – 20.3% CAGR since between CY’84 and CY’11. Today, at 96 years old, CY’67 vs. 10.0% from SPX. At 89 years old, Munger is one of the few to consult with Buffett investors are facing the fact he cannot run BRK regarding investment decisions, and has a say in forever. This raises the question of whether the next whether the firm repurchases shares, another CEO can display the same investment prowess. critical position the firm will need to replace.

We think both Jain and Abel have the experience to lead Berkshire’s subsidiaries post-Buffett, but also think the firm’s investments will sit in good hands. Buffett hired and Ted Weschler in CY’10 and CY’12, respectively. They each manage ~$15.0B of the firm’s equity portfolio, and are candidates for a potential CIO role. 20 April 2020 13

The Owl Fund William C. Dunkelberg Student Managed Fund

PEER GROUP ANALYSIS In this House, We Diversify

Berkshire Hathaway

Insurance Berkshire Hathaway Energy BNSF

We found little issues in finding rail comps with similar operations. This group includes everything Every name in the group conducts insurance: including the other P&C operations in North America, has giants that reflect GEICO’s While reflecting BHE’s 61.4% revenue exposure to regulated exposure to intermodal transport, operations, the top premium and carries similar products underwriters (multiple risks) to utilities, this diverse group also captures where we think its including coal, consumer & account for the BH Primary industrial products, commodities, business, with leading reinsurers electric transmission and pipeline among other components. to represent BHRG. businesses deserve to trade.

McLane Companies Manufacturing Service & Retailing

Industrial Peers:

Building Peers:

We decided to include names across the food supply chain that touched on each one of McLane’s With such differing S&R business operations, we decided to include operations, with less emphasis on Consumer Peers: its beverage distribution. This a bit of everything! Electronics companies for BRK’s components ranges from transporters of produce for restaurants and and fast food chains for Dairy

grocery stores to merchandise Queen, among flight simulation companies, automobile dealers, providers for convenience stores. Encompasses all manuf. ops. and furniture companies.

In the Doghouse: Unrealized Gains & Losses: In FY’19, 70.2% of BRK’s came from unrealized gains and losses on equity investments. In the year prior, these gains/losses made up (411.4%) of the bottom- line thanks to the CY’18 GAAP rule that reserves a spot for these items on the IS. Given the volatility of this line item and the lack of relevance to BRK’s long-term value, we decided to exclude these values when finding the firm’s equity value in our SOTP analysis. To strengthen this conviction, Buffett explicitly tells investors “to focus on operating earnings,” and “to ignore both quarterly and annual gains or losses from investments.”

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The Owl Fund William C. Dunkelberg Student Managed Fund

Company Market Statistics Growth Analysis Margin Analysis Valuation Analysis Enterprise Value / Market Enterprise Sales EPS EBITDA Margin Profit Margin EBITDA Sales Price / Earnings Ticker Cap Value LTM 2019E LTM 2019E LTM LTM 2019E LTM 2019E LTM 2019E LTM 2019E

Berkshire Hathaway, Inc. BRK.A $34,049 $39,477 7.9% 7.9% 14.9% 14.9% 14.9% 11.1% 12.7% 15.0x 4.6x 4.6x 27.6x 19.2x 3.7x

Primary Insurance Comparables Chubb Limited CB 53,682 67,914 4.5% 5.1% 8.8% 7.7% -- 13.0% 13.1% -- -- 1.9x 1.8x 11.2x 10.6x Erie Indemnity Company ERIE 9,247 8,932 4.0% -- 21.5% (4.9)% -- 12.8% ------27.5x 25.7x The Corporation ALL 33,197 42,389 12.2% (2.2)% 28.8% 5.1% -- 10.8% 9.6% -- -- 1.0x 0.9x 9.7x 9.7x The PGR 48,287 53,389 15.4% 4.4% 7.4% 6.8% -- 10.2% 8.8% -- -- 1.3x 1.2x 14.5x 15.1x , Inc. TRV 26,570 32,634 4.3% 4.4% 7.4% 4.9% -- 8.3% 7.8% -- -- 1.0x 1.0x 10.4x 9.6x Mean $28,497 $40,789 8.0% 3.9% 14.8% 5.8% 14.9% 11.0% 10.4% 15.0x 4.6x 2.0x 6.5x 15.4x 12.4x Median 29,884 40,933 6.2% 4.4% 11.9% 6.0% 14.9% 11.0% 9.6% 15.0 4.6x 1.3x 1.2x 12.8x 10.1x

Reinsurance Comparables Alleghany Corporation Y 8,012 9,030 31.3% -- 48.0% 88.1% -- 9.5% ------13.5x 12.0x Axis Capital Holdings Limited AXS 3,274 4,751 1.6% (1.8)% 42.1% 68.5% -- 6.3% 8.1% -- -- 1.0x 0.9x 8.5x 7.0x Everest Re Group, Ltd. RE 8,942 8,938 11.6% 8.2% 340.4% 6.6% -- 12.2% 11.0% -- -- 1.0x 0.9x 8.7x 8.2x Holdings Limited FFH 12,249 19,747 21.3% (6.2)% 239.8% 35.1% -- 9.3% (0.6)% -- -- 1.1x 0.9x 8.7x 5.1x RenaissanceRe Holdings Ltd. RNR 6,939 10,708 102.5% (5.2)% (11.1)% 71.3% -- 17.8% 16.2% -- -- 2.7x 2.5x 11.0x 9.9x Mean $6,569 $15,442 29.4% 0.6% 112.4% 47.4% 14.9% 11.0% 9.5% 15.0x 4.6x 2.1x 6.6x 11.6x 7.7x Median 7,475 9,869 16.4% (1.8)% 45.1% 51.8% 14.9% 10.3% 11.0% 15.0 4.6x 1.1x 0.9x 9.8x 7.6x

Berkshire Hathaway Energy (BHE) Comparables American Electric Power Company, Inc. AEP 42,744 72,988 (3.9)% 2.5% 1.7% 7.3% 35.2% 12.3% 13.3% 12.0x 11.1x 4.6x 4.4x 20.1x 18.6x Consolidated Edison, Inc. ED 29,911 51,425 1.9% 4.2% 1.2% 0.8% 35.4% 10.7% 11.2% 11.1x 10.5x 3.9x 3.8x 20.3x 19.6x , Inc. D 68,328 110,986 24.0% 5.8% 38.3% (22.3)% 33.7% 8.2% 20.7% 12.6x 12.2x 6.3x 6.1x 18.6x 17.6x Duke Energy Corporation DUK 66,136 131,936 2.3% 2.0% 7.6% 1.9% 44.6% 14.9% 14.8% 12.0x 11.4x 5.2x 5.0x 17.5x 16.5x Exelon Corporation EXC 37,438 78,173 (4.3)% (8.9)% (2.8)% (0.4)% 30.3% 8.5% 9.5% 8.6x 8.7x 2.5x 2.5x 12.5x 12.9x FirstEnergy Corp. FE 25,033 45,625 (2.0)% 2.8% 32.5% (2.8)% 34.1% 8.3% 11.8% 11.9x 11.3x 4.0x 3.9x 18.6x 17.5x The Southern Company SO 60,746 112,002 (8.8)% 2.6% (4.4)% 5.3% 53.1% 22.2% 14.9% 12.5x 11.8x 5.1x 5.0x 18.3x 17.4x Enterprise Products Partners, L.P. EPD 35,772 64,485 (10.3)% (1.8)% 11.7% (6.8)% 24.6% 14.0% 13.8% 8.2x 8.1x 2.0x 2.1x 8.1x 8.2x Kinder Morgan, Inc. KMI 33,861 67,587 (6.6)% (1.8)% 15.3% (4.3)% 56.1% 16.6% 16.2% 9.2x 9.2x 5.2x 5.1x 16.5x 16.5x ONEOK, Inc. OKE 12,159 24,887 (19.3)% 14.9% 10.7% 9.4% 23.6% 12.6% 12.1% 8.3x 7.9x 2.1x 1.9x 8.7x 8.2x Mean $37,466 $72,688 (1.7)% 2.7% 11.5% 0.3% 35.0% 12.7% 13.7% 11.0x 9.7x 4.1x 6.1x 16.2x 14.3x Median 35,772 67,587 (3.9)% 2.6% 10.7% 0.8% 34.1% 12.3% 13.3% 11.9 10.5x 4.6x 4.4x 18.3x 16.5x

BNSF Comparables Canadian National Railway Company CNR 79,882 94,115 4.2% (4.9)% 3.8% (15.2)% 49.1% 28.3% 26.6% 13.8x 12.4x 6.6x 6.1x 21.4x 17.9x Canadian Pacific Railway Limited CP 30,690 51,999 6.5% (0.3)% 13.3% (4.5)% 50.1% 31.3% 30.2% 13.5x 12.5x 6.7x 6.3x 18.8x 16.8x CSX Corporation CSX 48,378 63,227 (2.6)% (8.1)% 7.8% (8.8)% 53.6% 27.9% 25.8% 10.9x 10.2x 5.8x 5.5x 17.2x 14.8x Kansas City Southern KSU 13,242 16,776 6.3% (3.6)% 15.3% 1.9% 48.1% 18.8% 23.9% 11.8x 10.8x 6.1x 5.7x 20.3x 17.1x Norfolk Southern Corporation NSC 41,309 53,463 (1.4)% (10.3)% 12.2% (10.4)% 46.4% 24.1% 23.5% 11.1x 10.0x 5.3x 4.9x 17.7x 14.8x Union Pacific Corporation UNP 101,708 127,850 (4.9)% (8.1)% 4.9% (8.0)% 51.1% 27.3% 26.7% 12.5x 11.4x 6.4x 6.0x 19.4x 16.3x Mean $45,030 $63,844 2.3% (3.9)% 10.3% (4.3)% 44.7% 24.1% 24.2% 12.7x 10.3x 5.9x 8.9x 19.2x 14.5x Median 41,309 53,463 4.2% (4.9)% 12.2% (8.0)% 49.1% 27.3% 25.8% 12.5 10.8x 6.1x 6.0x 19.2x 16.3x

20 April 2020 15

The Owl Fund William C. Dunkelberg Student Managed Fund Enterprise Value / Market Enterprise Sales EPS EBITDA Margin Profit Margin EBITDA Sales Price / Earnings Ticker Cap Value LTM 2019E LTM 2019E LTM LTM 2019E LTM 2019E LTM 2019E LTM 2019E Manufacturing Comparables | Industrial Products Allegheny Technologies, Inc. ATI 1,008 2,097 1.9% (9.9)% (19.3)% (49.9)% 13.0% 6.2% 2.5% 5.4x 4.8x 0.6x 0.5x 13.0x 7.8x Curtiss-Wright Corporation CW 4,146 4,699 3.2% 0.8% 13.0% 0.7% 21.8% 12.4% 12.2% 9.0x 8.6x 1.9x 1.8x 13.7x 12.5x Eastman Chemical Company EMN 7,488 13,335 (8.6)% (11.3)% (8.2)% (20.5)% 19.5% 8.2% 10.2% 7.5x 7.1x 1.6x 1.5x 9.2x 7.8x Howmet Aerospace Inc. HWM 5,078 9,704 1.3% (61.2)% 117.6% (84.0)% 12.1% 3.3% 2.8% -- 6.9x 1.8x 1.5x 23.9x 11.4x Illinois Tool Works Inc. ITW 50,352 56,312 (4.5)% (15.8)% 0.1% (20.8)% 27.6% 17.9% 16.8% 17.6x 15.8x 4.7x 4.3x 26.6x 22.3x Kaiser Aluminum Corporation KALU 1,200 1,385 (4.5)% (1.9)% 60.1% (33.7)% 12.0% 4.1% 6.9% 6.5x 6.0x 0.9x 0.9x 12.0x 10.2x Mean $9,896 $18,144 (0.5)% (13.1)% 25.5% (27.6)% 17.3% 9.0% 9.2% 10.2x 7.7x 2.3x 5.5x 16.8x 10.8x Median 4,146 9,704 1.3% (9.9)% 13.0% (20.8)% 14.9% 8.2% 10.2% 8.2 6.9x 1.8x 1.5x 13.7x 10.2x Manufacturing Comparables | Building Products Carlisle Companies Incorporated CSL 6,920 8,244 7.4% (3.6)% 33.2% (13.3)% 18.3% 9.8% 9.0% 9.3x 8.6x 1.8x 1.7x 17.3x 15.1x Masonite International Corporation DOOR 1,174 1,941 0.3% (5.1)% (20.9)% (20.9)% 13.0% 2.0% (9.4)% 7.1x 6.1x 0.9x 0.9x 14.3x 10.4x Fortune Brands Home & Security, Inc. FBHS 6,510 8,481 5.1% (9.5)% 2.0% (17.1)% 15.7% 7.5% 7.6% 10.9x 9.3x 1.6x 1.5x 16.4x 12.9x Masco Corporation MAS 10,548 13,003 0.2% (7.2)% 6.8% (7.9)% 17.9% 13.9% 8.9% 11.8x 10.7x 2.1x 2.0x 19.1x 15.6x Owens Corning OC 4,331 7,396 1.5% (8.6)% (16.7)% (28.1)% 19.1% 5.7% 5.3% 6.9x 5.9x 1.1x 1.1x 12.2x 9.4x The Sherwin-Williams Company SHW 47,440 57,705 2.1% (1.4)% (1.1)% 14.5% 18.7% 8.6% 11.5% 18.0x 16.5x 3.3x 3.1x 24.2x 21.1x Mean $10,989 $19,464 3.5% (3.9)% 2.6% (8.3)% 16.8% 8.4% 6.5% 11.3x 8.8x 2.2x 5.4x 17.5x 12.6x Median 6,510 8,481 2.1% (5.1)% 2.0% (13.3)% 17.9% 8.6% 8.9% 10.9 8.6x 1.8x 1.7x 17.3x 12.9x Manufacturing Comparables | Consumer Products Carter's, Inc. CRI 3,320 4,525 1.6% (7.6)% 2.9% (31.0)% 18.4% 7.5% 6.5% 11.1x 9.5x 1.4x 1.3x 17.0x 12.2x Energizer Holdings, Inc. ENR 2,409 5,683 48.0% 6.4% (8.6)% (6.9)% 14.5% 2.0% 7.7% 9.7x 9.0x 2.1x 2.1x 12.3x 10.3x Gildan Activewear Inc. GIL 3,206 4,068 (2.9)% (19.7)% (24.2)% (16.4)% 15.8% 9.2% 8.9% 9.2x 7.6x 1.8x 1.5x 13.9x 9.8x Hanesbrands, Inc. HBI 3,296 6,864 2.4% (20.8)% 5.0% (54.0)% 14.7% 8.6% 5.2% 10.4x 7.4x 1.2x 1.1x 11.4x 6.2x Navistar International Corporation NAV 1,901 3,849 (1.1)% (32.9)% 26.6% -- 7.4% 2.0% (0.2)% 10.5x 6.5x 0.5x 0.4x -- 15.4x Simpson Manufacturing Co., Inc. SSD 2,813 2,619 5.4% (9.3)% 7.1% (24.6)% 20.1% 11.8% 9.8% 15.1x 13.1x 2.5x 2.4x 29.2x 23.7x Mean $2,421 $9,584 8.8% (10.9)% 3.4% (19.7)% 15.1% 7.5% 7.2% 11.6x 8.2x 2.0x 5.2x 17.2x 11.6x Median 2,813 4,525 2.4% (9.3)% 5.0% (20.5)% 14.9% 8.6% 7.7% 10.5 7.6x 1.8x 1.5x 15.4x 10.3x McLane Company Comparables Sysco Corporation SYY 25,583 34,645 1.4% (13.3)% 13.3% (16.7)% 5.5% 2.8% 2.3% 11.6x 10.0x 0.7x 0.6x 17.0x 15.1x US Foods Holding Corp. USFD 3,806 8,845 7.3% (6.6)% (3.5)% (33.9)% 4.2% 1.5% 0.7% 8.8x 6.8x 0.4x 0.3x 13.0x 7.0x Performance Food Group Company PFGC 3,045 6,068 26.5% 21.7% 4.4% (52.3)% 2.3% 0.8% 0.4% 12.4x 8.8x 0.3x 0.2x 28.0x 13.2x Fresh Del Monte Produce Inc. FDP 1,542 2,311 (0.1)% 3.1% 109.4% 78.1% 6.8% 1.5% 2.2% 9.8x 9.1x 0.5x 0.5x 16.0x 13.6x Core-Mark Holding Company, Inc. CORE 1,261 1,874 1.7% 0.5% 21.5% 8.0% 1.2% 0.3% 0.4% 10.0x 9.3x 0.1x 0.1x 19.9x 15.2x Mean $5,873 $15,536 7.4% 2.2% 26.7% (0.3)% 5.8% 3.0% 3.1% 11.3x 8.1x 1.1x 4.9x 18.8x 11.3x Median 2,293 7,456 4.5% 1.8% 14.1% (4.4)% 4.8% 1.5% 1.5% 10.8 8.9x 0.4x 0.4x 18.1x 13.4x Service & Retailing Comparables Arrow Electronics, Inc. ARW 4,350 7,383 (2.6)% (11.2)% (14.3)% (19.5)% 1.2% (0.7)% 1.4% 7.3x 6.7x 0.3x 0.3x 9.3x 7.6x Asbury Automotive Group, Inc. ABG 1,120 2,917 4.9% (13.6)% 12.3% (38.7)% 5.3% 2.6% 2.1% 11.5x 9.8x 0.5x 0.4x 10.0x 7.7x CAE, Inc. CAE 4,149 8,206 22.1% 10.7% (2.7)% (3.4)% 22.3% 10.0% 9.2% 9.5x 12.4x 2.2x 2.6x 17.2x 35.2x Jack in the Box Inc. JACK 1,276 3,460 11.7% (3.2)% (7.3)% (25.8)% 34.1% 9.9% 6.7% 15.9x 13.7x 3.8x 3.5x 20.4x 14.1x La-Z-Boy Incorporated LZB 963 1,101 4.6% 0.1% 24.1% (6.3)% 12.8% 3.9% 5.8% 6.9x 19.9x 0.6x 0.7x 10.5x 21.6x Herman Miller, Inc. MLHR 1,192 1,671 6.7% (0.6)% 29.7% 13.2% 12.8% 6.3% 7.1% 5.4x 5.9x 0.7x 0.7x 6.3x 7.2x Penske Automotive Group, Inc. PAG 2,622 7,598 1.7% (9.8)% (3.9)% (42.5)% 4.2% 1.9% 1.1% 14.7x 10.1x 0.4x 0.3x 11.0x 6.7x The Wendy's Company WEN 4,096 7,509 7.5% (5.2)% (1.4)% (33.9)% 28.0% 8.0% 5.9% 20.3x 17.5x 4.6x 4.3x 47.1x 29.1x Mean $2,196 $8,813 7.2% (2.8)% 5.7% (15.8)% 15.1% 5.9% 5.8% 11.8x 11.2x 2.0x 4.5x 16.8x 14.8x Median 1,276 7,383 6.7% (3.2)% (1.4)% (19.5)% 12.8% 6.3% 5.9% 11.5 10.1x 0.7x 0.7x 11.0x 7.7x 20 April 2020 16

The Owl Fund William C. Dunkelberg Student Managed Fund

Company General Statistics Returns Analysis 2019A Leverage Analysis 2019A Coverage Analysis Liquidity Profile Credit Profile Total Debt / Dividend EBITDA / (EBITDA - EBIT / Quick Current Ticker Tax Rate Beta Yield ROIC ROE ROA Cap EBITDA Equity Int. Exp. Capex)/Int. Int. Exp. Ratio Ratio Moody's S&P Berkshire Hathaway, Inc. BRK.A 2035.5% 0.85 -- 15.2% 21.1% 10.7% 20.3x 0.9x 25.5x 29.5x 25.5x 26.6x 1.9x 1.9x Aa2 AA

Primary Insurance Comparables Chubb Limited CB 15.1% 1.00 2.5% 4.0% 8.4% 2.6% 0.2x -- 0.3x ------A Erie Indemnity Company ERIE 20.1% 0.32 2.2% 24.4% 30.1% 16.7% 0.1x -- 0.1x ------1.43 1.52 -- -- The Allstate Corporation ALL 20.4% 1.14 2.1% 5.3% 21.8% 4.2% 0.2x -- 0.3x ------A3 A- The Progressive Corporation PGR 22.9% 0.83 0.5% 15.1% 27.4% 6.8% 0.2x -- 0.3x ------A2 A The Travelers Companies, Inc. TRV 16.4% 1.03 3.1% 4.9% 10.7% 2.4% 0.2x -- 0.3x ------A2 A Mean 19.0% 0.86 2.1% 10.7% 19.7% 6.5% 0.2x -- 0.3x ------1.4x 1.5x Median 20.1% 1.00 2.2% 5.3% 21.8% 4.2% 0.2x -- 0.3x ------1.4x 1.5x

Reinsurance Comparables Alleghany Corporation Y 20.8% 1.10 -- 3.8% 10.4% 3.3% 0.2x -- 0.2x ------Baa1 BBB+ Axis Capital Holdings Limited AXS 7.0% 0.86 4.2% 3.6% 6.3% 1.3% 0.3x -- 0.4x ------Baa1 A- Everest Re Group, Ltd. RE 8.1% 0.87 3.2% 7.9% 11.9% 3.9% 0.1x -- 0.1x ------A- Fairfax Financial Holdings Limited FFH 11.7% -- -- 4.6% 15.8% 3.0% 0.3x -- 0.4x ------Baa3 BBB- RenaissanceRe Holdings Ltd. RNR 1.8% 0.97 0.9% 10.0% 14.6% 3.3% 0.1x -- 0.2x ------A3 A- Mean 9.9% 0.95 2.8% 6.0% 11.8% 3.0% 0.2x -- 0.2x ------Median 8.1% 0.92 3.2% 4.6% 11.9% 3.3% 0.2x -- 0.2x ------

Berkshire Hathaway Energy (BHE) Comparables American Electric Power Company, Inc. AEP -- 0.98 3.2% 5.2% 9.9% 2.7% 0.6x 5.6x 1.5x 4.5x (0.5x) 2.1x 0.23 0.40 Baa1 A- Consolidated Edison, Inc. ED 17.1% 0.79 3.4% 5.2% 7.7% 2.4% 0.6x 5.1x 1.2x 4.4x 0.6x 2.6x 0.49 0.68 Baa2 A- Dominion Energy, Inc. D 20.3% 0.84 4.6% 2.7% 5.5% 1.5% 0.5x 6.9x 1.1x 3.1x 0.1x 1.4x 0.25 0.61 Baa2 BBB+ Duke Energy Corporation DUK 12.7% 0.98 4.2% 4.4% 8.4% 2.5% 0.6x 5.6x 1.3x 5.1x 0.0x 2.6x 0.09 0.62 Baa1 A- Exelon Corporation EXC 19.4% 1.02 4.0% 4.5% 9.3% 2.4% 0.5x 3.8x 1.1x 6.4x 1.9x 2.7x 0.50 0.85 Baa2 BBB+ FirstEnergy Corp. FE 19.1% 0.97 3.4% 8.5% 13.2% 2.2% 0.8x 5.7x 3.0x 3.4x 1.0x 2.3x 0.41 0.50 Baa3 BBB The Southern Company SO 27.5% 1.03 4.3% 5.9% 18.1% 4.0% 0.6x 4.3x 1.5x 6.3x 1.9x 4.3x 0.40 0.78 Baa2 A- Enterprise Products Partners, L.P. EPD 1.0% 0.85 10.9% 11.5% 18.9% 7.7% 0.5x 3.5x 1.1x 5.8x 2.6x 4.4x 0.57 0.86 -- BBB+ Kinder Morgan, Inc. KMI 29.3% 1.09 6.7% 4.9% 6.5% 2.9% 0.5x 4.5x 1.0x 4.1x 2.8x 2.7x 0.49 0.63 Baa2 BBB ONEOK, Inc. OKE 22.6% 1.49 12.7% 8.5% 20.0% 6.4% 0.7x 5.3x 2.0x 4.0x (2.4x) 3.2x 0.42 0.73 Baa3 BBB Mean 18.8% 1.00 5.7% 6.1% 11.7% 3.5% 0.6x 5.0x 1.5x 4.7x 0.8x 2.8x 0.4x 0.7x Median 19.4% 0.98 4.3% 5.2% 9.6% 2.6% 0.6x 5.2x 1.3x 4.4x 0.8x 2.6x 0.4x 0.7x

BNSF Comparables Canadian National Railway Company CNR -- 2.06 -- 4.4% (2.5)% (0.5)% 0.8x 5.7x 3.7x 2.5x 2.0x 0.9x 0.92 1.80 B2 B+ *- Canadian Pacific Railway Limited CP 22.4% 0.93 1.1% 10.3% 35.6% 11.2% 0.6x 2.3x 1.3x 8.3x 4.8x 6.6x 0.41 0.53 -- BBB+ CSX Corporation CSX 22.8% 1.05 1.7% 12.0% 27.3% 8.9% 0.6x 2.6x 1.4x 8.7x 6.4x 6.7x 1.37 1.52 Baa1 BBB+ Kansas City Southern KSU 31.4% 1.07 1.1% 8.9% 12.7% 6.1% 0.4x 2.3x 0.7x 11.1x 5.7x 7.6x 0.86 1.48 Baa2 BBB Norfolk Southern Corporation NSC 22.0% 1.10 2.3% 11.2% 17.8% 7.3% 0.5x 2.4x 0.8x 8.5x 5.2x 6.4x 0.65 0.90 Baa1 BBB+ Union Pacific Corporation UNP 23.6% 1.05 2.6% 11.5% 30.7% 9.8% 0.6x 2.4x 1.5x 10.6x 7.3x 8.1x 0.57 0.79 Baa1 A- Mean 24.5% 1.21 1.8% 9.7% 20.3% 7.1% 0.6x 3.0x 1.6x 8.3x 5.2x 6.1x 0.8x 1.2x Median 22.8% 1.06 1.7% 10.8% 22.5% 8.1% 0.6x 2.4x 1.4x 8.6x 5.5x 6.7x 0.8x 1.2x

20 April 2020 17

The Owl Fund William C. Dunkelberg Student Managed Fund Total Debt / Dividend EBITDA / (EBITDA - EBIT / Quick Current Ticker Tax Rate Beta Yield ROIC ROE ROA Cap EBITDA Equity Int. Exp. Capex)/Int. Int. Exp. Ratio Ratio Moody's S&P

Manufacturing Comparables | Industrial Products Allegheny Technologies, Inc. ATI -- 1.80 -- 11.7% 13.0% 4.6% 0.4x 2.7x 0.7x 4.9x 3.4x 3.3x 1.23 2.71 B1 B Curtiss-Wright Corporation CW 22.4% 1.29 0.7% 11.3% 18.6% 8.8% 0.3x 1.7x 0.5x 17.3x 15.1x 12.9x 1.08 2.05 -- -- Eastman Chemical Company EMN 15.5% 1.31 4.8% 7.2% 12.9% 4.7% 0.5x 3.3x 1.0x 8.0x 6.1x 5.0x 0.66 1.86 Baa3 BBB- Howmet Aerospace Inc. HWM 18.3% 1.39 -- 7.8% 9.4% 2.6% 0.6x 3.6x 1.3x 4.6x 3.0x 2.8x 0.63 1.42 -- BBB- Illinois Tool Works Inc. ITW 23.3% 1.06 2.7% 23.5% 80.3% 16.8% 0.7x 2.0x 2.6x 17.6x 16.2x 15.4x 2.06 2.90 A2 A+ Kaiser Aluminum Corporation KALU 22.9% 1.33 3.5% 8.2% 8.4% 4.2% 0.4x 2.9x 0.7x 7.0x 4.7x 4.8x 2.99 4.58 Ba2 BB+ Mean 20.5% 1.36 2.9% 11.6% 23.8% 7.0% 0.5x 2.7x 1.1x 9.9x 8.1x 7.4x 1.4x 2.6x Median 22.4% 1.32 3.1% 9.8% 12.9% 4.7% 0.5x 2.8x 0.9x 7.5x 5.4x 4.9x 1.2x 2.4x

Manufacturing Comparables | Building Products Carlisle Companies Incorporated CSL 20.4% 1.07 1.6% 11.6% 18.0% 8.8% 0.4x 1.9x 0.6x 13.4x 12.1x 9.9x 1.26 1.95 Baa2 BBB Masonite International Corporation DOOR 26.1% 1.46 -- 6.2% 7.2% 2.4% 0.6x 3.2x 1.4x 5.8x 4.0x 2.8x 1.66 2.74 Ba2 BB+ Fortune Brands Home & Security, Inc. FBHS 25.0% 1.53 2.1% 11.5% 18.8% 7.0% 0.5x 2.6x 1.0x 9.6x 8.2x 7.4x 0.72 1.35 Baa3 BBB+ Masco Corporation MAS 25.2% 1.25 1.4% 29.2% -- 17.9% 1.0x 2.1x -- 8.2x 7.1x 6.8x 1.09 1.75 Baa3 BBB Owens Corning OC 31.5% 1.34 2.4% 7.2% 9.1% 4.1% 0.4x 2.3x 0.7x ------0.71 1.55 Baa3 BBB The Sherwin-Williams Company SHW 22.2% 1.11 1.0% 12.5% 39.2% 7.8% 0.7x 3.1x 2.5x 9.6x 8.6x 6.6x 0.50 1.02 Baa3 BBB Mean 25.1% 1.29 1.7% 13.0% 18.5% 8.0% 0.6x 2.6x 1.3x 9.3x 8.0x 6.7x 1.0x 1.7x Median 25.1% 1.29 1.6% 11.5% 18.0% 7.4% 0.5x 2.5x 1.0x 9.6x 8.2x 6.8x 0.9x 1.7x

Manufacturing Comparables | Consumer Products Carter's, Inc. CRI 19.6% 1.08 3.2% 15.0% 29.9% 11.0% 0.6x 2.2x 1.6x 17.2x 15.6x 9.9x 0.93 2.33 -- BB+ Energizer Holdings, Inc. ENR 11.5% 1.18 3.5% 7.9% 3.2% 0.5% 0.9x 9.2x 6.5x 1.7x 1.5x 1.3x 0.56 1.91 B1 BB- Gildan Activewear Inc. GIL -- 1.50 3.8% 11.0% 13.8% 8.4% 0.3x 2.1x 0.5x 10.8x 7.7x 7.0x 0.91 3.58 -- -- Hanesbrands, Inc. HBI 11.6% 1.04 6.5% 16.1% 57.5% 8.3% 0.8x 3.8x 3.2x ------0.65 1.82 Ba1 BB Navistar International Corporation NAV 7.3% 1.36 -- 42.4% -- 2.6% 3.5x 6.1x -- 3.0x 2.0x 2.3x 1.02 1.39 B2 B *- Simpson Manufacturing Co., Inc. SSD 24.9% 1.11 1.5% 15.2% 15.3% 12.7% 0.0x 0.2x 0.0x 105.4x 90.3x 83.5x 2.33 4.03 -- -- Mean 15.0% 1.21 3.7% 17.9% 23.9% 7.2% 1.0x 3.9x 2.4x 27.6x 23.4x 20.8x 1.1x 2.5x Median 11.6% 1.14 3.5% 15.1% 15.3% 8.3% 0.7x 3.0x 1.6x 10.8x 7.7x 7.0x 0.9x 2.1x

McLane Company Comparables Sysco Corporation SYY 16.5% 1.47 3.6% 17.4% 77.2% 9.7% 0.8x 2.8x 3.2x 8.6x 6.7x 6.5x 0.77 1.33 Baa1 BBB- US Foods Holding Corp. USFD 24.7% 1.64 -- 6.5% 11.1% 3.8% 0.6x 4.7x 1.4x ------0.65 1.38 -- -- Performance Food Group Company PFGC 23.6% 1.85 -- 6.2% 13.4% 3.4% 0.5x 5.2x 1.2x 6.7x 4.6x 4.3x 0.73 1.57 -- -- Fresh Del Monte Produce Inc. FDP 23.6% 0.43 1.2% 3.3% 3.9% 2.0% 0.3x 2.4x 0.4x 12.0x 7.2x 4.5x 0.71 1.87 -- -- Core-Mark Holding Company, Inc. CORE 25.5% 0.73 1.7% 4.9% 10.0% 3.2% 0.5x 3.0x 1.1x 14.3x 12.7x 6.4x 0.61 1.89 -- -- Mean 22.8% 1.22 2.2% 7.6% 23.1% 4.4% 0.5x 3.6x 1.5x 10.4x 7.8x 5.4x 0.7x 1.6x Median 23.6% 1.47 1.7% 6.2% 11.1% 3.4% 0.5x 3.0x 1.2x 10.3x 6.9x 5.5x 0.7x 1.6x

Service & Retailing Comparables Arrow Electronics, Inc. ARW -- 1.14 -- (0.9)% (4.0)% (1.2)% 0.4x 9.4x 0.7x 2.0x 1.3x 0.5x 1.06 1.52 Baa3 BBB- Asbury Automotive Group, Inc. ABG 24.4% 1.28 -- 10.3% 32.9% 6.6% 0.7x 4.7x 2.8x 4.1x 3.4x 3.5x 0.11 1.29 Ba2 BB+ CAE, Inc. CAE 14.9% 1.35 -- 9.9% 15.3% 5.2% 0.5x 3.2x 1.0x 9.2x 3.2x 6.3x 0.43 1.12 -- -- Jack in the Box Inc. JACK 20.8% 1.70 2.8% 21.7% -- 5.4% 2.4x 4.4x -- 3.0x 2.5x 2.4x 1.01 1.44 -- -- La-Z-Boy Incorporated LZB 26.4% 1.34 2.7% 14.4% 11.2% 6.1% 0.0x 1.3x 0.0x 104.3x 72.9x 84.1x 1.23 2.27 -- -- Herman Miller, Inc. MLHR 20.3% 1.33 -- 15.6% 27.2% 12.0% 0.3x 1.5x 0.4x 22.8x 15.7x 16.8x 0.94 1.48 -- -- Penske Automotive Group, Inc. PAG 26.5% 1.61 5.2% 4.7% 16.1% 3.5% 0.8x 8.9x 3.1x 4.7x 3.5x 3.1x 0.18 0.98 Ba1 BB The Wendy's Company WEN 20.1% 1.45 2.6% 5.3% 23.5% 2.9% 0.9x 7.8x 7.2x 3.3x 2.8x 1.8x 1.19 1.58 B3 B Mean 21.9% 1.40 3.3% 10.1% 17.5% 5.1% 0.7x 5.1x 2.2x 19.2x 13.2x 14.8x 0.8x 1.5x Median 20.8% 1.35 2.8% 10.1% 16.1% 5.3% 0.6x 4.5x 1.0x 4.4x 3.3x 3.3x 1.0x 1.5x

20 April 2020 18

The Owl Fund William C. Dunkelberg Student Managed Fund

ECONOMIC MOATS & RISKS TO THE INVESTMENT THESIS Risks to the Investment Thesis • Life after The Oracle: Much to the chagrin of BRK shareholders and capitalists around the globe, the firm will eventually need to face a post-Buffett world. Buffett, now 89 years old, has called the shots for BRK’s acquisitions and other investments for nearly five decades, with his stellar performance helping make him one of the greatest investors of all time. Although we think a CEO succession would result in near-term underperformance, nothing will change in BRK’s portfolio of best-in-class companies, hand-picked by Buffett. Additionally, Buffett has been giving more equity selection power in the insurance investment portfolio to Todd Combs and Ted Weschler, who are likely to take over those operations. For the CEO role, Ajit Jain ( of BHRG) and Greg Abel (heads utilities business) are the two most likely candidates, and both have extensive experience with the firm. We would also like to point out that while Buffett makes all investment decisions, he is very hands-off in managing BRK’s operating activities. While we think Buffett is irreplaceable, his departure will not mark the end of the empire he’s built. • Economic Sensitive Portfolio: Although we believe economic disruption creates opportunities for BRK to put its cash to use, it may wreak havoc on the businesses it already owns. BRK’s portfolio today has drastically changed from the last time the U.S. entered recession. After buying BNSF in Nov’09 and Precision Castparts in Aug’15, BRK’s more cyclical (non-insurance & utilities) segments now make up ~70.0% of total earnings, up from ~30.0% in CY’10. Precision Castparts, which makes components for ’s issue-riddled 737 MAX, has been forced to lay off workers and close facilities on the West Coast, while BNSF has already seen intermodal volumes start to dwindle. On top of the pain to operating businesses, weakness in equity markets will likely create massive unrealized losses in BRK’s insurance investment portfolio, which will crimp the firm’s earnings. We maintain the belief that Buffett is in this for the long run; none of his operating companies will face insolvency risks thanks to the firm’s stellar balance sheet, so as long as we think this won’t eliminate the U.S. economy, we should be comfortable holding this name in any environment. • Nobody’s Perfect: Unfortunately, everything Buffett touches does not turn to gold. While we do find solace in his legendary track record of finding best-in-class companies to invest in or acquire, we recognize deals won’t always end up picture-perfect. In one example, Buffett purchased Dexter Shoe Co. in CY’93 for $433.0M by issuing BRK stock, and after heavy competition zapped its demand, shareholders ended up missing out on $5.7B (what the shares issued were worth in CY’14). In CY’07 Buffett dubbed Dexter “the worst deal that I’ve made,” and warned that “I’ll make more mistakes in the future — you can bet on that.” Economic Moats • Out-Investing its P&C Peers: In order to ensure ample cash on hand to cover unexpected future claims, most P&C insurers invest ~10.0% of their underwritten premium funds in equity securities, and instead focus on fixed income investments that bring stability to future cash flows (Exhibit II). At BRK, however, Buffett throws these norms out the window, and instead chooses to pump 73.6% of the insurance investment portfolio into his favorite equities, Historically, equity holdings can power the firm’s bottom-line via unrealized gains, but how can BRK take on the additional risk? How about its extensive capital base, including the combination of its $129.0B float with other shareholder capital, That’s not to say BRK misses the boat regarding fixed investment interest income, which made up a respectable 15.1% of earned premiums in FY’19. • Impenetrable Balance Sheet: Outside being able to utilize its float, a liability that acts as a “costless and long-enduring” source of funding, the rest of BRK’s balance sheet is well-positioned to survive long after an economic downturn. $128.0B in cash – well above Buffett’s $20.0B minimum – will allow the firm to act quickly when acquisition/investment opportunities present themselves, An all-cash acquisition would prove immediately accretive to EPS. Additionally, Buffett has vowed to “use debt sparingly,” and primarily issues debt to fund railroad and energy capex, though BRK does not guarantee any borrowings in these segments.

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The Owl Fund William C. Dunkelberg Student Managed Fund

VALUATION ANALYSIS Some-of-the-Parts (SOTP) Assumptions Given the extreme diversity of Berkshire’s business, there is no one “true” target multiple that encompasses all the firm’s operational crevices. We decided to venture into each of BRK’s segments, locate its operational peers, pinpoint where they trade relative to historic earnings, and apply those target multiples to the EPS of BRK’s respective segments. We believe in the resilience of the portfolio due to its bias toward long-term strength, even with recent trends toward U.S. economic exposure. In the base case, we assumed valuations fall in-line with peers’ three-year average for each respective segment.

Segment FY'19 Segment EPS Historic Peer Averages Implied Equity Value Insurance $2.86 26.2x $75.12 Berkshire Hathaway Energy 2.96 18.6x 55.11 Burlington Northern Santa Fe 1.07 19.1x 20.45 McLane Company 0.12 24.0x 2.82 Manufacturing 3.89 18.1x 70.38 Service & Retailing 1.04 16.2x 16.88 Implied Equity Value $11.93 $240.75 % Return 25.9% SCENARIO ANALYSIS Bear Case Assumptions: Our Bear Case or Downside Scenario derives a price target of $171.00/share, representing a (10.6%) return from BRK.B’ closing price on Friday, April 17th

• Insurance premium growth is slower than expected and loss ratios expand once stay-at-home orders are lifted • Equity valuations remain significantly below Feb’20 highs, decreasing the investments’ FV, and book value • BNSF sees a slow recovery emerging into a post-coronavirus world, alongside lower-than-expected volume • McLane realizes lower revenues due to decreased in-store activity in its end markets, namely 7-Eleven • Manufacturing, Service, and Retailing experience significant adverse headwinds associated with coronavirus • No large acquisitions are made in the ST while equity valuations are low, investors become discouraged with lack of capital deployment • We derived the Bear Case PT by applying BRK’s mid-CY’08 P/E multiple equally across its segments Bull Case Assumptions: Our Bull Case or Upside Scenario derives a price target of $258.00/share, representing a +34.9% return from BRK.B’ closing price on Friday, April 17th

• GEICO’s loss ratio continues to outperform the industry, and its direct marketing strategy continues to drive premium growth • Primary Insurance Group sees decreased commercial and worker’s compensation claims due to business slowdown, Reinsurance sees influx of retroactive reinsurance due to weakening balance sheets • Equity valuations rebound and the book value of BRK and its unrealized gains expands significantly • BNSF sees a quick recovery, and continues to capture a large portion of intermodal transportation market • BRK deploys its large cash balance for a significant acquisition while valuations are low, effectively capitalizing on compressed valuations across the entire market • Manufacturing, Service and Retailing rebound from coronavirus-related slowdown, and replicate Crisis resilience • McLane diversifies its end markets and displays logistical effectiveness through this coronavirus pandemic

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The Owl Fund William C. Dunkelberg Student Managed Fund

FINANCIAL ANALYSIS Revenue Insurance Revenue : came out to $67.7B in FY’19 Diversification Driving that Top-Line (+6.4% YoY), as underwriting growth in each of its subsidiaries supplemented strong returns in its $300B 15.0% investment portfolio. $250B 12.0% $200B 9.0% • Underwriting revenues at GEICO reached $150B 6.0% $35.6B (+6.6% YoY), driven by an influx of $100B 3.0% voluntary auto policies (+1.1M policies in $50B force over FY’19). GEICO also noted it saw a -- -- 2016A 2017A 2018A 2019A 2020E 2021E drop in policies not renewed, which helped offset lower premiums per auto policy. The Revenue Growth (YoY) investment portfolio realized a 23.9% spike in dividend income, in which management points to its higher levels of equity exposure, notably the ~$10.0B Aug’19 investment in Corp. As of FY’19, 73.6% of this portfolio belonged to equities, with the remainder going to cash (including U.S. T-Bills) and other fixed maturity investments. Burlington Northern Santa Fe Revenue: totaled $23.5B in FY’19 as the railroad endured a 4.5% decline in volumes (10.2M cars vs. 10.7M in FY’18). The segment did manage to drive revenues/cars +3.6% thanks to higher rates per car. Management also called out weather-related events, including flooding and winter weather, that negatively impacted revenues. • Consumer product revenues fell just 0.5%, as stronger revenues per car offset a 4.6% slump in volumes, which the firm blamed on muted imports in the West Coast (U.S. and Chinese trade war). $6.1B in industrial products marked a 1.7% YoY increase, as the sub-segment flexed its rates to drive revenues per car, which helped offset a 3.0% decline in volumes. The firm blamed the lackluster volume on muted sand volumes, weather-related disruptions, and general weakness in the broader industrials sector. Agriculture products saw revenues tumbled 0.3% YoY to $4.7B, as the trade war and weather concerns combined to push volume down 5.1%. Coal experienced the most extreme deterioration with a 7.4% YoY slump to $3.7, due to turbulent weather and low natural gas prices contributing to 5.3% lower volumes. BHE Revenue: advanced just 0.6% YoY to $20.1B, as a 6.1% increase in Real Estate revenues offset a 1.3% decline in the collective energy businesses’ top-lines. Among the utilities, lower average rates at PacifiCorp crimped retail revenues, while retail customer volumes fell 1.4% at both MidAmerican Energy Company and NV Energy. • Back in FY’09 Berkshire only had energy exposure through MidAmerican’s utility, pipeline, and electric distribution operations, and revenues tumbled 18.1%. Now that more of Berkshire’s energy unit is made up of regulated utilities, we think its top-line will act more defensive in a recessionary environment. Manufacturing, Service and Retailing Revenue: grew 1.3% in FY’19 to $142.7B. Beginning with manufacturing, industrial Products revenues shrank by 0.3%, as lower volumes and FX headwinds pushed Lubrizol’s revenue down 5.2%. Building Products revenues jumped 8.8%, thanks to 26.0% home sales growth at Clayton Homes, while Consumer Products sales fell 5.7%, mainly due to weak unit sales. • Services revenues rose 1.2% YoY, driven by its NetJets and FlightSafety aviation services more than offset media woes. Retailing saw revenues increase 2.5% namely due to an 11.5% jump in pre-owned auto sales, which helped offset a 1.3% slump in home furnishings. • McLane Company saw revenues rise 0.9%, as a 3.0% increase in foodservice offset a 3.0% hit to grocery sales. Given the necessity of McLane’s services, and after its strong growth rates over the Financial Crisis, we think McLane is well-positioned to navigate the incoming recession.

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The Owl Fund William C. Dunkelberg Student Managed Fund

Earnings • BRK’s last earnings fell on analysts estimate Resiliency is Key with a surprise rate of (24.8%) primarily driven by higher losses in insurance from $12.00 80.0% catastrophes, warmer-than-average weather $10.00 60.0% hammering the utilities business, and U.S.- $8.00 40.0% China trade tensions and global economic $6.00 20.0% slowdown affecting manufacturing earnings. $4.00 -- Yet, the quarter was a 10.9% increase YoY. $2.00 (20.0%) -- (40.0%) • In FY’19, the insurance business after-tax 2017A 2018A 2019A 2020E 2021E 2022E earnings from underwriting was $325.0M compared to $1.6B YoY which declined due to Adj. EPS Growth (%) significant catastrophic events of ~$800.0M in CY’19. However, earnings from insurance investments increased in FY’18-19 by 17.2% and 21.4% YoY, respectively reflecting an increase in interest and dividend income. • The railroad segment saw earnings increase 5.0% in FY’19 YoY driven by higher rates and cost cutting initiatives offset by a severe winter and flooding which lowered earnings growth compared to FY’18. Moving forward, we expect railroad earnings to rebound for the cost control and rail utilization initiatives. • Earnings from utilities and energy increased in FY’19 by 8.4% YoY from all businesses. The majority of BHE customers are residential but we expect earnings in FY’20 to be slightly impacted from lower demand driven by businesses shut down. Analysts call for a 1.2% pre-tax earnings growth in FY’20 and 7.8% in FY’21. • Manufacturing, Service, and Retailing is the largest segments by earnings totaling $9.4B in FY’19 and were essentially unchanged YoY. Operating results were mixed primarily due to strong U.S dollar and trade tariffs. Sell-side estimate a 10.2% pre-tax earnings growth in FY’20, 7.4% in FY’21, and 6.6% in FY’22. Cash Flow/Share Repurchases • BRK has a history of strong FCF generation, Strong Cash Flow, Strong Investments accumulating $22.7B and $22.9B in FY’19 and FY’18, respectively. The conglomerate $50B 80.0% was historically reluctant to repurchase its $40B 60.0% 40.0% shares unless it saw no other, better, use of its $30B cash flow, and if it could ensure ample liquidity 20.0% $20B after marking the purchase. -- $10B (20.0%) • Recently, BRK has shifted towards a stronger -- (40.0%) willingness to repurchase its shares, with 2017A 2018A 2019A 2020E 2021E $2.2B repurchased in 4Q’19, the highest level for a quarter in the firm’s history. We expect FCF Growth (%) this rhetoric to shift given the compression of valuations across the broad equity market, introducing more attractive investment opportunities to management than buying out its shareholders. • Due its many capital-intensive businesses, think BNSF, BRK has significant CapEx, totaling $16.0B in FY’19, up 9.9% from $14.5B in FY’18. We expect CapEx to decline in the coming years due to lower expected demand in its more capital-intensive segments, namely BHE and BNSF. Overall, BRK has strong FCF generation and its ability to generate cash allows for greater liquidity in making investments, which should especially prove valuable in this economic environment.

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The Owl Fund William C. Dunkelberg Student Managed Fund

Margins • BRK has a sound record of improving margins across all its businesses. Margins contraction Balanced Portfolio, Steady Margins in FY’18 reflect the beginning of accounting 20.0% changes in including investments gains/losses 15.0% including the fair value of equity securities during the period. FY’17 margins include a 10.0% one-time tax benefit of $29.1B, which 5.0% amplified the FY’18 YoY margin change. -- • Moving forward, we expect margins overall to 2017A 2018A 2019A 2020E 2021E 2022E remain steady driven primarily by cost cutting and higher utilization in the railroad business, EBITDA Profit pricing power in manufacturing and insurance offset by a slowdown in insurance underwriting and lower demand on commercial utilities. Debt • As of FY’19, BRK’s total debt was $109.3B, up from $97.5B YoY. Strong Track Record of Debt Repayments $12B • The parent company’s debt outstanding $10B increased by $3.0B in FY’19 YoY and the $8B company repaid maturing senior notes of $6B $750.0M. $4B

Debt ($ in M) in ($ Debt $2B • Both the railroad and energy segments are -- capital intensive and require significant amounts of capex. BNSF debt in FY’19 was unchanged, but the company repaid $750.0M Amount Available Corporates Loans Municipals of maturing debt and issued $825M senior unsecured debt. BHE debt increased in FY’19 by $3.30B YoY and repaid $1.80B of its maturing term debt. • BRK has been improving its solid liquidity ratios over the past years. In FY’19, Debt/Equity dropped to 25.5x from 27.7x in FY’18. Debt/Capital has also declined from 21.7x to 20.3x over the same period. - Moody’s: Aa2; S&P: AA; Fitch: AA- Float Float-ing Upwards • As of FY’19 end, BRK has $129.0B in float, up $150B 30.0% 4.9% YoY, following a 7.9% increase in FY’18. The primary driver for float over the past five $120B 20.0% years has been internal, as opposed to $90B acquisition-based growth. $60B 10.0% • The spike in FY’17 was due in large part to the $30B $10.0B retroactive reinsurance deal with AIG, -- -- which, due to the long-term nature of the deal, 2015A 2016A 2017A 2018A 2019A contributed almost entirely to the total float. Float Growth (%) • BRK’s annual cost of float, a measure of the amount of float paid out to residual claims, has been 3.0% since FY’17, primarily due to catastrophe-based claims and net underwriting gains. Its float is expected to grow due to a high likelihood of increased retroactive reinsurance deals and overall expansion in its BHRG segment and the firm’s best-in-class balance sheet. 20 April 2020 23

The Owl Fund William C. Dunkelberg Student Managed Fund

APPENDIX Exhibit I: BRK Investment Portfolio Equity Holdings (as of its 13F for the period ended 12/31/19) (1/2):

Company Ticker # of Shares Price/Share Investment Value % Stake Group Inc AAL 42.5M $11.56 $491.3M 10.00% Apple Inc. AAPL 245.2M $273.25 $66,988.8M 5.60% .com, Inc. AMZN .5M $2,168.87 $1,165.3M 0.10% Company AXP 151.6M $90.33 $13,695.0M 18.80% Axalta Coating Systems Ltd AXTA 24.3M $18.19 $441.4M 10.30% Bank of America Corp BAC 925.0M $23.92 $22,126.2M 10.60% Inc BIIB .6M $322.94 $209.4M 0.40% Bank of Mellon Corp BK 88.1M $36.00 $3,172.7M 10.00% Charter Communications Inc CHTR 5.4M $469.70 $2,548.9M 2.30% Costco Wholesale Corporation COST 4.3M $299.62 $1,298.4M 1.00% , Inc. DAL 58.9M $23.25 $1,369.4M 9.20% Davita Inc DVA 38.1M $73.59 $2,803.5M 30.30% Globe Life Inc GL 6.4M $79.71 $506.5M 5.90% General Motors Company GM 75.0M $23.01 $1,725.8M 5.20% Goldman Sachs Group Inc GS 12.0M $179.18 $2,151.0M 3.50% Johnson & Johnson JNJ .3M $139.77 $45.7M 0.00% JPMorgan Chase & Co. JPM 59.5M $98.19 $5,843.8M 1.90% Kraft Co KHC 325.6M $27.93 $9,095.0M 26.70% Coca-Cola Co KO 400.0M $46.93 $18,772.0M 9.30% Kroger Co KR 18.9M $31.33 $593.4M 2.40% Liberty Global PLC Class A LBTYA 19.8M $18.08 $357.8M 10.90% Liberty Global PLC Class C LBTYK 7.3M $16.98 $124.8M 1.70% Liberty Latin America Ltd Class A LILA 2.7M $11.44 $31.1M 5.40% Liberty Latin America Ltd Class C LILAK 1.3M $11.08 $14.2M 1.00% Liberty Sirius XM Group Series A LSXMA 14.9M $31.04 $461.3M 14.50% Liberty Sirius XM Group Series C LSXMK 31.1M $31.17 $969.1M 15.30% Co LUV 51.3M $34.26 $1,758.7M 9.90% Mastercard Inc MA 4.9M $263.34 $1,299.5M 0.50% Moody’s Corporation MCO 24.7M $231.09 $5,700.9M 13.20% MONDELEZ INTERNATIONAL INC Common Stock MDLZ .6M $52.02 $30.1M 0.00% M&T Bank Corporation MTB 5.4M $110.76 $596.1M 4.10% Occidental Petroleum Corporation OXY 18.9M $15.33 $290.2M 2.10% Procter & Gamble Co PG .3M $115.95 $36.6M 0.00% PNC Financial Services Group Inc PNC 8.7M $100.96 $875.4M 2.00% PSX .2M $61.56 $14.0M 0.10% Restoration Hardware Holdings, Inc common stock RH 1.7M $128.42 $219.4M 8.90% Restaurant Brands International Inc QSR 8.4M $41.92 $353.7M 1.60% Sirius XM Holdings Inc SIRI 136.3M $5.12 $697.7M 3.10% SPDR S&P 500 ETF Trust SPY .0M $275.66 $10.9M 0.00% StoneCo Ltd STNE 14.2M $23.01 $326.0M 5.10% Store Capital Corp STOR 18.6M $17.74 $330.3M 7.60% Suncor Energy Inc. SU 15.0M $16.36 $245.7M 1.00% Synchrony Financial SYF 20.8M $16.22 $337.4M 3.40% Teva Pharmaceutical Industries Ltd TEVA 43.2M $10.33 $446.8M 4.00%

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The Owl Fund William C. Dunkelberg Student Managed Fund

Exhibit I (Cont’d): BRK Investment Portfolio Equity Holdings (2/2):

Company Ticker # of Shares Price/Share Investment Value % Stake Travelers Companies Inc TRV .3M $106.42 $33.2M 0.10% Holdings Inc UAL 21.9M $28.91 $634.2M 8.80% United Parcel Service, Inc. UPS .1M $98.42 $05.8M 0.00% U.S. Bancorp USB 132.5M $36.79 $4,873.2M 8.70% Visa Inc V 10.6M $168.99 $1,785.0M 0.50% VANGUARD IX FUN/S&P 500 ETF SHS NEW VOO .0M $253.19 $10.9M 0.00% Verisign, Inc. VRSN 13.0M $199.00 $2,577.6M 11.10% & Co WFC 323.2M $31.43 $10,158.6M 7.90% TOTAL 53 3,434.4M $190,649.6M

Exhibit II: P&C U.S Insurance Industry Cash and Invested Assets by Assets Class (2018):

Bonds 5.6% 12.0% 8.5% Common Stock 3.9% Mortgagaes 0.6% 2.0% Schedule BA 0.9% Cash & ST Investments 0.3% Contract Loans 65.7% Derivatives 0.3% Real Estate 0.2% Securitied Lending 1.4% Other Receivables

Exhibit III: BRK Ranking Among Insurance Peers:

#1 #2 #3

Auto State Farm Group Berkshire Hathaway Ins Progressive ins Group

Worker’s Comp Travelers Group Hartford Ins Group Berkshire Hathaway Ins

Medical Prof. Berkshire Hathaway Ins Doctors Co Ins CAN Ins Cos

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The Owl Fund William C. Dunkelberg Student Managed Fund

Exhibit IV: U.S PE Deal Activity:

3,510 5,407 5,005 5,133 4,469 4,458 4,249

3,554 3,424 2,821 3,160 2,744 2,787

1,900

939

…

$1

$456.6 $748.1 $310.5 $137.3 $285.1 $339.4 $372.5 $430.9 $544.2 $505.6 $609.5 $678.0 $747.0 $726.5

2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020* Deal value ($B) Estimated deal value ($B) Deal count Estimated deal count

Exhibit V: Median PE Buyout EV/EBITDA Multiples:

14.0x

12.0x

10.0x

5.8x

5.2x

6.8x 5.9x

8.0x 5.8x

4.0x

3.9x

4.6x

5.3x

4.4x

4.5x 3.9x

6.0x 3.6x 4.8x

4.0x

7.1x

6.9x

6.3x

6.1x

6.0x

5.9x

5.8x

5.6x

5.5x 5.2x

2.0x 4.6x

4.5x

4.5x 3.2x 0.0x 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019

Debt/EBITDA Equity/EBITDA EV/EBITDA

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The Owl Fund William C. Dunkelberg Student Managed Fund

Exhibit VI: The Coronavirus Impact on Commercial Insurance Lines:

Impact on: Premium Volume Loss Ratio Deterioration Long-term Core coverage Property physical damage ↔ limited short term ↔ limited short term Property business continuity ? Perceived lack of value added ↓↓ Excluded but may be challenged Threat to relevance if excluded in future Casualty ? Depends on revenue levels ↓ Allegations of negligence or injury Long-tail lines becoming uneconomical Worker's compensation ↓ Depends on head-count levels ? COVID-19 not considered work-related condition due to low interest rates Motor fleet ? Varies based on size of fleet ↑ Lower frequency Professional liability Cyber ↑ Increased demand ↓ Increased cyber crimes Repricing lines Directors and officers ? More demand with more strain ↓ Allegations of unpreparedness Possible introduction of pandemic exclusions Erros and omissions ? More demand with more strain ↔ limited short term Healthcare professional liability ↑ Increased demand and exposure ↓ Claims from healthcare at overcapacity Repricing Speciality lines Aerospace and marine ↓↓ Less travel and transit ↔ limited impact Reduced demand until global trade recovers Construction ↓ Slowdown in construction ↓ Struggling contractors Energy ↓ Slowdown in upstream ↔ limited impact Event Cancellation ↓ Less activity ↓↓ Claims in 2020 policy year Add pandemic exclusions Credit and surety ↓ Decline in global trade ↓ Increased financial distress Political risk ↑ Increased demand ? Pandemic-related closures possibly trigger coverage

Exhibit VII: The Coronavirus Impact on Personal Insurance Lines

Impact on: Premium Volume Loss Ratio Deterioration Long-term Auto ↓ New business and current ↑ Reduced driving frequency in the near-term ↑ Faster shift to digitalization return from the economic shutdown ↓ Social inflation, new driving behaviors, more fraud ? New driving patterns- less use of public transportation Homeowner's ↔ Home occupancy unlikely to change ↔ Limited change in risk profile of home exposure Travel ↓ Interruption of sales from less travel ↓ Pandemics are often excluded but some companies ? Less need if demand for travel declined or are still waiving the exclusion a higher demand if pandemics are included Product / delivery ↑ Increase in online shopping could ? Global supply demand disruption impacting online ↑ Higher adoption for platform-based insurnace products insurance increase demand sales

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The Owl Fund William C. Dunkelberg Student Managed Fund

TUIA STATEMENT Established in honor of Professor William C. Dunkelberg, former Dean of the Fox School of Business, for his tireless dedication to educating students in “real-world” principles of economics and business, the William C. Dunkelberg (WCD) Owl Fund will ensure that future generations of students have exposure to a challenging, practical learning experience. Managed by Fox School of Business graduate and undergraduate students with oversight from its Board of Directors, the WCD Owl Fund’s goals are threefold:

• Provide students with hands-on experience • Enable students to work in a team-based setting in consultation with investment professionals. • Connect student participants with nationally recognized money managers and financial institutions Earnings from the fund will be reinvested net of fund expenses, which are primarily trading and auditing costs and partial scholarships for student participants.

DISCLAIMER This document contains confidential information and is intended for use internally at the Fox School of Business and with those involved with the William C. Dunkelberg Owl Fund. The WCD Owl Fund does and seeks to do business with companies covered in its research reports. Thus, investors should be aware that the Fund may have conflicts of interest that could affect the objectivity of this report.

This report is prepared strictly for educational purposes and should not be used as an actual investment guide. The forward-looking statements contained herein are simply the author’s opinions. Though the information herein is believed to be reliable and has been obtained from public sources believed to be reliable, the WCD Owl Fund makes no representation as to its accuracy or completeness. References to third-party publications in this report are provided for reader convenience only. The WCD Owl Fund neither endorses the content nor is responsible for the accuracy or security controls of these sources.

Opinions, estimates, and projections constitute the current judgment of the author as of the date of this report. They do not necessarily reflect the opinions of the WCD Owl Fund and are subject to change without notice. The WCD Owl Fund’s Analysts sometimes have shorter-term trade ideas that are consistent or inconsistent with the WCD Owl Fund’s longer-term investment outlook. The writer(s) do(es) not own any of the securities mentioned in this report.

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