Subject: Rational Walk on BRK
https://newsletter.rationalwal...

good as always

"Berkshire has had quite a run over the past year with the Class A shares rising 30.6%. While it is certain that the company’s intrinsic value has increased over the past year, there is no possibility that intrinsic value has increased by as much as the stock price.

The stock has clearly outperformed the business over the past year.

A company’s stock price does not track underlying business value over short periods of time such as a year or even a couple of years. Over five or more years, however, the stock will tend to roughly track the financial results of the business.

If one accepts that intrinsic value could not have increased by 30% over the past year, does this make the stock overvalued? Not necessarily, because shares could have been undervalued at this time last year. There are good reasons to believe that this was the case based on recent repurchase activity that has been publicly disclosed."