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Warren E Buffet 1995 Background In August 25 1995 Warren Buffet COE of Berkshire Hathaway announced that his company would acquire the rest of the GEICO Corporation In doing so this would the GEICO shareholders a 26 premium per share market price 5575 per share to 70 per share Buffet did not propose to change anything about GEICO which astonished the observer since there wasnt any synergy between the two companies At the end of the day Berkshire Hathaways shares were at 24 a gain in market value of 718 million and the SP500 Index was 005 Warren E Buffet 1995 VA Darden Business Publishing pg 2 of case study Warren Buffet is considered to be an anomaly one of the wealthiest people in the world as well as respected and loved Warren Buffet may have the best investment record in history a compound annual increase in wealth of 28 from 1965 to 1994 Warren E Buffet 1995 VA Darden Business Publishing pg 2 of case study Berkshire Hathaway only paid him 100000 per year as the CEO of the company Even though Buffet and other insiders controlled 479 of the company he ran the company in the interests of all the shareholders He remained a private individual even when he was featured in many laudatory articles and three biographies Warren E Buffet 1995 VA Darden Business Publishing pg 2 of case study Many writers want to extract the essential elements of Buffets success hoping to expose or reveal why Berkshires acquisition of GEICO The questions they hoped to have answered What are the key principles that guided Buffet Could these be applied broadly in the late 1990s and into the 21st century or were they unique to Buffet and his time Under what assumptions would this acquisition make sense What were Buffets probable motives in the acquisition Would the acquisition off GEICO prove to be a success How would it compare to the firms
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