No. of Recommendations: 1
I don't feel I understand this. So I'm asking the board's views.
o BRK retains cash, and primarily invests it in short term Treasury notes.
o These earn about enough interest so that after taxes it balances inflation.
o Being retained, they go into equity as real dollars, raising book value.
o BRK (and others) are willing to put a 1.40-45 multiple on BV in buying BRK. We cheer such buybacks.
I understand that cash has a hidden optionality value. But is it realistically 40-45%?
What happens if they begin to only pay 1.0 until the cash is deployed? What makes it worth 40-45% today?
