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Guest dealraker
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Guest dealraker

I've only been a Berkshire holder since 1997- or 1998- I can't remember exactly but I bought some shares at $37,000 on the Monday after Buffett wrote in the annual report that "now was a better time to buy the stock..." (than some other time I think).  But in any event I've spent hours along the way coming up with all the ways to try to value the business and finally settled on the 1 minute model of adding up the investments per share and then the non-insurance operating earnings times some 10 multiple.  Today, since Buffett is older I discount the investments per share a little because some of it (of course) is float based and thus subject to "cost" along the way if the insurance bussiness can run at break even.

 

To sum up what I am writing about, given what Berkshire's investments have done and given what operating earnings will likely be I have never - ever - seen Berkshire so cheap compared to Mr. Market or to the two variables mentioned above.

 

So, I'm not a spring chicken, but along the way you do pick up some knowledge and in this case it seems to me that while we are looking out everywhere for bargain stocks the diamonds are like right under our feet.

 

Remember, it is Buffett that says, "Most good investments are treated with a yawn."

 

 

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So you mean you use the "yardsticks" Buffett writes about in the annual letter?

 

For example: If you were valuing Berkshire at the end of 2008 - the time of Buffett's last letter - you would take $77,793 in investments per share plus $3,921 in pre-tax earnings times ten.

 

$77,793 + ($3,921 * 10 = $39,210) = $117,003 per "A" share.

 

The investments and earnings per share have obviously changed since then. But this is the approach you're talking about, right?

 

 

 

 

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