Essay Sample on Berkshire Hathaway: Powering the Market with Insurance & Warren Buffet

Introduction

Berkshire Hathaway has a long history of great performance and is known to be one of the stocks market blue-chips.

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Berkshire is powered by the company operation on insurance. Warren Buffet as the company CEO with the majority of the shares has an exceptional track record when it comes to investing the excess cash from the company. Berkshire makes a good investment for many portfolios for effective business performance.

The company gives stiff competition in a variety of industries, but most essentially insurance industry through GEICO among others. Berkshire is also a giant player maker who owns a railroad, utility industry among other dozen businesses. Berkshire owns a substantial portfolio of some of the world's known and largest stocks including Coca-Cola, American Express and Well Fargo.

Detailed Analysis of Berkshire Hathaway's Stocks

Warren Buffet releases Berkshire Hathaway's report on the financial result for the second quarter of fiscal 2019 on August 5th, 2019. Berkshire Hathaway was able to generate and create a total revenue of $63.6 billion, showing an increase of 2.2% compared with the same period 2018. In the first 6 months of the fiscal year, Berkshire Hathaway's total revenues have been able to increase by a total of 3.0%. (McCullum, 2019)

Berkshire Hathaway's Operation Segment Performance

Berkshire Hathaway's growth in revenue was facilitated by various major operating segments where performances were reported as shown;

• GEICO: Reported 5.7% growth
• Burlington Northern Santa Fe: Reported 0.2% growth
• Manufacturing, Service, and Retailing: Reported 1.2% growth
• Berkshire Hathaway Reinsurance: Reported a 5.2% decline
• Berkshire Hathaway Energy: Reported a 1.6% decline

Berkshire Hathaway's Performance Measurement and Determining Factors

Berkshire Hathaway owns approximately $201 billion portfolios of commonly available equities comprising of the company net income thus assist in assessing its results financially. It is important to assess Berkshire Hathaway's operating businesses earning before the implementation of income taxes. Excluding derivative gains and the company's investments, Berkshire has added about $32 billion to its GAAP earning by the end of the first half of the fiscal year 2019.

Through this first half of the year, free cash flow of an estimated $10.0 billion has been achieved by Berkshire thus representing an increase of 2.6%. book value measurement which has been a vital tool for Buffett in managing Berkshire Performance. Berkshire Hathaway book value indicates $157.56 per share which represents an increase of 7.5% from $146.60 in 2018 reports.

Berkshire Hathaway's cash hoard continues to strongly build up because of the availability of tremendous free cash flow in the company. Berkshire cash and short-term investments represent a total of $122.4 billion indicating an increase of 9.4% from $111.9 billion at the end of the second quarter at the same time in 2018. Perhaps, many investors claim the rising cash pile up would be used to repurchase Berkshire's depressed stock price (McCullum, 2019).

Conclusion

Overally, Berkshire shows a slight drop regarding the company's pace per share that was repurchased. The company seems to be undervalued at the moment. Perhaps, Berkshire has one of the best conservative balance sheet and best ways of management led by Warren Buffet. Berkshire has the potential of delivering a total return of 10% annually putting little risk into consideration. With all the analysis of information and data, Berkshire share is recommended to buy on the dips of the market especially after substantial discounting.Trade Results Report.

On the 3rd of October, favorable discounted price favored buying opportunity. I was able to buy 487 shares of Berkshire Class B stocks at $ 205.00 per share.

The stock was sold on the 16th of October at a closing price of 209.24, earning a total profit of $ 2064.88 representing 2.07% returns of investment.

Work Cited

McCullum, Nick. "Berkshire Hathaway's Second Quarter 2019 Results | Detailed Analysis." Sure Dividend. N.p., 2019. Web. 5 Aug. 2019.