Case 1 Assignment

Instructions: Answer these question in a Word document and submit via the dropbox for grading
and review.
1. How would you characterize Warren Buffetts style of investing? In your answer, explain
whether or not Mr. Buffett is a frequent trader, is a value or growth investor, and whether he
seeks out technology investments.
2. The case points out that Berkshire Hathaway holds $43 billion in cash. It also emphasizes
Buffetts search for elephants. What does he mean by an elephant, and why does he feel
pressured to find an elephant?
3. Read through the acquisition criteria of Berkshire Hathaway in exhibit 8. Carefully go
through each item and explain whether Pacificorp seems to meet the criteria mentioned.
4. Warren Buffetts investment philosophy is quite different from what professors typically teach
in leading business schools. Point out the 3 main differences between Buffetts philosophy and
standard business school teachings.
5. Determine the current valuation of Pacificorp. The bottom two rows of exhibit 10 under
Enterprise Value as multiple of and under MV equity as multiple of provide different
valuation estimates. Average these 12 numbers. Then discount these numbers by the yield on T
bonds (footnote on p. 9). [Do this by dividing the average number by (1 + T bond yield)] The
case notes on p, 13 that it will likely be about a year until the sale goes through because of
regulatory reviews.