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Berkshire's intrinsic value will indeed be lower when Warren Buffett is no longer CEO. However, as long as Berkshire's market value remains far below an estimate of intrinsic value and as long as that estimate of intrinsic value does not bake in any "Buffett Premium", this is really a theoretical exercise.

What seems so obvious to you and to me, and to so many other people, i.e. that Buffett's presence adds significantly to Berkshire's intrinsic value, must surely be present in Berkshire's market value too, so it seems odd that you keep saying that there is no Buffett premium. How would you know this?

Consider that Berkshire has two value components: Buffett's ongoing presence and ability to make great decisions and deals, using his good reputation, and the rest of Berkshire, the company that would be left after Buffett leaves the scene. Say for the sake of the argument that you and I agree that the latter is worth $300 billion, and the former is worth, say, $25 billion, giving a total of $325 billion. The current market cap is $250 billion. You can not logically infer from these values that the market gives Buffett's presence no value. It may be that the market also thinks Buffett is worth $25 billion, but believes that the rest of the company is only worth $225 billion.

Regards, DTM
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