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Strategies & Market Trends : Buy Berkshire instead of Vanguard S&P (BRKA)
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To: matherandlowell who wrote (279)5/30/2007 11:02:56 AM
From: Jurgis Bekepuris  Read Replies (1) of 313
 
You choose to argue rhetorics instead of reading the balance sheet. I think it is a dangerous approach in investing, but it's your choice.

Just 3 points:
- It is cash and investments, not cash and cash equivalents as you claim. Investments are not cash equivalents and therefore cannot be subtracted from share price as cash. Investments are stocks like KO, AXP, BUD, etc. not guaranteed to go up or stay level.
- I manually calculated the same number as Warren gives in page 4. It's just first 4 lines of the Assets on page 26, divided by number of shares outstanding. No subtraction of liabilities.
- Why Warren lists these if they are offset by liabilities? It's a good question and you should ask it Warren or BRK investor relations. My guess the explanation is that Warren has a nearly free float (debt) from his insurance operations, so he does not feel that he needs to subtract it. He lists the 80K number as the investments that potentially earn return. I believe that it is a misleading number though.

Overall Berkshire is a VERY COMPLEX corporation. Probably one of the most complex that I have looked at. So I invest in it mostly on belief in Warren, which is not something that should be done. :) But if you decide to analyze it, you can't simplistically take one number from page 4 and wave it around. The balance sheet is very complex because of insurance operations, financing operations, partial holdings and so on. You have to disect and understand each of these before you can say something about BRK's finances.

I have probably seen only 1 good analysis of BRK and trust me it took couple weeks if not more to do.
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