Floats, Moats and What is the book value of Berkshire?

edited March 14 in General Questions
So first off, Patrick OShaughnessy‏, linked to this awesome presentation called floats and moats. Think this community will really enjoy it: https://fundooprofessor.wordpress.com/2012/12/06/httpsdl-dropbox-comu28494399blog linksfloats_and_moats-pdf/

Leads me to a lot of questions, but let's start with the perfect one for this community. What is a good model for deriving berkshire's book value? Doubt the ones on sites like morningstar take all this hidden value into account.


  • honestly surprised at the crickets on this, all the discussion that goes into global macro, but no one has a view on Berkshire's book value. There are very few people in the world that can make money from global macro returns are heavily concentrated to a few mega players. But many investors can buy and hold Berkshire, and potentially compound over time. And this is a basic question in the analysis. What is Berkshire worth?
  • I really liked the lecture.

    I have noticed this float too in payroll service providers that collect payroll remittances to be filed later. In Canada people who have eligible deductions such as education amounts can use a TD1 to reduce or defer tax deductions to create more float instead of collecting a refund at the end of the year. If the float is invested this is a great tool.

    This in effect gives Berkshire great access to capital through Geico etc. With such low interest rates people have access to this very cheap float. People can leverage their house for next to nothing and invest in other assets very cheaply. I like free money, I guess a lot of people are doing this so that may be why housing is so overpriced north of the border. Risk for correction to asset price may offset the cheap rate eventually but the model works well for people who already have equity built up in their home and don't overpay for quality assets.

    The only thing is without a master valuer or investor like Buffett or Munger do you get a great return on that free float or just a mediocre one. That is why there must be some additional business model to fuel with the float or you are just getting the same risk free return as a T-bill.

    I am not sure how to value this per say in a business but it can definitley be included somehow. I will have to look more closely at ROCE as I usually like to look at ROE.

    Macro is fun to talk about but it is more for speculation and growth investors. You have to have a ton of capital and connections to invest macro it would seem. To many variables to consider IMO although sometime you may be presented with those golden opportunities.

    Good stuff Lev!
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