Berkshire Hathaway Inc. BRK.B

International Opportunities
1

Disc: Limit orders are in, and our purpose & outlook on this is slightly different as we have ended up with >55% of our portfolio in cash (not by design).

I have no special insights on BRK. It has 3 separate engines and my valuation is based on their earnings power and not book value. Over the past decade, it has traded at a median of about 1.4X book value. For context current book value is about 717B as of Q4 2025. Current Map is 1030B (approx 1.43X book value). So Iā€™d say its fairly valued. It is not attractively priced.

My valuation assumes a 10X-12X-13X multiple to their earnings. 5 yrs out Mcap = 1085-1279-1466B; 10 yrs out Mcap = 1248-1520-1743B. However, if it is a greate business, Mr. Market can assign a 15X multiple. That would bring the 5 yr base case to a Mcap of 1.59T and the 10 yr base case to a Mcap of 1.89T.

If they deploy 250B/373B of the dry powder, and if that earns 6-8-10% over 5 and 10 yrs, the Mcap would be 1.75T and 2.25T respectively.

Position sizing:

Implied BRK.B Share Prices at Each Hypothetical Market Cap. (X can be any amount. Eg: $10,000)

At $1.0T: $463.61 per BRK.B share ā€“> x USD

At $0.9T: $417.25 per BRK.B share ā€“> 2x USD

At $0.8T: $370.89 per BRK.B share ā€“> 3X USD

At $0.7T: $324.52 per BRK.B share ā€“> 4X USD

If one is able to deploy capital as stated above, the average cost would be about $365, implying a Mcap of 788B on a cost basis (1.09X book value). In our case, we would still be able and willing to deploy capital if the Mcap drops to $0.6T and $0.5T.

Thesis: It is unlikely that all 3 engines fail at the same time. Culture + decentralised mgt of subsidiaries will be maintained long after WEB is gone across all 3 engines. We trust the jockey and people he has picked to run the business/businesses.

Risks:

  • Execution risk + Destructive M&A (Greg is now at the helm)

- Opportunity cost incurred

- Huge claims being paid out for the insurance engine (But this is the nature of the business)

- Could be a value trap

- Drag of size on growth

Handwritten valuation is attached:
BRK Handwritten Valuation.pdf (385.3 KB)

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