Berkshire Hathaway Valuation Caution

26 days ago

Speaker

"If you look at Birkshar's equity, it went over the last 20 years from 92 billion to 700 billion. That's huge growth over time. Can Berkshire go bust? No. There is 382 billion of cash. With that, you cannot go bust. Which means they will keep on turning on those 45 billion per year, adding to the equity no matter what. But now the key question is price. What is a good price? What is a great price? What is an overextended price for a great business like Birkshirie? When it comes to Birkshirie, Buffett is not doing buybacks. That means that the price is overextended. That means that you will likely get an okay return. I estimate around four or five% from Birkshirie going forward."

The speaker reviews Berkshire Hathaway's impressive long-term equity growth but expresses concern over its current overextended price, noting that the absence of buybacks could limit future returns to around 4-5%. He suggests that alternative businesses with faster compounding may offer better opportunities, highlighting the importance of assessing valuation before investing.

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