Another Chris Bloomstran tome worth reading (168 pages).If in a hurry, the 53 page discussion of BRK starts on P69.https://static.fmgsuite.com/media/documents/c388840b-3dda-41...
"Another Chris Bloomstran tome worth reading (168 pages).If in a hurry, the 53 page discussion of BRK starts on P69."I found this Semper letter on BRK far more interesting and informative than BRK's AR.And, it includes Semper's estimate of 4Q2019 performance in his analysis.1. Some very strong criticism of BRK's both changing of the goal posts, as wellas reducing the amount of fine-detail reported in its results. Much more criticismhere than in last year's Semper report. He does not agree with WEB that BRK's reports should target average (i.e., unsophisticated investor) , rather than investment analysts.2. Expects continued 10%/year ROE going forward, based on his view of true sustainableearnings, which he calculates based on lots of earnings adjustments he makes, and explains.3. Very aggressive estimates of intrinsic value: over $450k/A-share!Carl
“ I found this Semper letter on BRK far more interesting and informative than BRK's AR.And, it includes Semper's estimate of 4Q2019 performance in his analys.”Agreed. Not just one IV estimate, but four, each using different methods and quite detailed. Would be interested if the accounting nerds on the board (you know who you are) had any comments on any/all of his methods and/or results.Liked Bloomstran’s comments about Buffett claiming he gives enough info on the company that even his two sisters - “Dear Doris and Bertie” - “would understand what I was talking about.” Bloomstran cries B.S. (not balance sheet) on more than one occasion. Good for him. On the other hand, If I were Buffett and serious about significant buying backs going forward, would I broadcast to shareholders and the investment public at large that shares are undervalued by as much as 30%(Bloomstran’s highest IV estimate)?Probably not. There would likely ensue a feeding frenzy that would take the market price quickly up to something much closer to IV.Maybe better to keep information vague and incomplete to keep IV estimates fuzzy and low.Instead, if you are a large shareholder and are interested in selling to us, Let’s have a private call and talk about a price attractive to both parties, without letting the rest of the poor schmu..s, shareholders know what the transaction price was.I’m oK with that as a ”small time”. (< $20 MM) shareholder if it means Buffett can hoover up significant amounts of stock at a discount to IV conservatively calculated.
WEB is NOT serious about significant buying backs going forward."If I were Buffett and serious about significant buying backs going forward"As long as he is in that office, as long as he is anywhere on the BoD, it won't happen. All evidence points to ... outlook not so good ... where's my Magic 8 Ball?
Semper gets readable, useful only beginning Pg 78, & in fact, starting on Pg 78, Semper gets EXTREMELY CORRECT in pulling back some of the wool from the eyes of those who constantly parrot WEB. EXTREMELY REFRESHING!
Not just one IV estimate, but four, each using different methods and quite detailed.Useful - but hard to reconcile with Buffett's statement that buybacks were at a "modest" undervaluation. I think there's some meat in all the stuff SA gives us. But it is going to take a lot of time to sort through all of it.
tecmo said "What I find most interesting is that the share price almost exactly matches the business growth. ie: the shares are (roughly) no more overvalued (undervalued) than at this time last year (as Jim likes to point out - a big contrast to the S&P 500).ie: Share Price up 13.4% vs. Business Results up 13.8%"In the Semper analysis, Bloomstran observes the BRK annual price growth over a period of time has tracked his average estimated increases in business value very well historically. He expectsthat to continue going forward.He also conservatively estimates book value growth of 10%/year, but his intrinsic value estimates are built from bottom up data, not a simple multiple of book.For those up to the effort of going through his 55-page analysis, and last year's letter for additional methodology built into this year's update, there is plenty of food for thought. His analysis of BRK is deeper by far than any analysis I have seen on or off this board. This does not mean you have to agree with all of it, but his methodology and assumptions are out there for one to think about and come to your own conclusions if you are into intrinsic value estimation.There is also a good deal of aggregated or intermediate data useful for your own manipulations.The data forms the building blocks of his 4 intrinsic value estimates, with an average value of $466K, and a range of $438K to $495K.Carl
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