No. of Recommendations: 6
Normalize Berkshire’s book value to $100, and the structure becomes clear: roughly $50 sits in cash and short-term T-bills, while another $40+ consists of MTM equities, all while the market prices the company at $145. You cannot simply back out those liquid assets to isolate the operating businesses, since insurance float supports a substantial portion of the asset base and the insurance franchise itself carries immense intrinsic value. Nevertheless, this breakdown shows why a headline 1.45× P/B may make Berkshire look cheaper than it really is.
I don't find your logic convincing because you are ignoring all the wholly owned non-insurance businesses. While I agree with you that buybacks should be done only prices below intrinsic value, I think your estimation of Berkshire's intrinsic value is incorret.
