berkshire - cheap?

[MarioP]

With regard to how to value the Berkshire insurance float, - popping up again here now -, I still think the best place I have read about it is rb's post #89 in this topic of July 19^th 2017. rb's angle & way of looking at it just makes so much sense to me.

 

Thank you for remembering that John. What I found interesting is that since the formula was posted

 

D=F*c*(1-t)/r where

 

D=Discount to float face value

F=Float face value

c=coupon BRK would have to pay on debt

t=BRK tax rate

r= hurdle rate

 

F is higher; t is lower and c is higher

 

So the discounted float is gaining value faster than the float face

 

 

[John Hjorth]

Thank you, Mario,

 

Actually, I didn't just "remember" here. rb's post is actually like some kind of script chiseled into my mind, as a - by basis - logic and quite simple solution to a question that I at that time had been struggling with for years. Simplifying it, yes, but still giving it some structure, that my brain can relate to. Up to us as readers of the post - based on our own expectations, to create the probability range.

 

It's like being hit over the head by a cub.

 

CoBF is actually stuffed up with beautiful things like this.  One just has to recognize it when one read it. It's all searchable - you just have to remember the bright person. By doing so, we all get less dumb.

 

Still H/T rb here.

[AdjustedEarnings]

Sell-side analysts (and 'Mr. Market'?) at work... if you are GOOG, you can get credit for undistributed cash in your valuation and your unproven 'moonshots'. But, if you are BRK, you get no credit for undistributed cash (thankfully, now being put towards the buyback) and only partial credit for your investments.

 

https://www.cnbc.com/2018/10/17/jp-morgan-berkshire-hathaway-shares-look-really-cheap-using-buffett-method.html

 

[The Investor]

With regard to how to value the Berkshire insurance float, - popping up again here now -, I still think the best place I have read about it is rb's post #89 in this topic of July 19^th 2017. rb's angle & way of looking at it just makes so much sense to me.

 

What do you think about this post on another thread?

http://www.cornerofberkshireandfairfax.ca/forum/berkshire-hathaway/buffett-buybacks-could-berkshire-tender-stock/msg350069/#msg350069

 

To me that suggests the formula given massively underestimates the value of the float, or am I missing something?

 

Imagine you get to choose one of the following two options:

a) You get $1m cash, no strings attached.

b) You get $1m in cost free float. This float grows at 5% per year, and while you never get to own it, you own all investment income derived from it for 50 years.

 

Assuming an 8% rate of return in the above scenario, $1m cash grows to $1.08m after 1 year if you choose "option a", and $0 grows to $80k if you choose "option b". You make $80k on the $1m float, and the float grows to $1.05m. So next year you make $84k from the float, plus 8% on the $80k you made in the previous year.

 

It takes 17 years for profit derived from cost-free float to exceed capital compounded at 8% starting with $1million cash.

 

After 50 years, $1m cash compounded at 8% has grown to $46.9m.

However, the investment income from $1m float growing at 5% per year, compounded at 8% per year, has grown to $94.5m, with the float standing at $11.5m.

 

So a few key points that to me seem to be missing from the formula:

 

1) The float is likely to grow over time (and I remember Warren or Charlie saying that if it contracts for any period of time, it would be very unlikely to be at faster than 3% per year, although I can't remember the source).

2) It's an extremely stable, long-term source of funds that is of far better quality than most types of borrowing, as there often tends to be an element of getting the rug pulled out from under your feet at the worst possible time. The more you need the money, the more likely it is the lending institution wants it back, or tries to charge you more when it's time to refinance. That's why float is not the Faustian bargain that a high level of 'normal' leverage is.

3) The longer your time horizon, the more the float is worth (assuming the float will tend to get larger over a long period of time).

 

Interested to hear your thoughts!

 

[rb]

Thank you John for the kind words and the flattery. I'm glad i was able to add some value. That's why most of us are here. But it's still nice to hear when people find something useful.

 

Now a few thoughts.

 

That formula is meant to attach a discount to the face value of flat liability at a point in time. It's not dynamic, i.e. it doesn't account for float growth. It can be made dynamic fairly easily by building a DDM sort of model around it for float.

 

Mario, while I think that BRK has a good story I don't know if it's as good as you think. t going down is not good. Also r went up which is also not good. c went up which is good. But with c it's a little more complicated. c can be positively correlated or negatively correlated with the investment portfolio. Furthermore, over time c is negatively correlated with underwriting profit. So while higher c is always good for float discount it's a lot more tricky when it comes to overall valuation. Context is key here.

 

The investor, I think your framework is flawed. You don't get to do what you want with the float and I think that 8% is really optimistic for return on float. There are regulations around what insurance companies can do with float - see Berkshire's huge bond portfolio --that's not an accident. Also you don't get to have fun with the float for 50 years. You pay it out and have to try to raise new one. There are thousands of people each day asking for their float money back from Berkshire.

 

What you say about float being a superior type of liability is true. I would account for that by adjusting c higher. But I would be careful about the size of the adjustment. Keep in mind. The vast majority of companies did not have a problem refinancing themselves in 2008. Berkshire wouldn't have had a problem either. The fact is just that Berkshire wasn't and still isn't very levered up.

 

[Cigarbutt]

Thank you John for the kind words and the flattery. I'm glad i was able to add some value. That's why most of us are here. But it's still nice to hear when people find something useful.

 

Now a few thoughts.

 

That formula is meant to attach a discount to the face value of flat liability at a point in time. It's not dynamic, i.e. it doesn't account for float growth. It can be made dynamic fairly easily by building a DDM sort of model around it for float.

 

Mario, while I think that BRK has a good story I don't know if it's as good as you think. t going down is not good. Also r went up which is also not good. c went up which is good. But with c it's a little more complicated. c can be positively correlated or negatively correlated with the investment portfolio. Furthermore, over time c is negatively correlated with underwriting profit. So while higher c is always good for float discount it's a lot more tricky when it comes to overall valuation. Context is key here.

 

The investor, I think your framework is flawed. You don't get to do what you want with the float and I think that 8% is really optimistic for return on float. There are regulations around what insurance companies can do with float - see Berkshire's huge bond portfolio --that's not an accident. Also you don't get to have fun with the float for 50 years. You pay it out and have to try to raise new one. There are thousands of people each day asking for their float money back from Berkshire.

 

What you say about float being a superior type of liability is true. I would account for that by adjusting c higher. But I would be careful about the size of the adjustment. Keep in mind. The vast majority of companies did not have a problem refinancing themselves in 2008. Berkshire wouldn't have had a problem either. The fact is just that Berkshire wasn't and still isn't very levered up.

BTW rb, I also appreciate your inputs, especially when I agree with you, something perhaps I should do more often. :)

The constructive aspect is to build on something else or to bring another perspective, which may have a component of disagreement.

 

I like the way you picure float. Another way to value float is to combine its dual nature. One can see the value of the float as a portfolio of set aside funds recorded on the asset side and adjusted for by a contra account of liability reserves which can be discounted to a large and varying degree because of time value and also because of the potential cost (negative) and growth of float (both the liability side and the asset side). Every float profile is different. For instance, looking at numbers from a certain perspective, the Geico acquisition (49% of what was left) in 1995 implied a discount of + or - 50% on the float liability. Since then, float at Geico has compounded at about 7-8% per year, in a profitable manner. Recently, BRK completed the acquisition of MLMIC, a professional liability insurer based in New York. Looking at numbers, it seems that the acquired liability float was only slightly discounted. Interestingly, it is reasonable to expect comparable returns going forward after acquisition in both scenarios.

 

Comment on BRK's "huge" bond portfolio in the "reserved" funds recorded on the asset side. I see what rb means (cash, bills and bonds + or - match the liability reserves) but technically the "bond" category is very small at BRK  (about 15-16% of liability float). In fact, apart from Fairfax, I don't see any insurer even close for comparison in terms of financial flexibility if or when needed. In terms of valuation of the float (which can be done many ways), a possibility is to include an option value for this aspect which, for instance, may mean the ability to grow profitable float inversely to what others could do under certain scenarios.

[The Investor]

The investor, I think your framework is flawed. You don't get to do what you want with the float and I think that 8% is really optimistic for return on float. There are regulations around what insurance companies can do with float - see Berkshire's huge bond portfolio --that's not an accident. Also you don't get to have fun with the float for 50 years. You pay it out and have to try to raise new one. There are thousands of people each day asking for their float money back from Berkshire.

 

What you say about float being a superior type of liability is true. I would account for that by adjusting c higher. But I would be careful about the size of the adjustment. Keep in mind. The vast majority of companies did not have a problem refinancing themselves in 2008. Berkshire wouldn't have had a problem either. The fact is just that Berkshire wasn't and still isn't very levered up.

 

In the 1995 annual meeting there is a question regarding this (the video should start on 1:42:40):

 

Warren is asked how much flexibility Berkshire has in investing float, and the answer is 'a lot'. "We are not disadvantaged by that money being in float as opposed to equity, really in any significant way. If we had a very limited amount of equity, and a very large amount of float, we would impose a lot of restrictions on ourselves..."

 

I interpret that as meaning that Berkshire's existing equity is so much larger than it needs to be to support claims, that they can effectively do whatever they want with float. Most insurance companies need to invest in low volatility investments (bonds etc.) because they can't afford to lose much money, operating on wafer thin equity to cover claims.

 

Presumably the regulations you mentioned are far more restrictive for companies with less equity/more float than they are for Berkshire? Warren suggests he would restrict activity voluntarily if it was necessitated by low equity relative to float.

 

If the quote about float and equity above holds true today, I don't think 8% is particularly optimistic.

 

Berkshire float has grown over time, and I think it is reasonable to assume it will continue to grow over time at a slower rate. If that's true, you do continue to get to have fun with the (increasing) float. Sure that might take a lot of work, but the same could be said of all the other businesses that keep producing over time.

[Swedish_Compounder]

The Investor - I am happy to see that you have made your homework and studied Buffetts and Mungers words on how to look at Berkshires float, which can not be compared with most other major insurance companies float.

 

We must conclude that there are no restrictions on the future float increase for the foreseeable future. Therefore the normalized float increase should be added to the free cash flow generation capacity of BRK. What is the right number? USD 8 Billion was mentioned by Buffett relatively recently if I remember correctly (I think it was during the annual meeting 2018).

 

This is unique and that is probably why many people have difficulties grasping it. Thus no complicated formulas for how to value the float increases are needed  ;)

 

 

 

 

 

[John Hjorth]

... We must conclude that there are no restrictions on the future float increase for the foreseeable future. ...

 

The discussion lately in this topic is covered at length in the Berkshire 2017 Annual Report, Item 1A "Risk factors", p. K-22 - K-25.

 

In note 19, p. K-91 some of it is quantified this way:

 

(17) Dividend restrictions – Insurance subsidiaries

 

Payments of dividends by our insurance subsidiaries are restricted by insurance statutes and regulations. Without prior regulatory approval, our principal insurance subsidiaries may declare up to approximately $16 billion as ordinary dividends during 2018.

 

Combined shareholders’ equity of U.S. based insurance subsidiaries determined pursuant to statutory accounting rules (Surplus as Regards Policyholders) was approximately $170 billion at December 31, 2017 and $136 billion at December 31, 2016. Statutory surplus differs from the corresponding amount based on GAAP due to differences in accounting for certain assets and liabilities. For instance, deferred charges reinsurance assumed, deferred policy acquisition costs, unrealized gains on certain investments and related deferred income taxes are recognized for GAAP but not for statutory reporting purposes. In addition, the carrying values of certain assets, such as goodwill and the carrying values of non-insurance entities owned by our insurance subsidiaries, are not fully recognized for statutory reporting purposes.

[rolling]

While there might be little restrictions to the use of float, the truth is that for decades (up until recently) Berkshire has kept an amount of cash available+fixed income above or very similar to the float. As such, float has, for years, offered almost no leverage at all and, at most, offered optionality.

 

When asked about it in this year annual report Warren said "I had never thought about it that way" (I couldn't believe it when I read the transcript, it has become progressively more obvious). But unless he changed that since then (and he might have, he is a learning machine and truth be told, he has been very agressive in the market since then), we should not expect more than a minor return on float.

 

question 17, afternoon session, for those interested

[Cigarbutt]

If one looks at the last 20 to 25 years, the comment about the relative balance between cash and bonds held versus reserves is relevant as the ratio has remained quite stable (although Mr. Buffett did modify the balance to some extent in 2001-2 and 2008-11). But this balance did not seem to apply earlier when it looks like Mr. Buffett did use float for equity investment leverage (even if, in some years, like the early 80's, the float could be quite costly). Why?

 

If one looks at relative "excess" or alpha return from the equity portfolio held or BRK itself versus the market over the last 10-year segments going back to the early days, the "excess" has progressively come down and some of this convergence is due to size but Mr. Buffett, in the last 20 to 25 years, has refrained from using float as leverage in a big way to help maintain the excess returns. Why?

 

From a risk-based capital and regulatory point of view, it appears that there was ample room to do so although not in an unlimited way.

[nickenumbers]

Why do you all think that BRK has not enjoyed a bit of a pop in 2019 like the S&P and other indexes have?

 

Is it that there has not been enough news flow specific to BRK, or do you think everyone is still worried about the investment holdings of AAPL going down in the portfolio?

 

 

[thepupil]

I think divining reasons for very short term out/underperformance is hard.

 

If I had to put a reason to it, it would be that Berkshire outperformed in 4Q 2018, so some short term mean reversion is potentially at work.

 

4Q2018 Outperformance

 

Against SPX      +9%

S&P Financials  +9%

AAPL              +25%

BAC                +11% 

Union Pacific    +10%  (BNSF)

Progressive      +10%  (Geico)

 

YTD 2019

Against SPX    -7-8%

Financials        -9%

AAPL              -1%

BAC                -19%

Union Pac      -14%

Progressive    -6-7%

 

[SHDL]

Why do you all think that BRK has not enjoyed a bit of a pop in 2019 like the S&P and other indexes have?

 

Is it that there has not been enough news flow specific to BRK, or do you think everyone is still worried about the investment holdings of AAPL going down in the portfolio?

 

Because my frivolous bet against Jurgis angered the investment gods?  :P

 

No but more seriously, even BRK behaves in a strange way from time to time and those tend to create interesting trading opportunities.  My favorite is when it sells off with the financial sector for no good reason just because it's a big component of XLF and other ETFs.

[Jurgis]

Why do you all think that BRK has not enjoyed a bit of a pop in 2019 like the S&P and other indexes have?

 

Is it that there has not been enough news flow specific to BRK, or do you think everyone is still worried about the investment holdings of AAPL going down in the portfolio?

 

Because my frivolous bet against Jurgis angered the investment gods?  :P

 

No but more seriously, even BRK behaves in a strange way from time to time and those tend to create interesting trading opportunities.  My favorite is when it sells off with the financial sector for no good reason just because it's a big component of XLF and other ETFs.

 

Just to bring everyone in context I privately proposed to adjust the bet to start at 1/1/2019. I honestly swear I did not look at BRK/SP500 performance since 1/1 and did not try to tilt the bet in my favor.  8) Peace.

 

Edit: Actually I still haven't looked, so I don't even know if I was tilting it in my favor or against me.  ::)

[alpha]

 

As others have said trying to rationalize short term moves is a waste of time.

 

If I had to guess ... maybe some investors have soured after Buffett made a very public bet on Apple right before it announced profit warning and slowing sales forecast.

[Viking]

Why do you all think that BRK has not enjoyed a bit of a pop in 2019 like the S&P and other indexes have?

 

Is it that there has not been enough news flow specific to BRK, or do you think everyone is still worried about the investment holdings of AAPL going down in the portfolio?

 

Here are my guesses for BRK underperformance YTD:

1.) AAPL and financials big price decline in Q4 and upcoming substantial hit to Berkshire BV when year end results are reported in Feb. Headline will be ugly.

2.) AAPL profit warning (caused immediate decline in BRK) and concern about AAPL results going forward and potential impact on Berkshire BV.

3.) flight to safety reversing: as thepupil mentioned, BRK dramatically outperformed in the Dec panic, and now it is underperforming as investors shift to riskier stocks.

 

The good news:

1.) since the start of the year, financials are on fire and we all know they are twice the size of AAPL in the BRK portfolio.

2.) AAPL, re-priced in the portfolio at $155, is now cheapish. It could go a little lower but the big decline is behind us. At some point in the next year or two Apple will launch a must have phone and when they do sales and profit will hit new records and the company will be valued over a billion $. At $155 this is a great long term hold for BRK. Having said that, i do think 2019 could be a very difficult year for Apple. China may be a big problem, and may persist for a year or two. And the current lineup of iPhone’s looks uninspiring with the result that people will hold on to their current phone a little longer on average (which will impact unit sales and profits. Fortunately, Apple does have a pretty good track record of recognizing mistakes with the iPhone lineup and making the proper course corrections the following year.

3.) at the end of Q3 BRK had $100 billion in cash. BRK bought $25 billion in stocks in Q3. With the decline in stocks in Q4 i would expect more than $25 billion in new stock purchases in Q4. Perhaps big additions to APPL, JPM etc. If so, this will meaningfully increase earnings power of company.

4.) BRK buying back its own stock: I expect more commentary from Buffett about this in this years annual letter. Given the size of APPL and financials, and the investment portfolio in general, we could see large swings in BV from quarter to quarter. Buffett has his own idea of intrinsic value of BRK and it obviously doesnot swing so dramatically quarter to quarter. Perhaps we will see BRK buy back its own stock at 1.4x BV when it feels the stock portfolio is being undervalued by Mr Market (resulting in BV being understated).

5.) as the US banks have communicated, the US consumer and economy continues to perform well. We can expect the Berkshire op co’s to report very strong results.

6.) tax reform: BRK was one of the big winners and the benefits of tax reform will continue into future years. The stock price today is trading close to where it was trading in Nov of 2017 when tax reform was being discussed. Bottom line is it does not look to me like Mr Market Is valuing Berkshire higher even though its future after tax earnings will be much higher as a result of tax reform.

7.) long term bond yields look like they have peaked and may be headed lower. All things being equal this will allow for a higher PE to be attached to stocks (in general).

8.) as volatility returns to the market, Mr Market may start to value ‘stalwart’ (bond like) stocks like BRK a little higher.

9.) insider buying: $20 million purchase by Jain in Dec likely around $192 is encouraging.

 

BRK looks attractively priced at current levels. I buy it in place of holding a bond. When it runs up 5-7% i am happy to sell. Rinse and repeat.

[Viking]

Another interesting tidbit of information. It really is amazing the amount of cash BRK and Apple are sitting on. And the US financials are over capitalized, unable to aquire, and forced to return +100% of earnings to shareholders. Clearly, Buffett is hot for companies that are cash machines and return most of it to shareholders in a tax efficient way (while still growing their businesses).

 

BRK has about $100 billion in net cash; about 20% of its market cap ($489 billion). It is generating about $25 billion in free cash flow per year. It recently raised the threshold for stock buybacks. Buffett really does need to find a use for this excess cash.

 

BRK’s single largest equity position (worth $40 billion), Apple has $130 billion in net cash and a market cap of about $740 billion. It is earning about $55-60 billion per year. It is already buying back significant stock and this will continue. (It says it wants to get to cash neutral down the road). It is paying a dividend that is currently yielding 2%. Stock buyback = +5%? This is yielding Berkshire a total return of +7% in a very tax efficient way. Year after year.

 

BRK’s largest equity group (worth $80 billion), the big US banks have lots of excess capital and as a result will be buying back 5-7% of shares outstanding over the next year. They all pay solid dividends in the 2-3% range. This is yielding BRK a total return of 8-10% in a very tax efficient way. Year after year.

 

So Apple and Financials, worth about $120 billion, will be yielding BRK about 8% or $9.6 billion per year moving forward. In a very tax efficient way. Looks like Buffett likes buying cash machines that return it to shareholders mostly via buybacks and dividends. Oh, and these businesses continue to grow their top line and total profits.

[shalab]

WEB and Munger do buyback at 207. It is safe to say no one understands BRKA valuation better than these two gentlemen. My son and I did some calculations last week, looks cheap even today.

 

market cap: 500B

Look through stock portfolio (Q3): 180 B

Cash and short term: 115 B

net value: 205 B.

 

BNSF: 100B (comp UNP)

Geico: 50 B (comp PGR)

Berkshire energy: 60 B (comp Duke energy)

 

Total: 210 B

 

Net value: -5 B

 

Remaining businesses are for free.

 

 

 

Why do you all think that BRK has not enjoyed a bit of a pop in 2019 like the S&P and other indexes have?

 

Is it that there has not been enough news flow specific to BRK, or do you think everyone is still worried about the investment holdings of AAPL going down in the portfolio?

 

Here are my guesses for BRK underperformance YTD:

1.) AAPL and financials big price decline in Q4 and upcoming substantial hit to Berkshire BV when year end results are reported in Feb. Headline will be ugly.

2.) AAPL profit warning (caused immediate decline in BRK) and concern about AAPL results going forward and potential impact on Berkshire BV.

3.) flight to safety reversing: as thepupil mentioned, BRK dramatically outperformed in the Dec panic, and now it is underperforming as investors shift to riskier stocks.

 

The good news:

1.) since the start of the year, financials are on fire and we all know they are twice the size of AAPL in the BRK portfolio.

2.) AAPL, re-priced in the portfolio at $155, is now cheapish. It could go a little lower but the big decline is behind us. At some point in the next year or two Apple will launch a must have phone and when they do sales and profit will hit new records and the company will be valued over a billion $. At $155 this is a great long term hold for BRK. Having said that, i do think 2019 could be a very difficult year for Apple. China may be a big problem, and may persist for a year or two. And the current lineup of iPhone’s looks uninspiring with the result that people will hold on to their current phone a little longer on average (which will impact unit sales and profits. Fortunately, Apple does have a pretty good track record of recognizing mistakes with the iPhone lineup and making the proper course corrections the following year.

3.) at the end of Q3 BRK had $100 billion in cash. BRK bought $25 billion in stocks in Q3. With the decline in stocks in Q4 i would expect more than $25 billion in new stock purchases in Q4. Perhaps big additions to APPL, JPM etc. If so, this will meaningfully increase earnings power of company.

4.) BRK buying back its own stock: I expect more commentary from Buffett about this in this years annual letter. Given the size of APPL and financials, and the investment portfolio in general, we could see large swings in BV from quarter to quarter. Buffett has his own idea of intrinsic value of BRK and it obviously doesnot swing so dramatically quarter to quarter. Perhaps we will see BRK buy back its own stock at 1.4x BV when it feels the stock portfolio is being undervalued by Mr Market (resulting in BV being understated).

5.) as the US banks have communicated, the US consumer and economy continues to perform well. We can expect the Berkshire op co’s to report very strong results.

6.) tax reform: BRK was one of the big winners and the benefits of tax reform will continue into future years. The stock price today is trading close to where it was trading in Nov of 2017 when tax reform was being discussed. Bottom line is it does not look to me like Mr Market Is valuing Berkshire higher even though its future after tax earnings will be much higher as a result of tax reform.

7.) long term bond yields look like they have peaked and may be headed lower. All things being equal this will allow for a higher PE to be attached to stocks (in general).

8.) as volatility returns to the market, Mr Market may start to value ‘stalwart’ (bond like) stocks like BRK a little higher.

9.) insider buying: $20 million purchase by Jain in Dec likely around $192 is encouraging.

 

BRK looks attractively priced at current levels. I buy it in place of holding a bond. When it runs up 5-7% i am happy to sell. Rinse and repeat.

[rolling]

WEB and Munger do buyback at 207. It is safe to say no one understands BRKA valuation better than these two gentlemen. My son and I did some calculations last week, looks cheap even today.

 

market cap: 500B

Look through stock portfolio (Q3): 180 B

Cash and short term: 115 B

net value: 205 B.

 

BNSF: 100B (comp UNP)

Geico: 50 B (comp PGR)

Berkshire energy: 60 B (comp Duke energy)

 

Total: 210 B

 

Net value: -5 B

 

Remaining businesses are for free.

 

 

   

You are double counting geico cash and investments. Cheap, but not that cheap.

[shalab]

Ok - remove Geico. Add manufacturing and service - 10 B income with 15% growth. Put a multiple of 15 on pre-tax earning (after tax 19) - market value 150B.

 

So - we do the same calculation without Geico.

 

BNSF - 100B

Manufacturing and service -  150B

BH Energy - 60B

Total: 310 B

 

net value 205B - 310 B = -105B

 

This is not counting Q4 which I expect Q4 to generate another 7-8B in cash.

 

WEB and Munger do buyback at 207. It is safe to say no one understands BRKA valuation better than these two gentlemen. My son and I did some calculations last week, looks cheap even today.

 

market cap: 500B

Look through stock portfolio (Q3): 180 B

Cash and short term: 115 B

net value: 205 B.

 

BNSF: 100B (comp UNP)

Geico: 50 B (comp PGR)

Berkshire energy: 60 B (comp Duke energy)

 

Total: 210 B

 

Net value: -5 B

 

Remaining businesses are for free.

 

 

   

You are double counting geico cash and investments. Cheap, but not that cheap.

[Guest longinvestor]

May the sentiment “cheap but not that cheap “ prevail until they buy back $100 B + worth.

 

There’s an interesting topic on why value investing doesn’t seem to work anymore. BRK itself being a value play is a more interesting topic. Or most boring

[Gregmal]

Precision Castparts and Lubrizol are another $50B or so of easily identifiable value.

 

I would also value the stock portfolio on a liquidation basis, which must account for their tax liability which in many cases, comes from a very low cost basis.

[rolling]

May the sentiment “cheap but not that cheap “ prevail until they buy back $100 B + worth.

 

There’s an interesting topic on why value investing doesn’t seem to work anymore. BRK itself being a value play is a more interesting topic. Or most boring

 

Yep, I sure hope so. I said, cheap but not that cheap but nevertheless I recently re-re(...)-entered at 196...It is currently my 2nd biggest position in my 3 stock portfolio (I am thinking of increasing to 4 stocks...)

[plato1976]

Isn’t cast precision part of the manufacturing ? Double accounting?