Author Topic: Berkshire Equity Put (where cash premium is held)  (Read 18743 times)

el_chieh

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Berkshire Equity Put (where cash premium is held)
« on: February 01, 2009, 01:40:16 PM »

I'm wondering how the equity puts affects Buffett's 2-column valuation.

+ Does cash and investments from "Insurance and Other" include cash premium received from the equity put?

+ The derivative contract liabilites are held in "Finance and "Financial Products" but the asset side of that reporting segment does not seem to reflect any increase similar to the cash premium (I know you can see the equity put premium in the cash flow statement)

I'm wondering whether by using cash and investments + a multiple of operating companies properly captures the value of the equity put (which I think is ~$4.8bn the cash premium received), esp if the premium cash is held in "finance and financial products".

btw, I buy that the tax liability + float liability + derivative contract liability has an NPV of close to zero (and thus not netted in the 2 column valuation).

Thanks!