$93,000/Investments plus $40,000/Operating Subs (Opertating Companies 10 times a conservative $4,000 a share Pre-Tax)= $133,000.
Back of the envelope--a range of 10-15 times PT Op Earnings would yield a trading range of $133,000 to $153,000.
There's margin of safety there. The Operating Companies have been growing Pre-Tax Earnings at 30% a year for more than 10 years. Know of any companies with that track record you can buy at 10-15 times PT Earnings?
Based on this crude valuation method, here's my take on Berkshire:
STRONG BUY: under $133,000
BUY: $133,000 TO $153,000
HOLD: $153,00- $163,000
WEAK HOLD: $163,000-$173,000
SELL: Above $173,000
Note: my "sell" could surely be questioned. On a Pro Forma Fully Taxable basis---this values the Operating Subsidiaries using a PEG of 1.0. Thats cheaper than all 30 Dow Stocks. I just personally have a problem using PEGs assuming Growth rates above 15-20% on large companies..But if Berkshire ever gets truly "loved: ala Google, Apple, etc--you can surely make a case for $170-$200K
I won't be a seller when it hit's 200k....sometime in 2011 or 2012. This will be the last thing I ever sell. Hard to sell printer that prints dollars. If the dollar continues it's slide, foreignors will be purchasing more and more of this rock solid asset.