Subject: Re: Brkb was downgraded to sell
Some thoughts on the KBW report.

I took the time to reread the 2024 annual letter last night. I also update my 5 grove model.

In the letter Buffet was a little more direct than I remember on what to think of the " large cash position" in relationship to the other parts of BRK.

To summarize what I think are key points, especially when it comes to thinking about the value of BRK.

The partially owned (marketable securities) and cash values are readily available. As of QE June, $280 MS, $350 cash. May be off a little. So over $600 BB.

In the typical Buffet characterization, Buffet stated that the owned businesses are worth FAR more than the marketable securities. Consistent with his previous statements that the owned business were worth far more than BV.

Of course, what is the definition of far more?

Also as I sit, marketable securities were likely around $300 BB as of March 31, higher now. So I think it is plausible that Buffets view of the owned businesses is likely at least 130% of the value of the marketable securities as of Q1 2025. So let's say $400 BB+.

So without getting too scientific it is not to hard to make a case for a overall valuation of $1.0 Trillion.

I will add a few more thoughts. As of today BV is likely north of $325 va $309 as of June 30.

Now to attempt to be a little more precise in terms of valuation I have updated my 5 groves.

1) Operations of non insurance businesses. YTD June, earnings are up 9% over 2024. You may characterize them as poor performers, but they are still showing solid YTD improvement. This puts them on pace for about $24 BB in 2025. What is that worth? I think in today's world of valuation around $500 BB. This would imply a P/E of around 20. You may disagree. Remember there is no insurance in this number.

2) Marketable securities. As of QE June, $268 BB less $40 BB est taxes or net $228 BB. However since then they are up about $30 BB AT. So current net value is about $258 BB. Not much to disagree with here. Of course positions may have been changed which will have an impact. I assume no Oxy or KHC are in the marketable securities numbers (can anyone confirm this)

3) Partially owned business plus preferreds? This one I am still try to make sure I don't have any double counts. However, if you assume current market values for all 4 of these (OXY, KHC, Oxy preferred, Berkadia). All in I get $30 BB. Kind of a rounding error.

4) Cash. I have $374 BB as of QE June, plus $11 BB QTD retained earnings. So $385 BB.

5) Underwriting profit. Buffet specifically mentions in the letter this year? that this has averaged 3.3% after tax of sales over the past 20 year. I am sure he is correct, but I get a number closer to 4%. However lets assume 3.3% on current sales of $88 BB. Since this is reoccurring I use a P/E of 12 (industry average for a collection of insurance companies, well below the market multiple) which gets me to a value of about $37 BB.

This collection of numbers gives me a valuation well north of $1.0.

I would add that as of today BV is back below 1.5.

Please offer your thoughts so I can make adjustments.