1st Warren Buffet and 2nd Hershey Foods - Case Study Example

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Warren Buffet is one of the world’s leading investor. He is the CEO of Berkshire and holds majority of its shares. With his wealth, he is a well renowned philanthropist. He has given majority of his vast wealth to…
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1st Warren Buffet and 2nd Hershey Foods
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Download file to see previous pages Value investors like Buffet target such companies because they have been undervalued in the market. This causes unusual shift of stock investment in the company. When this happens, the values of such companies are deflated and that is when a value investor strikes.
The intrinsic value is a company’s stocks, assets and product value. This value may or may not be the same as the current market value. Intrinsic value is different from stock price in the sense that stock price is not used to determine the intrinsic value of a company. A company’s stock price in the stock market might be high or low when analyzed based on intrinsic value.
Despite the benefits of acquiring undervalued companies, Value investors, so much consumed in finding ‘value’ in the stock market generally fail to notice some big risks that misguide in making judgments. Such risks include “value traps” where stocks of a company continue to fall. The other risk is the fact that the returns may be lower that the investment growth. Apart from that, determining the intrinsic value is subjective and varies. This is due to the fact that there are no standard criteria to determine it. Decision can be made based on findings from one analyst and this might turn out to be wrong.
Through his multinational holding company Berkshire Hathaway, Buffet has invested in major corporations all over the world. These include; GEICO insurance, National Indemnity Company, Justin Brands, Nebraska Furniture Mart , American Express, The Coca Cola Company, Wells Fargo and Company among others.
American Express is one of America’s leading credit card service providers. Buffet owns 14.8% of this finance corporation. Over the past months, the company lost partnership with Costco wholesale that opted to start working with Visa. The loss at Costco is more substantial, but the partnership contract is valid till early 2016. Berkshire has increased its equity share ...Download file to see next pagesRead More
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