Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Politics : Ask Michael Burke -- Ignore unavailable to you. Want to Upgrade?

To: re3 who wrote (68438)	9/30/1999 7:56:00 PM
From: Freedom Fighter	Read Replies (1) \| Respond to of 132070

Ike, I think the equity portfolio is a lot less significant to the value than is used to be. The bond portfolio is almost as large as the equity portfolio right now. I think a number of his large holdings that were overvalued are now trading at levels that are reasonable. Perhaps I wouldn't buy them, but I think KO for example trading at 30x "normalized earnings" +/- is not crazy. It's average PE ratio over the last 30 years is right about that. Amazingly, it has always been a good buy at that price. And if you ask me it is a better compnay right now than it was for much of that time. It has divested a few poor businesses and earns a higher return on equity and capital than it used to. It's long term prospects are still terrific despite recent struggles. My point being that BRK is currently trading at just above 2 times tangible book value (give or take - I haven't cruched the numbers lately). I think the equity portfolio is NOT as overvalued as it used to be and is less important to the value anyway. I think that the 100% owned operating companies (non-insurance) are worth 7.5 - 10 billion. Even if I'm off on that, they are certainly worth way way more than they are carried on the books for. So you are getting Geico (perhaps the best auto insurer in the country), General Re (one of the best reinsurers in the country), a terrific super-cat business, and a bunch of other businesses worth way more than book for a little more than 2 times tangible book. If you add in a portion of the unrealized capital gains tax liability and assume it is an asset because Warren isn't going to sell and then add Warren's ability as a value added investor. Wa La! It's hard for me to think that the best portfolio of insurance companies in the world with Warren at the helm isn't worth it. I didn't empty my pockets. I threw a little more in. Wayne