WARREN E$.$ BUFFETT, $2015$

Questions

Who is Warren E$.$ Buffett? How would you describe the business of Berkshire Hathaway?

How well has Berkshire Hathaway performed? Over the long term? Recently?

What is your assessment of Berkshire Hathaway's investments in Buffett's largest equity positions shown in case Exhibit $5?$ Has he been uniformly successful in making major investments?

What are the major elements of Buffett's philosophy? What do those elements mean? Do you agree with them $($identify points where you agree and disagree with him$)?$

From Buffett's perspective, what is intrinsic value? Why is it accorded such importance? How is it estimated? Why does Buffett reject them?

What is the possible meaning of the changes in stock price for Berkshire Hathaway on the day of the acquisition announcement?

a$.$ What typically happens to the stock price of an acquiring firm during the announcement period? Why does this occur?

b$.$ What typically happens to the stock price of an acquired firm during the announcement period? Why does this occur?

c$.$ What is the possible meaning of the changes in stock price for Berkshire Hathaway and PCP on the day of the acquisition announcement? Specifically, what does the $$4$ billion loss in Berkshire Hathaway's market value of equity imply about the intrinsic value of Precision Castparts $($PCP$)?$

Based on your own analysis, what do you think PCP was worth on its own before its acquisition by Berkshire? Based on the multiples for comparable companies, what is the range of possible values for PCP$?$

Should shareholders endorse the acquisition. If you believe that $PCP$ will be a good purchase, what justifies your belief? If not, why do you oppose it$?$ Are there any ethical issues involved with this acquisition? If$,$ so explain.