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Strategies & Market Trends : Buy Berkshire instead of Vanguard S&P (BRKA) -- Ignore unavailable to you. Want to Upgrade?

To: appro who wrote (280)	5/30/2007 12:40:08 PM
From: matherandlowell	Respond to of 313

"Sixty-thousand plus of that 80k/share is only technically referred to as cash equivalents because BRK owns that much of the marketable securities of Coca-Cola, American Express and a bunch of other long term investments...That really only leaves about 20k/share swirling around like dust bunnies looking for a good home" You seem to be agreeing with my earlier argument that the $80k/share is "owned" (without offsetting debt) by Berkshire shareholders. This was my understanding from the annual report but has been brought into question by Jurgis Bekepuris. Even if greater than $60k/share is kept in marketable securities, it is still property held without debt. The other $20k/share might be in cash or cash equivalents but, again, if it is not offset by debt, then the point remains that $80k/share is essentially in cash or investments which can be turned into cash at any time and the proceeds would not be used to pay back debts. This is my understanding from the annual report but the question should be resolved. Trying to understand the balance sheet of an insurance company would be difficult; trying to understand the balance sheet of Berkshire would probably be impossible. That's why I think Warren is simply stating in as clear language as is possible that each share owns $80k with no debt. In addition to the $80k, each share also owns the operating companies held by Berkshire. That is the point of showing us the earnings cash flow from the operating businesses. If we think of the $3500+/share in earnings as earnings on a stock valued at $110k/share, then the multiple is rather meager. But if we deduct the $80k/share from the share price and then do the PE and P/Sales computations, then the stock looks ridiculously undervalued. That's my only point and I think that is the point Warren was trying to make in his letter. j.