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Berkshire Hathaway Inc. Message Board

  • ignoramus_ ignoramus_ Sep 2, 1998 10:17 AM Flag

    Value of BRk with zero Buffett premium

    Here's my way of calculating value of BRK
    ASSUMING that WEB does not add much value to it and
    assuming that their insurance business does not
    grow.

    1) Take all BRK investable funds
    1a) Add
    investable funds from GRN after adding 25% to their float
    amount (because they cede about 25% of their premiums to
    other reinsurers)
    2) Subtract 80% of deferred
    taxes
    3) Add value of UNDERWRITING GAIN at GEICO, which is
    about equal to their float amount, 4 bil.
    4) Add
    value of their op businesses at, say, P/E of 30
    (because they are so damn good)

    My calculation give
    me the number of $54,065 per share.

    The
    company is traded at about 62,000 per share.

    I
    think that this kind of opportunity just does not come
    often.

    SortNewest  |  Oldest  |  Most Replied Expand all replies
    • rinolthe - i posted a valuation of BRK via the IV
      of GRN (argueably easier to calculate) and
      assumptions of WEB buying 'at a discount' - it appeared
      earlier on this board, but i cannot find it using the
      author search.

      if you want a copy, email me
      (address is in my profile) and i'll send you a copy. It
      isn't the only way, and requires some *very* argueable
      assumptions, but is an attempt to come at the whole issue from
      a different direction.

      As far as stock
      *price* is concerned, i don't think that anyone who
      couldn't cope with a stock retracing it's last year - or
      two's gains should call kid themselves that they're not
      speculators - for BRK this means down to the
      mid-40's

      peter_xyz

    • My shares are in street name. Thanks for help. Ill call broker

    • Hey 401K protectionist conspiracy theorists, I
      don't understand.

      The 401K is already protected.
      You can sell everything, put
      it into money market
      with absolutely no tax liability. What's
      more, if
      you loose by holding on between the end and
      beginning
      of a business cycle and loose maybe 50%, you can't
      write off
      any of your losses, not that you could
      write off any signifigant
      losses outside your
      401K.

      Everyone can protect their 401K assets by selling out. In
      fact
      the rules encourage it.

    • Boy
      My graph didn't come out quite
      right.
      Anyway.. .visualize that game on the Price is Right where
      the little guy is climbing a mountain and when he
      gets to the top he falls off. Or maybe where the
      roadrunner and the coyote are running up a hill which ends
      in a cliff.... and the coyote keeps going up until
      he realizes what a bunch of BS it is and then he
      falls clear down to the ground... goes smack.... gets
      up and starts walking a little and everyone laughs
      because he's as flat as a pancake... but then... oh
      darn... a big rock fell on him.

      Good Luck to all
      us Coyotes
      DT123

    • Oh I totally agree with you. Except I don't think
      the market is going to tank soon enough.

      My
      fear is this. Andrea Mitchell's whipping boy (and his
      successor) will keep tinkering with the market to preserve
      everyone's 401(k)'s for as long as possible. But of course
      the day before I retire, entropy will rear its ugly
      head.

      Anyway, enough with the manipulation
      already. Burn Baby Burn. Dow at 1500 by December,
      Please!!!!

      But... here is what's really going to happen in a crude
      ASCII graph.
      *
      * *
      * *
      * *
      *

      *
      Today My Retirement




      Sometimes I get
      bored at work
      Good Luck to All... (especially the
      shorts)
      DT123

    • I read the book last week just days before the
      U.S. dollar rose to new highs, gold slumped to new
      lows, and reports of commodity deflation and the
      russian crisis hit the media. Too close for comfort. I
      sold everything at market and stashed the funds into a
      money market account. Prechter's predictions (for
      1995/6) were darn close to what was actually happening in
      '98.

      That said, I find a lot of hocus pocus and dubious
      'science' in his citations of the elliot wave theory. His
      book reminded me of my (successful) visit to a
      chiropractor to have my back fixed. Crack. Crack. Done!
      (Instead of weeks of agonizing pain at the medical
      doctor.) But when the Chiro started spouting his
      'science', I ran!

      Where Prechter may have it right is
      that the economy does indeed run in cycles and some
      are bigger and longer than others. Almost no one now
      alivehas experienced a true economic depression. Maybe it
      is time for one now.

      I won't read too much
      reliability into his specific Dow predictions, but I agree
      with his point that it makes sense to switch to cash
      in what is turning to a deflationary environment. If
      he is wrong, we won't have the profits we might have
      made in the markets .. but if he is right, the losses
      of 'holding on' to our shares may truly be immense.

    • Prechter practices financial astrology, post
      facto paradigm fitting, and just plain hyping to the
      masses. Not a shred of plausible mechanism. Any dataset
      can be Fourier transformed and you'll find some
      frequencies are larger than others. Proves
      NOTHING! Read
      Soros "Alchemy of Finance" for a better handle on these
      things.

      Peter_xyz, I'd love to see your valuation of BRK,
      did I miss it? I agree that KO, G are probably
      overvalued. They got that way when it got out that WEB had
      heavily bought. Good time to sell G to my way of
      thinking; as a (try to be) clean shaven male, the triple
      blade at a higher price was a really BOGUS idea.

    • Since you did not receive your proxy and meeting
      notification, check the berkshirehathaway.com web site for more
      information about the special meeting September 16th at 9:30
      a.m. in Omaha at the Orpheum Theater, 409 S. 16th
      Street.

    • I think the market will always be manipulated.
      The
      Fed will always tweak it. Everyone wants to grab

      what they can.

      I am 29. All of my 401K has been
      maxed out and put
      into money market. I didn't want
      to get in at the
      end of the business cycle. I
      don't want all the
      executives to run off with my
      money.

      Buffet says it is nice to have a big wad of cash
      at
      the bottom. Do the math, it makes perfect
      sense.
      If you are investing for the long term, it
      doesn't
      make any sense at all to start from a top and
      take
      a fall.

      Having youth on my side, I realize I
      have time to get
      in after the market becomes under
      valued. Besides,
      I haven't finished reading
      Buffetology yet; why
      should I buy?

      Outside my
      401K, in my play money account, I just
      have fun
      shorting stocks. It seems I don't pick stocks
      that go
      up.

      Good luck!

    • Can someone tell me the date, the time, and the place, for the meeting ?

      I own shares but know nothing about it. Thanks

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