No. of Recommendations: 10
Equities: $354bn, take some off for taxes. Say $307bn.
Cash: Jim explained the debt. Cash + fixed income $187bn. Take $50bn off for reserve. $137bn
Earnings: $25.5bn at 16x = $408bn.
Total $852bn
A Share equivalents: 1,441,483
$591/A
FWIW, my method comes up with $603,300 for end-2023 in end-2023 dollars, not so different.
I make no attempt to get the "right" bottom line value number by obsessing over multiples, merely to get a method which is consistent through time and rises at the same rate of "true" value.
With that caveat in mind, it is calculated as follows:
Last four quarters net after-tax income in rails, utilities, manuf/service/retail including Pilot and non-controlled, and a cyclically adjusted estimate of underwriting profit. Sum of those four as stand-in for ALL subsidiary earnings, as the "other" category is small and volatile and investments covered elsewhere.
Each quarter inflation adjusted independently lately!
I slap a multiple of 15 on those earnings.
Investments per share generally at market value, but most equity positions capped at the greater of (21 times earnings) and (half current market value). Mainly this affects Apple.
A penalty of 30% of float as a proxy for the lower returns from having to have a lot of cash all the time. (not a proxy for the amount of cash)
My current estimate of cyclically adjusted underwriting profit is $1.757bn/year after 21% tax. A lot lower than the actual value this year, but a lot higher than the actual value last year.
Jim
