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Strategies & Market Trends : Value Investing -- Ignore unavailable to you. Want to Upgrade?

To: Don Earl who wrote (11483)	11/28/2000 9:43:42 AM
From: Bob Rudd	Read Replies (1) \| Respond to of 78683

USG: I suspect Buffett viewed the valuation discount as the 'premium' on asbestos litigation insurance risk. Since the risk is limited to the price of the shares, there isn't the open-ended downside that actually insuring the risk might entail. He and AJ cranked the probabilities and decided the discount represented a very profitable premium at his cost of the shares. This may no longer be the case now that the Buffett premium is built into the shares. While USG has a very different risk profile than asbestos insulation makers [USG's is about joint compound - for less likely to be implicated in lung diosrders] and average settlement costs are far lower, it nevertheless is very difficult to reasonably quantify.