Subject: Re: Bloomstran: “The stock was overvalued”
I had Bloomstran pegged as a perma-bull. Anyone remember his last IV estimate?

The most recent publicly-available Semper Augustus client letter is from February 21, 2025. (It is extremely strange that he publishes a detailed assessment of Berkshire literally the day before the annual report is published - it becomes immediately outdated. But who am I to judge.)

Some relevant quotes from that report:

"Berkshire grew per-share intrinsic value by 10.5% in 2024 and 11.3% in 2023. The stock returned 25.5% and 15.8% over the two years, respectively. The stock advanced faster than intrinsic value over both years in part because the shares gained only 4% in 2022, trailing intrinsic growth. The stock also rose to 87% of value from 77% at year-end 2023 and 76% the prior year."

"The shares are less undervalued heading into 2025 than they have been in quite a while."

He presents intrinsic value estimates based on 4 different methods (again this is immediately prior to the most recent Berkshire annual report]:
Sum of the Parts Basis: $780,463 (A shares)/$520 (B shares)
GAAP-Adjusted Financials: $757,508/$505
Simple Price to GAAP Book Value: $785,965/$524
Two-Pronged Approach: $807,869/$539 [He labels this one "Ours" to indicate preferred method. This aligns with the comment that the stock traded at roughly 87% of value as of this date]
Simple Average: $782,951/$522

If he kept exactly those estimates, then Berkshire reached full fair value ($539 per B share) already this year and exceeded a "Simple Average" fair value of $522 by a small amount.

But I think it's also reasonable to believe that Bloomstran lowered his estimate of fair value after the annual report and annual meeting (and before this most recent interview), such that he did view it as materially overvalued in real time. (I have certainly soured on Berkshire's outlook over the last 14 months or so and have more or less exited a position that I've held for more than 25 years. I have some remaining shares offset by January 2027 calls at 530. I probably would be a buyer again at 420 or so.)

Any way you look at it, I think it's clear that he viewed Berkshire as substantially less attractive at the beginning of this year than he historically had, and that view almost certainly got more bearish during April and May when Berkshire's price jumped.