Warren E. Buffett, 1995 There Are Several Case Study

Open, View, and/or
Download this Document

Total Length: 643 words ( 2 double-spaced pages)

Total Sources: 1+

Page 1 of 2

Warren E. Buffett, 1995

There are several assumptions Warren Buffett might have made when he purchased GEICO. He is famed for saying that acquiring executives think of themselves as beautiful princesses whose kisses will turn 'frogs' -- underperforming companies -- into handsome princes. Believing they can "release the imprisoned princes" (Hambrick & Hayward, 1997, p. 103+). He also said that he'd observed many kisses but very few miracles.

Why, then, might he have bought GEICO, a company admittedly perking along just fine without him, especially considering the acquisition premiums. In view of the increase in share price, it is likely Buffett was relying on the target's pre-existing stock price inadequately reflecting the value of the firm's resources and its prospects. This has been called hubris by some analysts, but it is hubris only if it fails. In the case of Buffett, it did not fail.

In fact, Buffett may have been operating from a position of having identified one or more of the main motives for takeovers being present at GEICO.

Stuck Writing Your "Warren E. Buffett, 1995 There Are Several" Case Study?

View All Our Example Warren E. Buffett, 1995 There Are Several Case Study

Have A Custom Example Essay Written

Poor company management is one possibility. In fact, it is a more plausible possibility than a desire to rely on synergy; Berkshire Hathaway and GEICO would not, seemingly, have much opportunity for that.

In fact, Buffett probably expected to eliminate inefficiencies in the target company and/or increase its market share. When he took over The Buffalo News, a daily in upstate New York, he increased the news hole, a maneuver that would necessarily decrease the advertising page count. His contrarian move worked, however, because the news hole "attracts a wide spectrum of readers and thereby boosts penetration. High penetration, in turn, makes a newspaper particularly valuable to retailers since it allows them to talk to the entire community through a single megaphone" (Buffett, quoted by Henry, 1998, p. 58).

It is arguable that Buffett did much the same thing with GEICO. He did not interfere with the executive structure, the….....

Show More ⇣

     Open the full completed essay and source list


OR

     Order a one-of-a-kind custom essay on this topic


sample essay writing service

Cite This Resource:

Latest APA Format (6th edition)

Copy Reference
"Warren E Buffett 1995 There Are Several" (2005, October 10) Retrieved May 16, 2025, from
https://www.aceyourpaper.com/essays/warren-e-buffett-1995-several-69258

Latest MLA Format (8th edition)

Copy Reference
"Warren E Buffett 1995 There Are Several" 10 October 2005. Web.16 May. 2025. <
https://www.aceyourpaper.com/essays/warren-e-buffett-1995-several-69258>

Latest Chicago Format (16th edition)

Copy Reference
"Warren E Buffett 1995 There Are Several", 10 October 2005, Accessed.16 May. 2025,
https://www.aceyourpaper.com/essays/warren-e-buffett-1995-several-69258
   

Open, View, and/or
Download this Document
order custom essay example