On May 24, 2005, it was announced that Berkshire Hathaway would acquire PacifiCorp. from parent, Scottish Power, for $5.1 billion in cash and $4.3 in liabilities and preferred stock (Bruner, Eades, Schill). After the announcement of the acquisition, the market responded very positively the same day. Berkshire’s stock price had increased by 2.4%, PacifiCorp.’s parent, Scottish Power’s by 6.28% and S&P 500 closed up 0.02%. Berkshire Hathaway’s 2.4% shares increase was equivalent to $2.55 billion. Since this is not consistent with results of other acquisitions of the same order, it must be Warren Buffet’s “cult”-like following that allows this to happen. Rather than rationally studying the market information of the acquisition, the general public puts their trust in Warren Buffett as an investment guru. Berkshire held many different types of industries in their portfolio, but prior to the acquisition of PacifiCorp., Berkshire did not have significant investment in the energy sector. The now more diversified investment portfolio of Berkshire after the acquisition was expected to provide more stable returns. Often throughout the case study, Buffett’s view on a company’s “intrinsic value” was spotlighted as one of his predominate investing strategies. Book value and the investment outline are the two alternatives to intrinsic value. Buffett rejects them because these alternatives neither can give clear and accurate information about the expected profit in the investment. A company’s intrinsic value, though, is a company’s value relative to the present value of its discounted future cash flows (Bruner, Eades, Schill). And this is how Buffett evaluates his investments, asking will future cash flows provide an acceptable return on investment.…