1995Research and answer the following questions in preparation…

1995Research and answer the following questions in preparation for the session after reading thecase1. What is the possible meaning of the changes in stock price for GEICO and BerkshireHathaway on the day of the acquisition announcement? Specifically, what does the$718 million gain in Berkshire’s market value of equity imply about the intrinsic value ofGEICO? (Note that Berkshire owned 33.25 million shares before the acquisition wasannounced.)2. Based on Value Line’s forecast information, what is the range of possible intrinsic valuesfor GEICO? What questions might you have about this estimated range?3. How well has Berkshire Hathaway performed? In the aggregate? In its investment inScott & Fetzer? In its investments in earlier purchases of GEICO stock? In itsinvestments in convertible preferred securities?4. What is “intrinsic value” in Warren Buffett’s perspective, and why is it accorded suchimportance? How is it estimated? What are the alternatives to intrinsic value, and whydoes Buffett reject them?5. Please critically assess Buffett’s investment philosophy, and prepare to identify pointswhere you agree and disagree with him.6. Should Berkshire shareholders endorse the acquisition of GEICO?

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