Post #17283 by Munger_Disciple on the Berkshire Hathaway board

Stocks A to Z / Stocks B / Berkshire Hathaway (BRK.A)

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Unless there is some flaw in my thinking, there is an amazing benefit to leaving earnings retained in Berkshire. Like $1.69 market value per $1 retained recently, $1.40 per $1 retained averaged over the last 10 years of endpoints checked.

@RalphCramden,

Your calculations appear correct to me. They really hit home the point that shareholders are far better off leaving the earnings to be retained by BRK to be reinvested by Warren & Greg.

I always knew dividend is very sub-optimal for BRK shareholders because the stock almost always traded at a premium to book value so anyone wanting/needing cash can always sell a portion of their stock well above book and come out way ahead. But your diligent analysis makes it crystal clear that we got something like $1.40 in market value for every $1 of retained earnings (adjusted for inflation) in the past decade.

Once again, well done!

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