Berkshire Hathaway Class B Message Board

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Non-Tech : Berkshire Hathaway Class B

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To: Jacques Newey who wrote (1302)	1/24/2000 6:31:00 PM
From: Benkea	Read Replies (2) of 1652

Jacques: "Therefore I concluded that the understated value (oops I didn't post that) was equal to the understated goodwill." No, not necessarily. Yes, goodwill is understated. But, BRK's subs are worth considerably more than their book value would reflect even if goodwill had never been amortized. First, Buffett doesn't ever pay too much. Thus, the companies were worth more than they were booked for the day he bought em. Second, their value has grown dramatically since they were booked. See's for example was bought for less than $50 mil, but Buffett states See's is worth "many hundreds of millions" more than it is carried on the books. See's is a small part of BRK so you can see how when this same principle is applied to most of the other subs how the number would climb. This is why BRK does and should trade at a multiple of book. I hope this makes sense. The Appendix in the 1983 annual at the bottom would be very helpful to you for gaining a better understanding. In fact, the 1983 annual is the best annual in BRK history IMO, and would warrant a complete re, and re-read anyway: berkshirehathaway.com

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