Author Topic: BRK-A book value and intrinsic value  (Read 26809 times)



no_free_lunch

  • Hero Member
  • *****
  • Posts: 1131
Re: BRK-A book value and intrinsic value
« Reply #111 on: November 22, 2017, 06:17:00 PM »
If you follow this twitter thread there is a lengthy breakdown and valuation of the various BRK subs.  They peg the total value at $517B.

https://twitter.com/MarAzul_90/status/932705338981257222
« Last Edit: November 22, 2017, 06:18:42 PM by no_free_lunch »

rb

  • Hero Member
  • *****
  • Posts: 1849
Re: BRK-A book value and intrinsic value
« Reply #112 on: November 22, 2017, 07:57:43 PM »
If you follow this twitter thread there is a lengthy breakdown and valuation of the various BRK subs.  They peg the total value at $517B.

https://twitter.com/MarAzul_90/status/932705338981257222
Did he miss the stake in KHC?

no_free_lunch

  • Hero Member
  • *****
  • Posts: 1131
Re: BRK-A book value and intrinsic value
« Reply #113 on: November 22, 2017, 10:14:31 PM »
I dont think he missed it.  Has 180b under securities.  I assume its in there. Its only 15b.

Cigarbutt

  • Sr. Member
  • ****
  • Posts: 474
Re: BRK-A book value and intrinsic value
« Reply #114 on: November 23, 2017, 04:53:48 PM »
SlowAppreciation,
Thanks for bringing up the brooklyninvestor link.
Convincing data about the relative disregard for bonds.
Reviewing this, came across that, from another era:
http://fortune.com/2011/06/12/buffett-how-inflation-swindles-the-equity-investor-fortune-classics-1977/

scorpioncapital

  • Lifetime Member
  • Hero Member
  • *****
  • Posts: 1333
    • scorpion capital
Re: BRK-A book value and intrinsic value
« Reply #115 on: November 24, 2017, 04:14:50 AM »
I guess his argument is there is no protection except in high quality businesses that can have a high chance of earning a good spread regardless of changes in rates. Reminds me a bit of the tide showing who will be naked. Now the tide is lifting everyone.


Cigarbutt

  • Sr. Member
  • ****
  • Posts: 474
Re: BRK-A book value and intrinsic value
« Reply #116 on: November 24, 2017, 06:03:41 AM »
This thread has a lot to do with the hypothesis that book value for BRK is becoming less relevant as a valuation input.
My understanding is that this may be true in the sense that book value will eventually reflect the unrecognized intangible value now.
A relatively simple way to deal with this "lag" effect is to put a higher multiple of the IV/BV ratio.
How much higher depends on your analysis but, in my book, the difference is relatively small.
Of course, over time, small differences do compound.

However this higher multiple due to the unrecognized potential may not apply to the whole market. Last time I looked for the S&P, price to book was around three to one.

If you apply a simplified way that Mr. Buffett has described over the years to use this parameter as a valuation input, the "coupon" on the stock index would be around 4% (retained portion compounding at 12%). The yield on USA 10 yr Treasuries is 2,33% this morning and the 30yr is 2,76%. The yield on cash this morning is 0%.

Ceteris paribus. Simple but not easy.