No. of Recommendations: 3
Gator1984,
I get a higher IV using what I believe is the same methodology.
Yes, that's the usual outcome :-)
Using the same 17.5x:
Grove 1:
$196 (23.23 oper earnings (no insurance) + 0.95 retro insurance losses) times a PE of 17.5 which I base on a formula that uses the current 10 year treasury rate)
I didn't include "Other". Most of it was currency exchange gains. I don't get into the details of retro insurance and such. It's over my head.
$177
Grove 2:
$107 Net after tax value of equity holdings with small gain of 2.1% YTD added.
Same
Grove 3:
$ 19 KHC, Oxy, Berkadia equity + Oxy preferred and Oxy warrants
Again, you go into more detail than me. I just use the "Non-controlled businesses" number from the letter.
$12
Grove 4:
$165
Cash, Treasuries, including railroads plus small YTD add for retained earnings.
I just use the insurance cash and bonds from the AR.
$160
Grove 5:
$21 Many may not include this. Smoothed annual underwriting profits over 20+ years Times same 17.5 PE.
I didn't used to include this, because Buffett didn't when he first described 5-groves. You've all convinced me it should be there, but how? Jim has a later post in this thread and I need to think on that method more.
For now: 10 year average (not adjusted for anything): $15
Total: $508
Total: $471
On that basis we are not far apart.
