<<Be interested what IV you’re coming up with currently using look-through. How are you valuing the cash? What multiple on fully-owned businesses? What multiples on look-through>>

Great question, I calculate Berkshires % ownership of each individual stock and simply add that same % of earnings—what Berkshire owns. Then I use a multiple of 17 which is below market, but slightly above historic averages. The value of cash is the earnings it generates and is already included in Berkshires income statements. You do have to back out the stocks dividend payment to avoid double counting those earnings.Because Berkshire earnings give already give full credit to that-but only that on stocks. That’s the whole point of this exercise—giving credit to the value stocks provide us BEYOND the dividends.

I just treat all the earnings the same. This is very ballpark. And I’m probably not doing this exactly right :) The 5 groves method is excellent. And not claiming look through is better but I like it. I’d rather be highly accurate within a very wide range…than very specific but wrong.

Honestly, I’m on vacation now and haven’t run this exercise for a while—last time I got around 16x but the stock has run considerably higher since then. In any case—on a trailing earnings basis Berkshire is a good deal cheaper than the market. Forward earnings comparison not as compelling but I think those are highly speculative/generous numbers…

As far as Intrinsic Value it really depends what you plug in for your hurdle rate. Buffett says the 10 year Treasury is the risk free hurdle. We’re probably around fair value now. For most of the time I’ve owned Berkshire it’s traded between a 10 to 20% discount. So trading at fair value is attractive relative to the market, yet one of the least attractive for historic Berkshire entry points.