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https://seekingalpha.com/article/4568966-it-is-unl...

You have to wonder what the author actually owns and what their performance has been. Looking at their articles, they are never buying anything and seem to specialize in publishing wishy-washy "I won't buy it but you can buy it if you can't find anything better" articles.

https://seekingalpha.com/author/sven-carlin

Good morning, in general, most of these articles offer some value,hopefully in the aggregate,it makes us a little better. Hey bud, do you have to sign in every time you post or am I missing something to click on to stay current? Thanks.

do you have to sign in every time you post or am I missing something to click on to stay current?

Manlobbi addressed this recently. As he is still updating the site frequently, and he has to reset the server when he installs an update, that disrupts people's session and requires a log-in next time they visit. Updates should become less frequent, and so people should stay logged in more consistently over time.

He said he may program persistent cookies at some point, to help with the issue, but as of now the site is just programmed to leave a current session open indefinitely, which he hopes will be sufficient once the site is more stable.

I just read the summary.

Quote:
"I argue that BRK's stock price is currently in the exuberant territory".

I don't agree with "exuberant". More like fair value to highly valued. That itself is quite rare.

Price to last known book 1.53
Price to estimated Q4 book 1.51
Price to peak book 1.38

Negligible discount to 3Q 5 groves ($323)

I'm going to lighten up a bit. Do the Jim method - sell half of what I have earmarked for sale.

I don't see Berkshire particularly highly valued at this price and I think just looking at the PB ratio can be a mit misleading for this.

The price is basically where it was exactly a year ago when the PB ratio was 1.4 due to the higher book per share then.

In those 12 months, the value has clearly increased.
The share count has reduced, normalized earning power has increased due to accumulated earnings, capital allocation and the Alleghany acquisition etc.

I can see the case for selling because one needs cash immediately but I don't think the current price is anywhere close to making the case for proactive selling if that isn't the case.

Fag packet.

207@9%x10yrs = $490 book x 1.4book = $686 = 8%pa from $319

I don't see Berkshire particularly highly valued at this price and I think just looking at the PB ratio can be a mit misleading for this.

The price is basically where it was exactly a year ago when the PB ratio was 1.4 due to the higher book per share then.

Yes, I sold some then, also :-)

I'm not just looking at PB ratio:
3Q 5 groves $323
3Q look through $322
3Q Book + float + 1/2 deferred taxes $283

I expect all these will be lower when Q4 numbers are in.

And yes, price to peak book is currently about 1.4. Apple is down 24% since then. Deserved?

Share count reduction to Q3 was 0.77%. Not likely much in Q4.

They definitely invested a lot in 2022. The underlying value is up, no doubt.

'They definitely invested a lot in 2022. The underlying value is up, no doubt.'

Totally agree. OXY, CVX, Alleghany all have been terrific & owner earnings keeps snowballing. When will get our initial 2022 annual numbers, mid Feb.?

Will need to think about my first ever trim of BRK as I'm now in the early draw down phase. My trigger for initial trim may be in that $350-360 range when we are back in that P/Peak BV of >1.5 but appreciate hearing when other shrews are considering a trim. Still holding a 5% cash at present.

Agree, market/ higher rates have given Apple its haircut from 180 to 130 and hope Tim is using that $90B to buyback in size so we get a dual benefit. I think BRK was adding around 150 in early 2022.

Random tidbit- I sent a brief holiday card to Greg Abel, and he generously responded with a kind short hand-written note- class act.

Completely agree!

I remember back on the other board, you were at a time trimming to get to a 35% allocation and I believe putting some cash into GOOGL. How do you feel now about GOOGL?

Thanks

I still like Alphabet long-term. My position is already full-sized so my plan is to hold as my faith and the long-term thesis has not changed. They also seem to be becoming more disciplined and leaner. I added 1/3 of the position from Jan.-July 2022 priced in 140-115 range.

Risk/reward seems very reasonable now for a terrific company priced @92 with FPE-16.5, P/S-4.15, 25% margins and ROE and $90B net cash with inflation coming down, Fed set to pause soon and maybe a softish landing. Hope buybacks will accelerate down here. Trying to look well beyond the next 6-12 months. They just seem very well positioned - Search, cloud, YouTube, YouTube TV, NFL package next year not to mention Waymo and Other Bets.

Can you show your assumptions on the 5 grove analysis?

As I understand Buffet's suggested method in the 2018 annual letter, it is to first add the four asset laden groves:

Grove 1 - BRK subsidiaries
Grove 2 - Equities
Grove 3 - Shared control companies
Grove 4 - Cash, cash equivalents, etc.

Then subtract an appropriate amount for taxes eventually payable on the sale of marketable securities.

This two-step method is summarized at page 2018 of the letter:

"I believe Berkshire's intrinsic value can be _approximated_ by summing the values of our four asset-laden
groves and then subtracting an appropriate amount for taxes eventually payable on the sale of marketable securities."

Grove 5 is "Insurance". Grove 5 provides cost free finance of the four groves, but it is also ideally better than cost free. I take Buffett to mean, given the above quoted text, that the approximate of BRK's intrinsic value assumes this figure to be $0, with its benefit as zero cost financing showing up in the first four groves. That said, he then goes on to suggest BRK is worth considerably more than the sum of its parts, etc., thereby suggesting that the above method is a conservative estimate (or that's how I read it).

What are your numbers and assumptions to get to $323? I'm curious as its more bearish than my own outlook. I'd provide my own specific 5 grove analysis but I haven't done it in a spell. Might be time to do so.

I'm not just looking at PB ratio:
3Q 5 groves $323
3Q look through $322
3Q Book + float + 1/2 deferred taxes $283


In March 2022, Buffett was buying back shares at an average price of $322.88 per B which is higher than the price today and suggests your estimates of value are too low.

As you acknowledge, the value of each share is up since then and that will be true regardless of the Q4 figures reported next month as there has been no impairment in the prospects of the business.

I remember back on the other board, you were at a time trimming to get to a 35% allocation and I believe putting some cash into GOOGL. How do you feel now about GOOGL?


My Berkshire position is now up over 40%, mainly due to it being the best performer in my portfolio last year although I did buy a chunk at $269 in the summer.

I still feel good about Alphabet and its competitive prospects so have not changed either my position ( about 13%) or thesis.

Can you show your assumptions on the 5 grove analysis?

Sure, here goes:

Assumptions:
15x multiple of earnings
21% tax rate
30% of float ($45Bn) held as reserve (Berkshire say $30Bn)
Q3 numbers. Earnings are last 4 quarters.

Non-Insurance Operating Businesses Earnings Value 22.13 x 15 = 332
Equity Investments less Taxes 272
Partially Owned Businesses Earnings Value 1.91 x 15 = 28.7
Cash & Fixed Income Available for Investment 105 + 18.6 - 45 = 79
5 Groves Total Value $711Bn

A Share Equivalents 1466045

5 Groves Total Value per A Share $485k
5 Groves Total Value per B Share $323

If I use $30Bn reserve and 17x multiple it spits out $352/b

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