Berkshire Valuation - Portfolio+Cash = $130/BRK.B Share Equivelent

[longterminvestor]

1 share of BRK.B represents $84 in value from the portfolio of stocks ($206B Portfolio Value with 2.4529B shares of BRK.B equivalent).  1 share of BERK.B represents $46 in cash ($114B cash with 2.4529B shares of BRK.B equivalent).  $130 value for portfolio+cash for $205 share price today means you get all of Berkshires Operating businesses for $75/share. 

 

Can someone please poke some holes in this?  Seems like an incredible "margin of safety" vs. other available marketable securities. 

 

(credit Dynamic for the google spreadsheet - nice tool). 

[SwedishValue]

At least $20 BN of cash is needed as a capital buffer, probably more like $25-30 BN. Then you have deferred tax liabilities from the marketable securities (imo make up your own mind about the size of these, since some stocks are likely never gonna be sold).

 

Then you have the insurance float. Depending on how you view the insurance float you could either consider this to be a small or big liability, or you could (as I do) value this float to not be a liability at all since it’s likely to grow and also produce underwriting profits.

 

There is an argument to be made that since Berkshire is incorporated in an inefficient tax structure, it deserves to trade at some type of discount.

 

All things considered, I’ve reached the conclusion that Berkshire is very significantly undervalued. Buffett and Munger don’t seem to agree considering the very limited repurchase activity. I honestly don’t know what I’m missing but there are plenty of fish in the sea.

[Guest longinvestor]

1 share of BRK.B represents $84 in value from the portfolio of stocks ($206B Portfolio Value with 2.4529B shares of BRK.B equivalent).  1 share of BERK.B represents $46 in cash ($114B cash with 2.4529B shares of BRK.B equivalent).  $130 value for portfolio+cash for $205 share price today means you get all of Berkshires Operating businesses for $75/share. 

 

Can someone please poke some holes in this?  Seems like an incredible "margin of safety" vs. other available marketable securities. 

 

(credit Dynamic for the google spreadsheet - nice tool).

 

+1

 

This sort of back of the envelope math is enough. Kinda fits the Buffett quote  “I don’t need to know if a man is 330 or 365 lbs to know that he’s fat.”

 

A lot of the yeah buts to this end up being,

- Berkshire is too big

- Buffett and Munger are too old

- The future ain’t what it used to be.

- Berkshire too low tech