Subject: Re: Book + Float (+ 1/2 Deferred Taxes)
Thanks To Tex (formerly Texirish) ...

The board name is an accident of not reading the instructions closely enough when I signed up for this new board. I would happily go back to Texirish if I knew how to make the change. It is more descriptive of who I am - i.e. an Irishman living in Texas - than what "Tex" may imply to some about my values and political orientation.

Re B+F I assume you've done some of your own work in backchecking how it tract price. I still view it as good enough to make Buy, Sell, or Hold decisions. If one is a trader or uses options, you should prefer a more fundamental approach.

I'm always somewhat amused by the wide range of IV's different people come up with using a sum of the parts approach. It all depends upon the assumptions and attempted corrections built into the spreadsheet. I think Jim's 2 1/2 column approach is the most pragmatic.

Re the relationship between IV estimates and price, price does seem to approach them better a few years out. But with a business retaining and reinvesting earnings, that's what it should do. That doesn't explain why it always leads price - the market is supposed to be forward looking.

My "pet cat" theory is that buying Gen Re with stock - and not promptly repurchasing the stock - is one major reason. If the business you buy with stock grows slower in value than the business behind the stock you issued, then you've made a mistake. The spread between the value you received and the value you gave away compounds with time - and in a negative manner. If you buy at a discount, then the process takes longer, but it still happens. If you buy at a premium or buy a bunch of expensive problems you didn't know existed, the time is shorter.

Using optimistic values for a fixed Gen Re, that value spread is now somewhere around the value of 200,000 A shares. Those excess shares are a dilution on how the market values BRK results.

Bloomstran is dead wrong in stating the Gen Re acquisition has resulted in doubling the current value of BRK. None of the fixed assets and cash acquired have been needed to make any of the subsequent acquisitions Buffett has done. Bloosstran simply hasn't studied the data or paid attention to what Buffett subsequently said about the acquisition.

I have done the work - and ran it by a group of 20 long term BRK shareholders to check my data and conclusions. None have disputed the analysis.