This week, I find the intrinsic value of Berkshire Hathaway (BRK) using the DCF method that’s taught in business school and compare that valuation with the way famous value investors like to find intrinsic value of companies. In the first method, I find BRK’s cost of capital, and use that as my discount rate to find the intrinsic value. In the second method, I use a discount rate that fits my risk tolerance and find the intrinsic value of BRK.
Timestamp
0:00 Introduction
0:46 Business School Way of Finding I.V.
8:31 Value Investors’ Way of Finding I.V.
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References:
Berkshire Hathaway’s Website: here.
FINRA Berkshire Bond Rating: here.
FRED Option Adjusted Spread for AA rated bond: here.
US Treasury Yield: here.
Berkshire Hathaway 10-Q: here.
MarketWatch: here.
Morningstar: here.
Useful Resources here.
About Berkshire Hathaway:
Berkshire Hathaway Inc., through its subsidiaries, engages in the insurance, freight rail transportation, and utility businesses worldwide. It provides property, casualty, life, accident, and health insurance and reinsurance; and operates railroad systems in North America. The company also generates, transmits, stores, and distributes electricity from natural gas, coal, wind, solar, hydro, nuclear, and geothermal sources; operates natural gas distribution and storage facilities, interstate pipelines, liquefied natural gas facilities, and compressor and meter stations; and holds interest in coal mining assets. In addition, the company manufactures boxed chocolates and other confectionery products; specialty chemicals, metal cutting tools, and components for aerospace and power generation applications; and flooring, insulation, roofing and engineered, building and engineered components, paints and coatings, and bricks and masonry products, as well as offers manufactured and site-built home construction, and related lending and financial services; and recreational vehicles, apparel products, jewelry, and custom picture framing products, and alkaline batteries. Further, it manufactures castings, forgings, fasteners/fastener systems, and aerostructures; and seamless pipes, fittings, downhole casing and tubing, and various mill forms. Additionally, the company distributes televisions and information; franchises and services quick service restaurants; distributes electronic components; and offers logistics services, grocery and foodservice distribution services, and professional aviation training and shared aircraft ownership programs. It also retails automobiles; furniture, bedding, and accessories; household appliances, electronics, and computers; jewelry, watches, crystal, china, stemware, flatware, gifts, and collectibles; kitchenware; and motorcycle apparel and equipment.
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Superior North LLC’s content is for educational purposes only. The calculators, videos, recommendations, and general investment ideas are not to be actioned with real money. Vyom Joshi is not a professional money manager or a financial advisor. Contact a professional and certified financial advisor before making any financial decisions. Please review the Disclaimer and Terms and Conditions.
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