“It’s difficult to make predictions, especially about the future.”
– Yogi Berra
Berkshire Hathaway: In Search of the “Buffett Premium” was published on March 1, 2011 shortly after the release of Berkshire’s 2010 annual report. The 118 page report was originally offered for sale on this website. However, the passage of time has made the material somewhat out of date since it does not contain data beyond 2010 and the analysis has not been updated to account for significant events since early 2011. As a result, we are now pleased to make the report available free of charge.
Fifteen months is not a great deal of time and certainly not nearly long enough to judge whether many of the conclusions of the report will be proven to be accurate in the long run. However, it only took thirty days to shatter our belief that David Sokol would be the most logical choice to succeed Warren Buffett as CEO of Berkshire. On March 30, 2011, Mr. Sokol resigned in disgrace over his personal trading in shares of Lubrizol. Readers are encouraged to skip over our references to Mr. Sokol in the succession section and to treat our defense of Mr. Sokol’s management at NetJets with extreme skepticism.
On a brighter note, we are just as confident in the valuation methodology for Berkshire as we were at the time of initial publication although obviously the numbers must be adjusted to account for the company’s progress over the past fifteen months. Although Berkshire’s shares remain well below the intrinsic value range discussed in the report, if the same valuation exercise was repeated today, the range would be higher rather than lower. Berkshire’s repurchase program, announced in September 2011, is an important development and confirms the fact that Mr. Buffett views Berkshire shares as deeply undervalued.
As with all material on this website, the report should not be viewed as investment advice and this is especially true for a report that is fifteen months old.
To download the report, please follow this link and click on the download button on the page.
Disclosure: Individuals associated with The Rational Walk LLC own shares of Berkshire Hathaway.