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cyberhawk
Joined: 13 Nov 2012
Last visit: 12 Apr 2014
Posts: 219
Own Kudos:
Given Kudos: 25
Location: Ukraine
Concentration: Strategy, Operations
Schools: INSEAD Jan '15 (A)
GMAT 1: 680 Q48 V36
GPA: 4
WE:Supply Chain Management (Consumer Packaged Goods)
31 May 2013, 10:44
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bob99
did he challenge you that PE is just for finance guys who had previous PE experience?
ChickenTikka
Joined: 29 Jul 2010
Last visit: 11 Mar 2014
Posts: 123
Own Kudos:
Given Kudos: 35
Concentration: Finance, International Business
Schools: INSEAD Jan '15 (M) ESADE (A) HEC '15 (A)
WE:Real Estate (Finance: Venture Capital)
31 May 2013, 10:49
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cyberhawk
That's not so much a challenge as a fact.
ducceus
Joined: 14 Feb 2012
Last visit: 20 Dec 2013
Posts: 488
Own Kudos:
Given Kudos: 20
Concentration: Finance, Entrepreneurship
Schools: INSEAD Jan '13 (M)
GPA: 3.76
WE:Engineering (Other)
ChickenTikka
Yes, Berkshire Hathaway does not actively manage any of the company it owns. Yes, it has influence over the board of directors, whom have the power of choosing CEOs.
This is the Warren Buffet's genius. Buffet finds companies that are essentially a no-brainer. By that, I mean these companies will be around forever, selling products or services that people always going to need. Obviously, he picked the company with good management already in place, and allows maximum autonomy. Of course, they have to send the profit to Berkshire, so Buffet can allocate it to his other investment.
If you look at the companies that Berkshire own, you will recognize how masterful Buffet is to build Berkshire to last for centuries. Berkshire is in the auto insurance and reinsurance business; one is legally mandated, and the other is required for big corporation to secure their assets. They are in the energy and utility business, which no one can live without. They are in the rail road business, which moves goods and services all over the country. Smaller investments, such as See’s candies, Nebraska Furniture Mart, Jewelry Stores, Auto parts, Ketchup, Local Newspaper (Caters to local news, not national news, which you can get for free in the internet) are evident of things people will be consume in their everyday life for years to come.
Buffet weaves Berkshire Hathaway into the fabric of the society. He made it become the backbone of the U.S economy in a sense. Berkshire is an insurance company that manages risk really well. He used the insurance float to finance his profitable acquisition. In turn, he uses the profit from his acquisitions to fund his marketable security investments
A well-managed insurance operation, a private equity without the leverage buyout, and a hedge fund without the needs to raise any money from outside investor is the perfect business model.
Yes, I drink Warren BUffet Kool-Aid. I'd work for him for free...well, for 2 or 3 years maybe lolThis is what I get from reading all 35 of BK annual shareholder letters. It is a very good read, I recommend it for any future MBA students. you can find it here https://www.berkshirehathaway.com/letters/letters.html
