Berkshire
As many investors now say, it is getting harder to find value in choosing stocks and acquiring companies particularly successful ones. This is why in 2001 Warren Buffet said “We need elephants to make significant gains now-and they are hard to find” This is very similar to today’s valuations of companies that are now back to all-time highs so it is more difficult to find intrinsic value in a company. As Mr. Buffet many times has said there needs to be intricsic value when investing which he defines as the present value of future expected performance. This is one of the reasons Berkshire Hathaway saw a $2.55 billion gain in their market value the day of acquiring PacifiCorp. Many times you see the firm buying out the company especially when paying a premium go down the day they acquire a company. However, investors did their own calculation and valued PacifiCorp at much higher than the $5.1 billion purchase price and looked at the Duke Enegy deal to acquire Cinergy for $9 billion. Another reason Berkshire’s market capitalization appreciated over $2 billion was simply because investors value Mr. Buffets investments and know he doesn’t typically acquire a company unless there will be long-term consistent growth. He has had many losing investments but he is one of the richest people in the world because he sees value where others don’t.
The acquisition of PacifiCorp was an underrated deal because many analysts such as Fraser McLaren of ING Group said our group had a valuation of $8.5 billion. Scottish Power bought Pacificorp in December 1998 for $12.2 billion and many would ask why Scottish Power would sell in 2004. But this acquisition routinely led to quarterly losses for Scottish Power so it was easier for them to cut their losses and sell to the highest bidder. Buffet with this deal now doubles the U.S. customer base to 6 million which is a great deal because their first energy purchase was for MidAmerican for $9 billion. Pacificorp has roughly the
The acquisition of PacifiCorp was an underrated deal because many analysts such as Fraser McLaren of ING Group said our group had a valuation of $8.5 billion. Scottish Power bought Pacificorp in December 1998 for $12.2 billion and many would ask why Scottish Power would sell in 2004. But this acquisition routinely led to quarterly losses for Scottish Power so it was easier for them to cut their losses and sell to the highest bidder. Buffet with this deal now doubles the U.S. customer base to 6 million which is a great deal because their first energy purchase was for MidAmerican for $9 billion. Pacificorp has roughly the