Warren Buffett's Bet and Berkshire Hathaway's Investment Skill: highlights of the presentation at ITQM 2015.

Abstract

By applying the concept of “information ratio” to data published in The 2014 Berkshire Hathaway's Annual Report, this work discuss with quantitative data and equations Warren Buffett's management strategy and financial accomplishment at Berkshire Hathaway. Furthermore, a combined analysis of two time series (information ratio and GDP growth in the United States) assesses if the GDP growth had an impact upon Berkshire's financial performance. Last but not least, this work argues that there is an underlying link between thoroughly investing and simply betting, shedding light on the difference between a ‘financial bet’ and a ‘managerial wager’.

Keywords: Portfolio management, Active investment, Passive investment, Information Ratio, Institutional Investment, Personal Investment, Financial Planning, Gambling, Warren Buffett, Berkshire Hathaway

JEL Classification: G00