No. of Recommendations: 5
“Berkshire Hathaway's stock is about 20% undervalued, presenting a golden investment opportunity for a unique capital allocation powerhouse.”
The obvious response: if it’s so undervalued why isn’t Berkshire buying it? It’s not like they don’t have excess cash.
I’ve done the 5-groves IV estimate ever since Buffett published it. Berkshire has almost always been undervalued using this ‘Buffett-approved’ method. It’s about 10% overvalued currently.
No. of Recommendations: 4
“According to consensus estimates, Berkshire's FY2024 EPS is projected at $19.73. I think that this forecast is highly reliable because we have only one reportable quarter left in 2024. Multiplying this forecasted EPS ($19.73) by the S&P 500 P/E ratio of 27.87 gives me a fair share price for BRK.B at around $550.”
Oh boy. Yeah, err, no.
No. of Recommendations: 2
<<“According to consensus estimates, Berkshire's FY2024 EPS is projected at $19.73. I think that this forecast is highly reliable because we have only one reportable quarter left in 2024. Multiplying this forecasted EPS ($19.73) by the S&P 500 P/E ratio of 27.87 gives me a fair share price for BRK.B at around $550.”>>
Oh boy. Yeah, err, no.
Well, for a thought experiment ... if the things that Berkshire owns (let's use the S&P500 as a proxy for those things) are worth more than Berkshire is worth, then would it make sense over time to sell those things, and use the cash to buy Berkshire? Or maybe that's exactly what WEB is doing, converting a lot of S&P500 holdings to cash, and if prices out there moderate, then Berkshire can buy them, and if prices don't moderate, Berkshire can buy Berkshire (for a better price than other S&P500 stuff). Either way it should be profitable over the long term. A kind of arbitrage.
