11/17/08
Berkshire's insurance business is worth at least $70 billion. Berkshire has $140 billion in cash and securities, (though intrinsically worth more). Manufacturing and retail is worth at the very least, $16.5 Billion and Utilities at least $10 Billion. I left out the financial businesses and a few others because, in essence, they are free:
(In Billions of dollars) Minimum Business Value = 70+140+16.5+10 = $240 billion vs. Market Value = $150 billion a 40% discount.
The underlying business value should compound at 15% annually over 5-year periods, irrespective of the markets appraisal (and Mr. Buffett's comments at last year's meeting). Buffett has set up the business in such a way that the underlying business value will continue its compounding rate of return for generations.
Unless an investor thinks they can earn better than 15% annually, Berkshire is an attractive commitment.
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