WEB:The Oracle of Omaha- Warren Buffett
- MichaelC_AU
- RandeS
- MichaelC_AU
- KirkL
- MichaelC_AU
- RandeS
- Thruhiker
- MichaelC_AU
- RandeS
- MichaelC_AU
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» MichaelC_AU - Nubmers meaningless.
Those net income numbers are meaningless. Owning BRK is like owning shares of a mutual fund company like Vanguard if it owned half of the shares of its own funds. The quarterly fluctuation of NAV would outweigh the earnings.In BRK You have holdings that are wholly owned with earnings reflected in BRK, then you have $10 Billion in KO common stock which can go up and down in value. Dairy Queen for instance is wholly owned it might be worth more or less than WEB paid for it, but under GAAP only its BOOK VALUE would be reported to shareholders.
The question in BRK's case, is: How do you do the calculations to arrive at a VALUE? That is what my post about the $90,000 valuation is about! You never addressed this Rande.
I don't think anyone will know how much a share of BRK is worth, unless someone liquidates everything.
If you come up with a valuation such as the $90,000 estimate it is an aproximation of a very dynamic and always changing value. Even from a CFA or CPA it is just an oppinion from that pernson's perspecive. With this goliath there is no clear cut valuation. It is like measuring surface area on Jobba the Hut or a 1200lb man.
-- posted by MichaelC_AU
» MichaelC_AU - Insurance
BRK might be worth more in its present state than if liquidated. I read an article about its strength as a asset building machine. The strong cash flow of its insurance business invested into a massive portfolio managed by best fund manager ever, is a match made in heaven.Maybe I can find that article. If anyone finds any good reading material on BRK valuation post it here!
-- posted by MichaelC_AU
» KirkL - Kirk's Rule of Thumb number e^pi/K
"When you start to stretch to come up with a way to value a company, then you are stretching PERIOD."I think WEB would agree and has said as much.
A company is worth what sort of earnings it tosses out plus any tangible assets like realestate that can be liquidated. You could say "HWP is a wholly owned subsidy of HWP" and still all that matters is earnings it generates.
WEB is an icon of religous proportion and many invest that way. Fine with me since it isn't my money. Great company, great management, just too expensive for both mine and WEB's tastes to put our hard earned money into.
-- posted by KirkL
» MichaelC_AU - Value
I agree it probably is overvalued. It has looked that way on the surface, for a long time. But how will we ever know for sure.How do you put a value on so many Mom and Pop furniture stores, jewelry stores, and other companies, wholly owned. Add to that unrealized gains that maximize tax efficiency. For example, the books might be showing a BRK owned Nebraska furniture store for it's assets plus goodwill paid 15 years ago.
All I ask for is further discussion and more information about the corporation's valuation and you close the subject with a quote of Buffett's own words.
I could close the subject on value, my self and make a shallow statement like, as they say in real estate the only value of an asset is the price someone will pay for it, but I don't want a shallow answer. I find this fascinating and an important skill in stock selection. Peter Lynch found may steals this way.
So if you happen to read anything concerning valuation theories of Berkshire Hathaway, let us know!
-- posted by MichaelC_AU
» RandeS - When it comes to the value of any business, or group of business
When it comes to the value of any business, or group of businesses, I tend to be like Kirk in that I look to cash flow. Earnings are all that matter. Profit. It's the only reason there is for being in business. The rest is fluff. Show me the cash that makes it to the bottom line or forget it. In that regard, Berkshire has seen better days.-- posted by RandeS
» Thruhiker - Inasmuch as BRK is overvalued due to the financial acumen of Mr
Inasmuch as BRK is overvalued due to the financial acumen of Mr Buffet (similar to a closed end fund selling at a large premium), anyone currently invested in BRK should say a nightly prayer for his continued good health.-- posted by Thruhiker
» MichaelC_AU - Obviously
Obviously, I also focus on earnings, remember my slammings of Tony and other internuts. I don't own any BrkBs.But on to the purely theoretical debate on the value of Brk. How do know what the earnings are? Does the Berkshire Income Statement reflect the respective earnings of KO, G, Dis, See's Candy's, Dairy Queen, etc?
I don't think it does for KO, G, & Dis. Doesn't GAAP dictate that stocks held for investment be valued and their gain or loss in market value reflected on the IS?
I can't remember, but maybe there are different requirements based on how much of a company is held.
-- posted by MichaelC_AU
» RandeS - Evidently there is some methodolgy.
Evidently there is some methodolgy. Again, here's the numbers from CBSMarketWatch.com:Berkshire Hathaway (BRKA: news, msgs) said it netted $376 a share in the second period vs. $947 in the same period a year ago.
Seems pretty clear-cut.
-- posted by RandeS
» MichaelC_AU - It can not be clear cut.
Have you ever looked at a BRK annual report it is not clear cut! You could probally start a field of study for Berkshires earnings alone!-- posted by MichaelC_AU
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