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ValueMaven

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Greg Warren is a very good analyst who has been brought back by Warren and Charlie over the last several shareholder meetings.  This piece didn't generate enough hits when it was published (during the holidays) - but he is very thoughtful on his valuation case.  It's a decent write-up and directionally correct. 

 

https://www.morningstar.com/articles/1016064/how-to-value-berkshire-hathaway

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I don't have a subscription.

 

Can someone post a summary?

 

You can sign up for free to see the whole article.  It was a very high level sum of parts that I felt didn't address the value of the huge cash balance enough.  They estimate the value of the b shares at $253. 

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  • 2 weeks later...

This may not be the right thread to post this question, but bar starting a new thread it seemed the most likely candidate.

 

If Biden raises taxes say to 28% does the deferred tax net liability of Berkshire take at 14bn or so hit, bearing in mind the 28.2bn gain Berkshire took in 2017 on the back of the TCJA, or are those gains locked in?

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This may not be the right thread to post this question, but bar starting a new thread it seemed the most likely candidate.

If Biden raises taxes say to 28% does the deferred tax net liability of Berkshire take at 14bn or so hit, bearing in mind the 28.2bn gain Berkshire took in 2017 on the back of the TCJA, or are those gains locked in?

This is a complicated question, with a lot of moving parts. In the 2017 report, BRK reported 35.6B of positive development and 6.0B of negative development so it depends on specific changes made but a basic rule of three will give you an approximate answer.

For to the locked-in aspect, the basic answer is no as tax is one of the two factors that are certain in life, although submitted to variable levels of certainty. You can think of the tax liability as a an insurance reserve and, with tax rates being raised, you expect to pay more taxes in the enacted year but, even if a non-cash event, you also have to increase the reserves for the amount that will have to be paid over time as a result of the 'adverse' development.

Irrelevant addition: i think that's why Mr. Buffett described before that tax float was of lesser (quasi-permanent equity) quality. It seems he prefers to deal with the kindness of uncertainty than the kindness of strangers.

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