No. of Recommendations: 23
"On a a market cap basis bases on profits compared to Tesla, Amazon, Google, Apple, Nvidia?"
Yes, compared to those companies, Berkshire is way undervalued. Absolutely no doubt. Just from the amount of cash it pulls in.
That said, I always find relative comparisons to be a very bad way to make valuations though. The reason is, is because it doesn't account for mistakes in valuations.
Let's take Buffett's favorite sport: baseball. Some team, say the Dodgers have a young 3rd baseman full of potential. So they sign him to a big, long contract for a lot of money. Now let's say that he doesn't live up to his potential. It isn't that he ends up a bad player, it is just he never quite reached his potential. He ends up being a decent player, but he had the potential to be one of the all-time greats. Perhaps one of the 10 best 3rd baseman in the history of baseball. His contract reflected that potential. Unfortunately he never reached it. So a couple of years later another 3rd baseman with lots of potential comes up with the Phillies. He is negotiating a long term contract with them and he uses the first players contract as a comparison. He is obviously better than the first player so he should make more. It doesn't matter that the first player was paid on potential and not actual production. His contract set the market for future comparisons. This mistake keeps compounding because everyone makes comparisons to previous contracts despite the fact that they were paid on potential and not actual production.
To bring a tortured analogy to the point. Just because Berkshire is way undervalued compared to other select companies does not mean Berkshire is really undervalued. Those companies may be way overvalued so Berkshire's overvalue is small in comparison. Being the tallest dwarf doesn't mean you are ready for the NBA.
