Berkshire Valuation

[CanadianMunger]

Simple valuation from the 2012 lettter:

 

Investments - 114k

Pre tax earnings - 8k

 

So, 114k + 10x8k=80k = 194k

 

Sound right?

 

-CM

 

 

 

[BRK IN MKE]

Simple valuation from the 2012 lettter:

 

Investments - 114k

Pre tax earnings - 8k

 

So, 114k + 10x8k=80k = 194k

 

Sound right?

 

-CM

 

Whitney Tilson has used the same method in his calculation. However, over the last couple of years Tilson has used a more conservative multiplier of 8 on pre-tax earnings per share.

 

So Tilson's method would be

 

114k+8x8k=178k

 

I think your method is probably closer to the true intrinsic value, but even with a conservative calculation Berkshire is still selling well below intrinsic value.

[Mephistopheles]

Simple valuation from the 2012 lettter:

 

Investments - 114k

Pre tax earnings - 8k

 

So, 114k + 10x8k=80k = 194k

 

Sound right?

 

-CM

 

Whitney Tilson has used the same method in his calculation. However, over the last couple of years Tilson has used a more conservative multiplier of 8 on pre-tax earnings per share.

 

So Tilson's method would be

 

114k+8x8k=178k

 

I think your method is probably closer to the true intrinsic value, but even with a conservative calculation Berkshire is still selling well below intrinsic value.

 

Although, Tilson does account for underwriting profits whereas Buffett does not. So all in all, if he uses an 8 multiple, the IV calculation is probably very similar to Buffett's.

[Palantir]

If you are going to capitalize earnings x8-10, shouldn't you take out debt?

[JBird]

Simple valuation from the 2012 lettter:

 

Investments - 114k

Pre tax earnings - 8k

 

So, 114k + 10x8k=80k = 194k

 

Sound right?

 

-CM

 

I find that valuation both reasonable and rational.