Head office cost for co's like Berkshire, Fairfax, etc.

[MrB]

Analysis question.

If you did a sum of the parts analysis for a co like Berkshire, Fairfax, etc. Would you then capitalize head office cost? If so then at what rate and why?

[beerbaron]

What you mean the 0.01% annual cost for the headoffice?

 

BRK and FFH are the worst examples to try to discount their HQ costs, they are so decentralized that they can run as slim. I don't think the Conglomerate discount applies to those companies.

 

BeerBaron

[MrB]

I just used those companies as an example of the structure. I'm looking at a much smaller company and in a valuation report the cap head office costs actually end up being  10% of the EV. However, I am not sold on the logic of the idea, which is what my questions are aimed at.