Food for thought.

I updated my Grove model.

All actual Q3 numbers except Grove #1 - Operating earnings. I used previous year earnings plus 10% growth. I also use a $30 BB deduction from cash for reserves.

I get a value of around $475.

I will also add a new twist.

As we sell equities and move to cash, operating earnings carry the majority of the valuation. Cash is valued at what you can earn with it, currently slightly below 5%. BRK Q3 earnings with some small adjustments to normalize insurance and currency losses is now tracking around $12 BB a quarter (a lot more cash in this number going forward). If you assume 10% return on the $271 BB equities, You get about $18 - 19 BB in quarterly earnings or about $75 BB in annual earnings normalized.

Assume PE of 15 (could be higher or lower) and you get a valuation of $1.05 trillion or about $470 per share.

That seems reasonable to me.

I think $425 may be too low for me.

Of course IV may push $500 by the end of next year.

Berkshire Hathaway FAQ

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