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No. of Recommendations: 6
The fact is that the businesses is doing terrific but WEB is lowballing this.
There is too much over engineering of PBV, 4 column, 5 Groves etc.


In the four groves I used a multiple of 14. The market is assigning much higher multiples to similar businesses, e.g. CSX is 19, Vanguard Utilities ETF is about 25. If I plug in, say 20, in my 4 groves, "intrinsic value" is now approximately $440K A ($293 B), 1.7x book. That's probably closer what exuberant Mr. Market should be offering for Berkshire in comparison with alternatives, but Berkshire don't get no respect no more.

If the last know buyback was a 95 cent dollar, that's a multiple of 11.5, or perhaps more likely, a bit higher multiple with a haircut on investments like Jim does (12.5 and a 10% haircut gets you there).

WEB, of course, isn't interested in Berkshire's stock price going to exuberant levels - even though it would benefit the charities he supports. I think that at least while he's around, an owner of Berkshire will get a return close to how the business performs. Multiple expansion simply isn't on the cards.
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