The Motley Fool Discussion Boards

Previous Page

Stocks B / Berkshire Hathaway


Subject:  Float based valuation model Date:  1/6/2013  10:58 AM
Author:  rationalwalk Number:  197590 of 225394

The discussion regarding Berkshire's float and how it is invested inevitably leads to the question of whether the "float based valuation" models that were very popular 10-15 years ago ultimately led investors astray and resulted in valuations for Berkshire that, in retrospect, can be considered above fair value.

The float based valuation model is one developed by Alice Schroeder in the late 1990s and published in a 1999 report which is now available on a number of sites online. I think most everyone here is familiar with the methodology. Although not explicitly endorsed by Warren Buffett, many believe that Schroeder's access to Buffett in the late 1990s combined with the fact that she was subsequently selected as his official biographer indicate Buffett's general agreement with her work and methodology.

Although I used this methodology for years as my primary guide to Berkshire's value, I have come to believe that it is of