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FWIW'have found this Financial Service to be conservative.
'-
Valuation
Nov 22, 2022
Currency in USD
BRK.B is at a 17% Discount.
Last Close
308.24
Fair Value
370.00
Uncertainty: Low
1-Star Price
> 462.50
Economic Moat
Wide
Trend: Stable
5-Star Price
< 296.00
Capital Allocation
Standard
GLTA,
paul

They have been doing this for quite a few years.
Has anyone built a list of their dates and value estimates?

Jim

Thanks for sharing. Cannot wait for the AR release Saturday am as well as the new Bloomstran/Semper Augustus letter which should be released any day now.

FYI- Adam Mead provided a conservative and thoughtful BRK valuation on YouTube. He has the current price at a 12% discount to IV and IV/book 1.67. I think the link was shared already but in case others want to listen to his discussion:

https://m.youtube.com/watch?v=cjjrLFnwBI4

"Has anyone built a list of their [Morningstar's] dates and value estimates?"

Morningstar has a graph on their website, but it only goes back to Jan 2013. Would you like me to transcribe the data from the graph? They have changed their valuation about 24 times from Jan 2013 to present. I have something that I need to do right now, but I could get to it in an hour or so.

date, price, Morningstar fair value estimate
Jan 2013, $149.5K, $175K
May 2013, 171.3K, 195K
Jun 2013, 168.6K, 207K
Sept 2013, 170.4K, 215K
Apr 2014, 193.3K, 225K
Oct 2014, 210.0K, 235K
Apr 2015, 213.4K, 252.5K
Sept 2015, 195.2K, 265K
Feb 2016, 202.6K, 255K
Jun 2017, 254.7K, 280K
Jul 2017, 262.8K, 290K
Jan 2018, 323.4K, 330K
Feb 2019, 302.2K, 360K
Jun 2019, 318.4K, 364.5K
Jul 2019, 308.7K, 380K
Apr 2020, 271.7K, 342.5K
Sept 2020, 320.0K, 355K
Nov 2020, 343.7K, 380K
Mar 2021, 385.7K, 440K
Aug 2021, 429.9K, 484K
Mar 2022, 528.9K, 525K
Apr 2022, 484.3K, 550K
Jul 2022, 451.7K, 535K
Nov 2022, 480.3K, 555K

Many thanks for the Morningstar data.

I converted to an Excel file and played with it. The average (and mean) of price vs IV is 86%. The average deviation from the mean is 5%.

That illustrates a long standing question for me. If the market is truly a weighing machine, why does BRK almost always sell at a discount to IV? This happens over decades - certainly since the Gen Re acquisition. How long does it take the weighing machine to weigh?

Is there truly a conglomerate discount - whether there should be or not - that reflects continuing investor attitudes? Or do we all consistently miss some real world negative in our IV estimates? Do IV estimates just consistently look 2-3 years ahead of the market?

"How long does it take the weighing machine to weigh?"

Good question. I would say definitely longer than 10 years. If you plot P/B versus time since 1965, you'll see that P/B has oscillated between 0.4 and 2.1. P/IV has oscillated, too, no matter how one estimates IV. Personally I think that P/IV was greater than 1.0 from late 2000 to late 2007, and below 1.0 from 2008 to 2021.

Thanks Tex for digesting the data and Excel findings. The majority of my assets are in BRK. However, these are some quick amateur thoughts that come to mind wrt to market perception and the weighing machine consistently seems to lag its actual weight:

All assets are less liquid within BRK.
Investors know assets are quite unlikely to be 'spun off' or sold to PE.
Perceived complexity to value all of the diverse groves and jigsaw puzzle of BRK, including float.
The uncertainty as to what happens to current assets and , as importantly, future asset allocation when WEB leaves.
Will the hundreds of outstanding sub. managers stay and remain as loyal to BRK?
BRK may be less appealing to own and trade for growth-oriented large money managers.
Algorithm/Hedge fund/ momentum/options based frequent trading may make BRK less appealing.
A larger % of BRK may be Predominantly owned by individuals/loyal shareholders vs. large funds and institutional investors vs. other equities.
Perceived BRK keeps too much cash/ cash equivalents on hand.
Perception that BRK is becoming too large to provide market beating returns and 'move the needle.'

Personally I think that P/IV was greater than 1.0 from late 2000 to late 2007, and below 1.0 from 2008 to 2021.,/I.

You may well be right. I recall WEB talking about almost doing a buyback in 2000. And I bought an A share for my birthday in early 2000 at $45,734. Wish all my birthday gifts turned out as well.

While it may be oversimplified, I think of the conglomerate discount here as similar to "a basket of options is worth more than an option on a basket" in the sense that, unless one takes substantial effort (short Apple and some of the other large holdings to hedge) to back out some of what is in the basket, you're stuck with what's in the basket of Brk. A lot of what is in that isn't readily offset, and the people who are willing and able to make a lot of those evaluations will find themselves better served putting together their "basket of options" from the individual companies out there. For those of us willing to take the basket, the lower volatility is an positive, but we're not being paid a percentage of performance without losing money on the downside. That takes an enormous amount of demand out of the market for the shares, but at a fairly static proportion; the discount ought to be fairly stable and price track performance. I may also be way off, but it's a story that would fit the stable ongoing discount.

I've always thought that, if price NEVER matches IV (according to a particular model), then that IV model must be wrong. Conversely, if an IV model is valid, then, at some point, price will recognize it and coincide with it.

Saying that an IV is "ahead of itself" by a few years has never made any sense to me.

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