No. of Recommendations: 4
This is where I get tripped up:
Grove 4 ' Cash, US Treasuries, Fixed Income. IV $164 Billion.
Excludes cash and debt in rail and energy. Buffett has previously talked about $20 Billion minimum. Not sure if this is higher now. Leaving it in anyway. Berkshire has $166 Billion of insurance float.
...
I can understand the value of the cash and bonds. If I had $164 Billion I can invest that easily and get 5% or $8.2 Billion. It is clearly worth $164 Billion at least. I say at least, as it is in the hands of capital allocators with a history of getting more than 5%. It may not look that way now but even with the huge size of Berkshire there is a good chance it earns even 9% some fine day. But for now its IV is $164 Billion. That is the investment side of the insurance business sorted.If they always hold a large percentage of the float amount in cash, is the cash pile really worth face value? Float is a liability, after all.
IIRC, both Jim and Bloomstran take $50 billion off the cash pile (30% of float value) to account for the amount that will always be held in reserve.
https://berkshirehathaway.com/qtrly/2ndqtr23.pdfPage 25
Berkshire's common stock repurchase program permits Berkshire to repurchase its shares any time that Warren Buffett,
Berkshire's Chairman of the Board and Chief Executive Officer, and Charlie Munger, Vice Chairman of the Board, believe that the
repurchase price is below Berkshire's intrinsic value, conservatively determined. The program continues to allow share repurchases in
the open market or through privately negotiated transactions and does not specify a maximum number of shares to be repurchased.
However, repurchases will not be made if they would reduce the total value of Berkshire's consolidated cash, cash equivalents and U.S.
Treasury Bill holdings below $30 billion.I think you have to knock at least $30bn off. It's not a huge difference to IV, though. 5% or so.
