No. of Recommendations: 7
Grove 1: $24.271b net earnings of BNSF ($5.031), BHE ($3.730b) and MSR (Manufacturing, service and retail; $13.072b) p. 5)
Grove 1: 5.031+3.73+13.072 = 21.833
Grove 2: $271.588b market value (p. K-102)
Less taxes that would be owed if sold, per Buffett's explanation.
Cost basis 75.5, tax rate 21%
Grove 2: 230
Grove 3: $1.519b net earnings of associates (p. 5)
Same.
Grove 4: $349.565b (p. K-66)
I've gone back and forth on this. At one point the cash really was earning nothing. Now it is earning a little bit over inflation, maybe.
Let's include it all.
Grove 4: 318 cash +15.4 fixed = 333.4
Grove 5: Net premiums were $88.257 in 2024, average underwriting margin in the last 20 years has been 3.46%[3], so I'm saying $3.058b in normalized underwriting earnings.
I've been copying Jim.
Grove 5: 2.39
Using your market cap of $1068b
1068-230-333.4 = 504.6
PE = 504.6 / (21.833 + 1.519 + 2.39) = 19.6
Or, using 15x it adds up to an estimated IV at end 2024Q4 of $440/b share (1.46x book).
Same procedure for 2025Q3 gets $471/b share (1.45x book).
It's just an interesting exercise for me. I wouldn't buy at >1.4x book.
