...Warren E. Buffett, 1995, Case Questions The purpose of this case is to introduce the themes that we will be covering in this course. In fact, if you look at Buffett’s investment philosophy (question 3 below) and compare it to the syllabus, you will find extensive overlap. 1. What is the possible meaning of the changes in the stock price for GEICO and Berkshire Hathaway on the day of the acquisition announcement? Specifically, what does the $718 million gain in Berkshire’s market value of equity imply about the intrinsic value of GEICO? (Note that Berkshire owned 33.25 million shares before the acquisition was announced.) Geico stock price will move up on the day of the acquisition announcement. Meant, GEICO intrinsic value also increase, total value will be more than $718 million in the market. 2. How well has Berkshire Hathaway performed? In the aggregate? In its investment in Scott & Fetzer? In its investment in earlier purchases of GEICO stock? Scott & Fetzer conservatively financed with Berkshire Hathaway. Buffett offered to buy the company for $315 million. Scott and Fetzer paid Berkshire Hathaway $125 million. Buffett noted that in terms of return on book value of equity, Scott & Fetzer would have easily beaten the Fortune 500 firms. 3. Please critically assess Buffett’s investment philosophy, and prepare to identify points where you agree and disagree with him. Graham’s approach was to focus on the value of assets, such as cash, net working...
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...Warren Buffett and Gillette Background of the Active Investor Warren Buffett is known as one of the world’s most notable investors. He is a self-made investor, now worth billions of dollars. Buffets premise is that people should base their investing on common sense and search out assets that are selling for less than they are worth (Pardoe, 2005). At an early age Buffett had a knack for making money. At six year old, Buffett made a five cent profit by purchasing a six-pack of Coca-Cola for twenty-five cent and reselling each bottle for a nickel. At eleven, he purchased three shares of Cities Service at $38 per share. Shortly after buying the stock, it fell to just over $27 per share (Kennon). When the shares rebounded to $40 he sold the shares, but regretted his actions when the shares shot up to $200. The experience taught him that patience is a virtue (Kennon). Buffett was a graduate of the University of Nebraska-Lincoln. Some time after graduation, Buffett had the opportunity to work for his mentor, Ben Graham, on Wall Street. There, he spent his day analyzing S&P reports, searching for investment opportunities (Kennon). He took a different interest than that of his mentor, he became interested in how a company worked, what made it superior to competitors and observed how the company was managed when deciding to invest; he was not interested in the corporate leadership of the companies he researched and invested in. In the mid-1950’s Buffett aligned himself...
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...Summary Problem/Issue: By analyzing the financial statements and Warren Buffett’s investment philosophy, a conclusion must be drawn as to whether the acquisition of PacifiCorp increased Berkshire Hathaway’s intrinsic value. Background or Historical Perspective: Berkshire Hathaway was incorporated in 1889 as Berkshire Cotton Manufacturing and later merged with Hathaway manufacturing in 1955. In 1965, Warren Buffett and some partners gained control of Berkshire Hathaway. Buffett invested in companies from various sectors of the market ranging from insurance to clothing apparel. Over the next few decades since Buffett originally acquired Berkshire Hathaway, Buffett became famous as investment genius with an unbelievable growth percentage of 24%. Class A shares of Berkshire Hathaway traded at $102 in 1997 to $85,500 in 2005. Analysis and discussion: The stock price jump for both Berkshire Hathaway and Scottish Power plc means that investors are very optimistic about this move. The increase in Berkshire Hathaway’s market value of $2.55 billion means that the intrinsic value of PacifiCorp will add value to Berkshire Hathaway. The value of PacifiCorp ranges from $6.25 Billion to the $9.4 Billion paid to acquire PacifiCorp. The only aspect of this acquisition is why did Berkshire Hathaway pay so much for this acquisition? The only reason why Berkshire Hathaway would pay so much for an acquisition is that Buffett perceive PacifiCorp’s intrinsic value as more than $6.25 Billion...
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...Warren Buffett Motivation “When you’re associating with the people that you love, doing what you love, it doesn’t get any better than that.” — Warren Buffett The four motivational theories that were analyzed showed a similar element on how leaders can motivate their employees. It assumed the expectations and responsibilities of an employee in a company. Out of the four motivational theories, Warren Buffet has applied McGregor’s Theory Y to motivate his employees. Buffett strongly believes that trust is the main element to motivate employees. Buffett gives empowerment and responsibilities to his heads for them to take ownership over their work. He doesn’t always focus on earning money because the heads of his companies are almost millionaires; Buffett pays his people equally and fairly so that his employees don’t feel ripped off and put their trust in Buffett too. As he wants his managers to act like owners, therefore he treats his managers like owners. Buffett wants his employees to paint their own “picture” and find their own ways of doing things, he doesn’t want to stand behind his employees and tell them to “add blue or red into their picture” because then the employees would lose their creativity. This would also motivate the employees to produce a better work as the employees know they've got Buffett’s trust. I like Buffett’s way of motivating his employees as he used a very humble approach to his people. Everyone should speak up and share their ideas and creativity...
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...Warren Buffett Warren Buffett is well known for being a self-made billionaire. He started investing at the age of 11, where he bought three shares of Cities Service Preferred which he earned a small profit off of. He was disappointed to find that after he sold his shares for $40 each, they went up to $200 each. He later stated that it was a lesson to him to have patience with the stock market. Buffett started running his own small business as a paper boy when he was only 13 years old. He was also selling his own horseracing tip sheets. During high school, Buffett was still coming up with ways to make money. Buffett and his friend purchased a pinball machine for $25, installed it in a barber shop, and a few months later, had enough profit to purchase other machines. They installed two more machines in two other locations. Buffett and his friend later sold the business for $1,200. Buffett attended college at the University of Pennsylvania for two years studying business when he was just 16 years old. He then moved to the University of Nebraska to finish his degree. He finished school at age 20, with $10,000 from his childhood businesses. He decided to advance his degree and attended Colombia University. Just after he finished school, he formed the firm Buffett Partnership in his hometown of Omaha. He became very rich and was named “Oracle of Omaha”. His success came from buying undervalues companies whose stocks shortly began to rise. In 2006, Buffett donated all of...
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...Buffett worked from 1951 to 1954 at Buffett-Falk & Co. as an investment salesman; from 1954 to 1956 at Graham-Newman Corp., as a securities analyst; from 1956 to 1969 at Buffett Partnership, Ltd. as a general partner and beginning in 1970 as Berkshire Hathaway Inc Chairman and CEO. By 1950, at 20, Buffett had made and saved $9,800 (over $96,000 inflation adjusted for the 2014 USD[22]).[23] In April 1952, Buffett discovered that Graham was on the board of GEICO insurance. Taking a train to Washington, D.C. on a Saturday, he knocked on the door of GEICO's headquarters until a janitor admitted him. There he met Lorimer Davidson, Geico's Vice President, and the two discussed the insurance business for hours. Davidson would eventually become Buffett's lifelong friend and a lasting influence,[24] and would later recall that he found Buffett to be an "extraordinary man" after only fifteen minutes. Buffett wanted to work on Wall Street, however, both his father and Ben Graham urged him not to. He offered to work for Graham for free, but Graham refused.[25] Buffett returned to Omaha and worked as a stockbroker while taking a Dale Carnegie public speaking course.[26] Using what he learned, he felt confident enough to teach an "Investment Principles" night class at University of Nebraska-Omaha. The average age of his students was more than twice his own. During this time he also purchased a Sinclair Texaco gas station as a side investment. However, this was not successful.[citation...
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...Warren E.Buffett, 1995 一、個案簡介 1995 年 8 月 25 日，Berkshire Hathaway 公司的執行長華倫˙巴菲特將收購 GEICO 公司尚未取得的 49.6%股權，並以高於市價 26%，每股 70 美元的價格溢 價收購，震驚市場。雖無法證明此項收購案對 Berkshire Hathaway 有任何實質 上的貢獻，但其股價立刻上揚，市值也顯著增加。 關於華倫˙巴菲特 一位名聲顯赫的投資奇才，締造出有史以來最佳的投資績效(1965~1994 平 均報酬率為 28%)。一旦投資錯誤便迅速對外承認，和作為一位優秀的執行長， 其低調和不凡的風範獲得許多人的愛戴。在哥倫比亞大學就讀碩士期間，發展出 一套價值投資法的哲學，不同於一般商管學校所教授的財務投資理論，並是他能 夠獲得非凡成就的主因。 巴菲特的投資哲學 價值投資法的基礎在於尋找出價值被低估的股票，巴菲特在哥倫比亞大學時 期首次接觸到這個概念，備將此法予以調整，把其他市場未明確給定價值的各項 因素皆包括進價值評估範圍內，如經銷權、品牌資產等。 Berkshire Hathaway 公司形容自身為“一間擁有多元化業務分支機構的控股公司”，涵蓋的業務群 有保險事業、報社、衣料、家庭用品、傢具、糖果批發商等。Berkshire Hathaway 採取相當嚴格的併購策略，列出多項標準，比如必須展現長期的營利能力、沒有 負債、自主管理、給定的價格等。 GEICO 為一家保險公司，Berkshire Hathaway 持續的收購 GEICO 的股票，雖有受 到通貨膨脹及意外率上升的負面影響，但整體而言有不斷的成長。巴菲特提出三 點作為收購 GEICO 的理由：其一，GEICO 為美國第七大汽車保險業者；其二， 資深經理人的投資型態與巴菲特相近，可望在未來延續公司的一貫性；最後，為 該產業中成本最低者。 二、分析與討論 1. Berkshire Hathaway 投資 GEICO 後，因為市場訊息不對稱，當日股價即上 揚 2.4%，公司整體市值的上升也是此項投資帶來的正面影響。此外，本組推斷 巴菲特雖無執行重大實際改革 GEICO 的計畫，卻願意付出 26% 溢價的原因還有 兩個。一為 GEICO 本身的隱含價值，即其剩餘 49.6%股權的價值與當時實際股 價相比，金額更高，所以 Berkshire Hathaway 願意以溢價收購，反映此公司的 真實股價。二為 Berkshire Hathaway 本身在購買剩餘股票前已經持有 GEICO 的 50.4%股權，當其買下剩餘股票時，原先其所持有的股票價值實質也具有 premium，可藉此拉抬 50.4%本身持有的價值。綜合以上兩點，推得 Berkshire Hathaway 既覺得買進的股票確有其價值，買進本身已持有股份公司的剩餘股票 拉抬本身股票，也能夠為本身股票增值，有一舉兩得的效果。 而由訊息公布後市值的增長高達 7 億 1,800 萬美元，我們可藉由以下算式推 估 GEICO 的隱含價值 P： 718 Million = [34.25 Million × ($70 − $55.75) ] + [67.9 Million × (P − $70)] 得 P 為 73.38641。也就是 Berkshire Hathaway 以超乎市場行情的價格買下 GEICO 剩餘股票，相當於對市場送出訊息，表示他們認為 GEICO 當下股價是被 低估的，而同時市場對此事的反應讓 GEICO 的隱含價值達每股 73.38641...
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...UVA-F-1483 Version 2.3 WARREN E. BUFFETT, 2005 On May 24, 2005, Warren E. Buffett, the chairperson and chief executive officer (CEO) of Berkshire Hathaway Inc., announced that MidAmerican Energy Holdings Company, a subsidiary of Berkshire Hathaway, would acquire the electric utility PacifiCorp. In Buffett’s largest deal since 1998, and the second largest of his entire career, MidAmerican would purchase PacifiCorp from its parent, Scottish Power plc, for $5.1 billion in cash and $4.3 billion in liabilities and preferred stock. “The energy sector has long interested us, and this is the right fit,” Buffett said. At the announcement, Berkshire Hathaway’s Class A shares closed up 2.4% for the day, for a gain in market value of $2.17 billion.1 Scottish Power’s share price also jumped 6.28% on the news2; the S&P 500 Composite Index closed up 0.02%. Exhibit 1 illustrates the recent share-price performance for Berkshire Hathaway, Scottish Power, and the S&P 500 Index. The acquisition of PacifiCorp renewed public interest in its sponsor, Warren Buffett. In many ways, he was an anomaly. One of the richest individuals in the world (with an estimated net worth of about $44 billion), he was also respected and even beloved. Though he had accumulated perhaps the best investment record in history (a compound annual increase in wealth for Berkshire Hathaway of 24% from 1965 to 2004),3 Berkshire paid him only $100,000 per year to serve as its CEO. While Buffett and other insiders controlled...
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...Course No: C-501 Course Name: Managerial Communication A Report on Business Communication Method of Warren Buffett Prepared For: Mr. Zahid Hassan Khan Associate professor, Institute of Business Administration University of Dhaka Prepared By: Md.Tazul Islam Roll:133 Batch:46D Date of Submission: 11-12-2011 Executive Summary: Warren Buffett is considered as one of the most successful investors of the market. A man who started his journey as an investor at the age of 13, continued to cross hurdles of his business carrier. It's annual report season, which includes announcements from the CEO and/or chairman of every public U.S. company. Given that Warren Buffett, the chairman of Berkshire Hathaway, is the most successful investor of all time, you might expect that a 23-page communication from him would be jargon-packed and over most people’s heads. In actuality, Buffett's annual letter to shareholders is famously down-to-earth, conversational, and witty. Never mind for now the specific points he makes: how he communicates his message is a lesson for all of us. Warren Buffett writes his letter to shareholders as a letter to his sisters - then crosses out "Dear Doris and Bertie" and replaces it with "To the Shareholders of Berkshire Hathaway". It’s not enough that Warren Buffett has become one of the richest men in the world. He’s also a world-class communicator – and nowhere does this gift go on public display more than in his annual letter to shareholders...
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...Saint Martin’s University Warren Buffett Photo Credit: Mark Seliger for TIME Warren Edward Buffett was born on August 30, 1930 in Omaha Nebraska to Howard and Leila Buffett. His father, Howard, was a stockbroker until elected into congress in 1942; his mother, Leila, was a homemaker. Warren Buffett is the middle child and only boy born to his parents. His sisters, Doris and Roberta, also make headlines with their generosity and successes. Photo Credit: classicphotos.com Photo Credit: classicphotos.com As a young boy Warren Buffett could be described as a math guru, he was able to calculate large tables of numbers in his head; a skill he still shows off today. Warren Buffett would often visit his father’s brokerage shop and write stock prices on the blackboard. Being so close to the industry allowed an 11 year old Warren Buffett to invest in three shares of Cities Service Preferred stock, costing him $38 per share. The shares dropped to $27 but he remained patient and waited for them to rise to $40 before selling for a small profit. Regrettably the stock soon rose to $200 but this didn’t faze young Warren Buffett, as he says “It was an early lesson in patience in investing.” (biography.com). At the age of 13 Warren Buffett ran a successful paperboy business where he filed his taxes and used his bike as a business deduction of $35. In high school Warren Buffett and a friend purchased a use pinball machine for $35 and installed it into a barbershop. The two were...
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...Jarett Burwell Seminar: Issues in Corporate Finance 9/18/14 1. The meaning behind the changes in the stock price for Scottish power on the acquisition announcement was the market reacting to the company being taken over by Warren Buffett and his company, which had a successful track record of managing companies into successful business strategies, the deal the had a positive effect on both buyers and sellers. The intrinsic value of PacifiCorp was the elephant that Warren Buffett was looking for because he was willing to pay a premium of $16.30 per share for the acquisition. 2. The possible values for PacifiCorp are: 1. Revenue median of $6.252 Billion, mean of 6.584 Billion. 2. EBIT median of 8.775 Billion, mean of 9.076 Billion. 3. EBITDA median of 9.023 Billion, mean of 9.076 Billion. 4. Net income median of 7.596 Billion, mean of 7.553 Billion. 5. ESP median of 4.277 Billion, mean of 4.308 Billion. 6. Book value median of 5.904 Billion, mean of 5.678 Billion. 3. I feel the amount of capital use to acquire PacifiCorp was worth the investment risk. The intrinsic value of PacifiCorp is that the company can now invest in a whole sector of the energy field. The value of PacifiCorp was in the actual business not the stock price and the extensive research that was done in understanding the energy industry made the acquisition safer. 4. Berkshire Hathaway has consistently outperformed the market since its creation in 1965. In 1977 the firms year-end closing share...
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...ල ෙග ් 'පැරදව' සැබෑ ප ධනවතා !!! ස ූ සි ඔහ ගැන.... 1. ඔහ ඔහෙග පලම ෙකාටස ල ගන වයස අවරැ 11...ඒත අද ඔහ ෙන ු යනවා ඒත පමා වැ... ඒ ගැන ඔහ අද පසතැෙවනව ! ඒ කාෙල හම ලාබ අදට වඩා..ඔෙ දරැවන ආෙයජන වලට ෙයාම කරන න... 2. ුවත ෙබ හැෙ රස ප පත ්සාවන උපයන දෙලන ඔහ අවරැ 14 ම ු ක ෙගාපලක ල ගන ඩා නවා... දලක ඉ ෙමන ඔබට ෙබාෙහ ෙදවල ලට ගත හැ. ඔෙ ස ම දරැවන ක ෙහ ෙදයක උපයන ටත ඩා නට රැ කරවන හ න... 3. ඔහ තවමත වත ෙවන ඔහ ට වසර 50කට ෙපර වාහ ූ ට ෙන ව ලට ගත දන කාමර 3ක ක වෙස ඔහ පවසන ඒ ක වෙස ඩා ්.. ෙන ඩා ් ඔහට අවශ සය ෙද ඈ බව. ෙශ ි ෂය වන , ඔහෙග වස වටා ෙන ශාල තාප ්පයක සෙහ වෑටක අදටත ෙනාම... ඔබට අතවශ ෙද හැරැන ෙකාට ෙවනත අනවශ ෙද ලට ගැෙමන වලන න...ඔෙ දරැවන එය රැ කරවන ටත හ න... 4.ඔහ තවමත ඔහෙග ෙමට රථය පදවාෙගන ඕනෑම තැනකට යන ෙනක .. අදටත ඔහට ෙයෙරක ෙහ ආරක ෂකන නෑ. ඔබ ඔබම වන එහ සැනස ඇත. න. ීම 5. ඔහ සක තම ුදගලක ග යානයක ගමන යන නැහැ. එෙහත ි ප වන ෙන ුමය වන ඔහ තම ෙලකෙය ශාලතම ුදගල ග යාන ප ෙන ් ප ක වන සමාගෙ හ කරැවා !! අරපමැස හැමටම හ තබාගන ි ්ම ෙත න... 6. ඔහෙග ආයතනයක වන සමාගම සත පවන 63ක ූ සමාග වල ම ව ව ධායක අධක වරැන , ෙ ප ධනවත හාපතාෙගන වසරකට ෂ ට සි ු ලැෙබන එක ලම... එහ සඳහන ෙවන එලැෙඹන වසර සඳහා ෙන ය ෙන ඉල කයන ඔහ සක වසර ුරා ස ලක ... ි ප ් , සාකඡා පවත ෙන නෑ. වන රකථන ඇමත ෙදන නෑ. ෙන ස තැනට ස ෙතරාපත ි ස ්සා කර ගන න... 7. ඔහ යටෙත සන ධායක...
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...HALKEVLERİ TÜZÜĞÜ I. BÖLÜM TEMEL HÜKÜMLER A.DERNEĞİN ADI VE MERKEZİ Madde 1 Adı “Halkevleri Derneği” olan kuruluşun kısa adı “Halkevi” dir. Kuruluşun şubeleri ayrıca “Halkevleri Derneği (bulundukları yerin adı) Şubesi” ve kısaca “(bulundukları yerin adı) Halkevi” olarak; temsilcilikleri ise “Halkevleri Derneği (bulundukları yerin adı) Temsilciliği” ve kısaca “(bulundukları yerin adı) Halkodası” olarak adlandırılır. Halkevleri Derneğinin merkezi Ankara'dır. B.HALKEVLERİ DERNEĞİNİN GENEL POLİTİKASI VE HALKEVCİLERİN GENEL İNANÇLARI Madde 2 Halkevleri Derneği tüzel kişilik olarak hiçbir siyasi partiye bağlanamaz. Bütün vatandaşlar Halkevleri Derneğine üye olabilirler. Ancak, Halkevleri Derneğinin kesinlikle ve tam bir inançla bağlı olduğu Atatürkçü düşünceye ve Atatürkçü Devrim anlayışına aykırı düşen herhangi bir felsefi düşünceye, ideolojiye, politik inanca veya doktrine veya bunlara bağlı davranışlara Halkevleri Derneğinde yer verilmez. Halkevcilik çalışmaları, bütün yönleri ile bu politikaya ve bu temel inançlara göre düzenlenip uygulanır. Bunlara ters düşen herhangi bir çalışma içerisine girilemez. C. HALKEVLERİ DERNEĞİNİN AMACI Madde 3 Halkevleri Derneği Atatürkçü düşüncenin ve devrimlerin ışığında olarak; halkın eğitimine, Türk kültürüne ve sanatına hizmet eder. Bu konudaki çalışmalarını; Atatürkçü düşüncenin ve Kemalist Devrim anlayışının düşünsel ve ideolojik temeli olan ulusalcılık açısından yorumlayarak, tam bağımsızlık, ulusal egemenlik ve çağdaşlaşma...
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...Warren Buffett is the role model to all investors; therefore, I believe what he believed in is right (at least to him). However,we need to understand that not all of his rules work for everyone. Buffett's first rules is not to lose. The second rule is not to forget the first rule. He is absolutely right about this because risk management is always the key to success in investing. I think that valuing a share based on its relative performance to similar shares is a good strategy to make sure the return on your investment. The comparison of an investment against other returns available in the market was an important benchmark of performance is a good point. Moreover, Buffett also said that we should invest based on sound research and a detached emotional state and not to become an emotional slave to day to day price fluctuation. Buffett also has his points when he said that we should not believe in Efficient Market Theory because the market does have efficient sometimes doesn't mean the market always have its efficient. The intrinsic value is another point that inspired me because I agreed with him about we should focus on the firm's future output but not the historical input. However, I slightly disagree that accounting reality is useless. It is because we can't tell a firm's financial health by just looking at the economic reality. I also think that his heavy focus on economic reality relies too heavily on subjective evaluation of intangible assets and sometimes future cash flows...
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...WARREN BUFFET The Omaha Miracle 12/ 16/ 2008 Business English 1 WARREN BUFFETT The Omaha Miracle Table of Content I III IV IV Biography / Historical Timeline Berkshire Hathaway Buffet’s Principals Sources 12/ 16/ 2008 Business English 2 WARREN BUFFETT The Omaha Miracle Warren Buffett was the richest man in the world 2008. 12/ 16/ 2008 Business English 3 WARREN BUFFETT The Omaha Miracle He’s a self-made man with a fortune of around $62 billion. 12/ 16/ 2008 Business English 4 WARREN BUFFETT The Omaha Miracle Croatia’s GDP was actually $63 billion in 2008. 12/ 16/ 2008 Business English 5 WARREN BUFFETT The Omaha Miracle He lives in the same house in Omaha, Nebraska that he bought in 1958. 12/ 16/ 2008 Business English 6 WARREN BUFFETT The Omaha Miracle But Mr. Buffett doesn’t live here… 12/ 16/ 2008 Business English 7 WARREN BUFFETT The Omaha Miracle …he actually lives here. 12/ 16/ 2008 Business English 8 WARREN BUFFETT The Omaha Miracle Is this his car? 12/ 16/ 2008 Business English 9 WARREN BUFFETT The Omaha Miracle Well this is. 12/ 16/ 2008 Business English 10 WARREN BUFFETT The Omaha Miracle Like every American he’s also pretty much into sports and even sponsors an international tournament. 12/ 16/ 2008 Business English 11 WARREN BUFFETT The Omaha Miracle The Warren Buffett Bridge Cup to be exact. 12/ 16/ 2008 Business English 12 WARREN BUFFETT The Omaha Miracle ...
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