Berkshire stock valuation - Always Compounding!

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Value Investing with Sven Carlin, Ph.D.

Күн бұрын

Пікірлер: 136

@Erez.Levi.Stocks 2 ай бұрын

I have been following your content for years and have complimented you several times in the past but I really feel the need to do so again, Thank you very much for the content you make available to all of us

@Value-Investing 2 ай бұрын

Thanks!!!

@richardrock4life 2 ай бұрын

Thanks for the insight Sven. I've been on the fence with berkshire for a while but your clear reasoning behind the long term benefits made me decide to buy and include it in my portfolio

@Value-Investing 2 ай бұрын

thanks for sharing, but keep in mind the risk of valuation, thus be ready to average down if possible, but for real BRK investors, that is the key benefit!

@richardrock4life 2 ай бұрын

@Value-Investing very true, that's why I've been rebalancing my portfolio as well so I'm more heavy in cash too in order to be able to average down in case there is a bigger crash

@PeterWolfenstein-ug7bt 3 күн бұрын

Hi Sven, at your Hidden Earnings calculation around 5:29 minutes you forgot the $1.7 billion from American Express.

@Value-Investing 3 күн бұрын

even better then...

@JonTreon 2 ай бұрын

If Berkshire isn't buying their own shares at these prices, why should anyone else?

@druvaciam5407 2 ай бұрын

Good point, the stock is not cheap and quite risky comparing to AMZN or GOOGL.

@Value-Investing 2 ай бұрын

well, it seems some are as the stock just keeps going up!

@viiccd 2 ай бұрын

Why do you think Ajit Jain sold half his holding recently, seems very odd and not exactly an encouraging sign to investors? Thanks

@viiccd 2 ай бұрын

In your video on BRK at the start of 2023 you ended up saying you wouldn't buy it at that price. Since that video the stock price has gone up more than 50% !

@Erez.Levi.Stocks 2 ай бұрын

Hello Swan, I’m very confused about Berkshire's report and would greatly appreciate a little help if possible. In the table you presented at 03:18, we see that the operating income for the first nine months of 2024 was about $32 billion (after excluding investment gains and losses). However, on page 5 of Berkshire's reports, in the income statement, we see approximately $86 billion in operating income. If we subtract the amount shown in the income statement, approximately $46 billion (Investment gains/losses), we get $40 billion and not $32 billion. Could you help clarify this discrepancy? Thank you!

@whoiswho22 2 ай бұрын

great video was looking exactly for that!!

@Value-Investing 2 ай бұрын

Glad I could help!

@HarukaMizune 2 ай бұрын

For some reason the algorithm on my KZbin feed for this channel has fallen out of favour a bit. But I'm glad to have caught this video 😊

@Value-Investing 2 ай бұрын

great to hear!

@anderskrusell5238 2 ай бұрын

Great video Sven. Berkshire low risk and decent reward.

@luftwise Ай бұрын

Thank you for this amazing video! I have a question about counting Occidental Petroleum C and Kraft Heinz Co in the look through earning, because I believe they belong to the 20-50% ownership. I remember Buffet wrote about for look through earnings 20-50% ownership companies, whether or not distributed, will end up in Bershire's earnings. Does this already counted in Berkshire's earnings "Non-controlled business(Includes certain businesses in which Berkshire had between a 20% and 50% ownership interest.)"? Thanks!

@BakOonLy 2 ай бұрын

Hi Sven Serious question : Don't you count 2 times the insurance investment income ? I mean you take 40 billions (included investment income) then you add +13 for T-bill income which are already in the 40 billions

@Value-Investing 2 ай бұрын

i have deducted that, we are at 40 now, plus 30 from new investments is 70, minus 10 from current income :-)

@BakOonLy 2 ай бұрын

@@Value-Investing Aaah you're right, awesome !

@fishhunting101 2 ай бұрын

Buffett thinks brk is not a buy right now sven. Just follow the old man on his own stock.

@jakepapa6516 2 ай бұрын

Wrong, burkshire doesn't think it's UNDERVALUED. But if you follow buffet, buying a great company at a fair price is a buy. And this is a great company at a fair price.

@Value-Investing 2 ай бұрын

yes, not for Buffett, but for the other 99% of people BRK is always a buy!

@viiccd 2 ай бұрын

But Sven I remember a video you made on BRK saying at that moment it wasn't a buy.

@paulvlad34 Ай бұрын

Hey Sven. How do you buy berkshire being from europe? Do you exchange your eur to usd? Is there another way?

@felixwallmeyer 2 ай бұрын

Hello can you take a look at the Porsche Holding Stock? It is trading at PE ratio of 2,30x. Even though the automobile industry in Germany is very damaged I feel like the stock is just underpriced and the inner valvue of everything is much higher than the stock is valued. But I’m not as good in value investing as you so I would be very interested in what you think

@johnkraemer96 2 ай бұрын

He looked at VW / Stellantis. Porsche Holding is basically Volkswagen. Just some input, it doesn't matter what the PE says, if you're unable to sell (enough) cars for a profit in the future you ain't gonna make (much) money. The porsche situation is way too unclear to say it is undevalued. Too much competition for a new product (e-cars). The question is, are you willing to pay around 46 billon dollars for a company that is earning less each quarter, likely making €0 or a loss in Q4 with unpredictable future earnings? I'm not.

@felixwallmeyer 2 ай бұрын

@ yeah thanks for responding I’m with you! I’m also not bullish on the car industry in Germany. I’m just curious because at some point don’t know how low a stock can go. The market cap of the Porsche holding is way lower than the stocks they hold on Volkswagen. Plus they have holdings on other company’s. I mean obviously they heavily depend on the performance of Volkswagen and there is a holding fee included but at that point I feel like just the market cap is to low for that stock. That’s why I’m wondering. Greetings from Germany

@continuouscompounding 2 ай бұрын

Car companies are hard to value. Ferrari can always raise prices. Porsche can always raise prices for their collector cars, but mass market cars like Cayenne not so much

@Value-Investing 2 ай бұрын

thanks for suggesting!

@bobbenavides 2 ай бұрын

what is difference between brk.b and brk.a. which to buy on fidelity for my taxed account?

@smoothjorn 2 ай бұрын

Brk.a has voting rights. So you should buy brk.a but you won’t have enough money to buy 1 share. So brk.b it is for us…

@continuouscompounding 2 ай бұрын

Buy brk.b, that is the cheaper one that most ppl can afford. There is no difference, just brk.a represents are large stake in the company

@bobbenavides 2 ай бұрын

@@smoothjorn thanks

@bobbenavides 2 ай бұрын

Thanks

@Value-Investing 2 ай бұрын

always buy BRK.A, buy a few and forget about your money :-)))

@AlessandroAnderson 2 ай бұрын

Equity returns calculated for BRK, are in real terms, or nominal (with, we can say, 3% inflation for easy calculation)? S&P500, with 31 PE ratio, should offer 3%+2% US growth+3% inflation (circa) equals 8% nominal return (potential). Isn't it?

@Value-Investing 2 ай бұрын

we cannot know what inflation will be, assume 8% return on equity, that is 3 to 4%, plus inflation

@marjanpavlovski 2 ай бұрын

opinion on Grenke AG stock?

@Value-Investing 2 ай бұрын

no opinion, if you elaborate more in a new comment, maybe I'll have :-)

@joegomez5807 2 ай бұрын

What do you think of the 2x long brk etf ?

@afonsodeportugal 2 ай бұрын

Ticker symbol, please?

@continuouscompounding 2 ай бұрын

Hot trash, buffett would hate it

@joegomez5807 2 ай бұрын

2BRE.L

@Value-Investing 2 ай бұрын

likely a daily thing, what if BRK doesn't do anything for a decade?

@joegomez5807 2 ай бұрын

@ I guess you would be out the management fee. Yes it could but it is a compounding machine so I would think that it do at least 5-8% a year. Over the past five years BRK has doubled with a compound annual return of 14-15%. I personally would not buy it because many of those daily long/shorts ETFs mostly serve the fund marketers.

@murats9679 2 ай бұрын

is sven still publicly running his portfolio, or made up a new one with the better performance to show you))))

@Value-Investing 2 ай бұрын

thanks for commenting, hope you have a great day!

@neildryden3559 2 ай бұрын

If Buffet is not buying back despite the huge cash pile, does that imply we should not be buying? Or, does it imply he values the option value of the cash highly and thus we should buy? What is more plausible? Thanks

@granlandsmotors8394 2 ай бұрын

Buffet always seems to build a big pile of cash before a crash. But he is not timing the market. It could be seen as waiting for valuation to drop.

@Robert-fx3ng 2 ай бұрын

Best comment. Thanks

@Value-Investing 2 ай бұрын

cash 5%, plus the potential for future acquisitions - he likely values it more than BRK now!

@brother_wesley 2 ай бұрын

What is the actual PE ratio right now then?

@Value-Investing 2 ай бұрын

around 25

@extramild1 2 ай бұрын

Time is the friend of the good company. I could care less if BRK is under or overvalued. Buy the shares, sit on your arse and get rich. In Buffett we trust.

@paultweedley2026 2 ай бұрын

8% a year gross return on investment, it will take a lifetime to get rich

@Value-Investing 2 ай бұрын

it is not about getting rich, but about being well-off

@magalengo 2 ай бұрын

Berkshire stock is compounding around 10% over the last 25 years, and likely at a lower rate over the next decade, you aren’t creating real wealth at that low rate.

@karimmourabitamari6540 2 ай бұрын

I don't buy bonds, All in 8% will be perfectly fine for me in BRK.

@AntonGeorgescu 2 ай бұрын

Any updates on Liberty 42% drop? I can’t find any news

@casakova7582 2 ай бұрын

spin-off

@Value-Investing 2 ай бұрын

Sunrise spin

@AntonGeorgescu 2 ай бұрын

@@Value-Investing so that value just vanished?

@mathewwilson9776 2 ай бұрын

@@AntonGeorgescu Sunrise shares started trading and the starting market cap was subtracted from Liberty's, so nothing changed at time 0. From here, Sunrise under $50 represents a near 10% dividend from a Swiss telco with stable cashflows... it won't stay like this. The top Swiss telco trades at an under 4% div yield. If Sunrise's yield approaches that after the dust settles, its market cap could approach the pre-spin Liberty market cap. And then you still have the remaining Liberty subsidiaries trading almost for free. So no, nothing vanished, but if you have to ask such question, I'd honestly focus on something else.

@mihaidaniel8373 2 ай бұрын

I wonder what happens with this stock after Buffet dies. They have someone to take Buffet place or how the company will transform after his death. For me this is the most important question.

@mihaidaniel8373 2 ай бұрын

Also, have you considered that Buffet is maybe too old for this and he doesn't want to involve in finding another businesses to invest and thats why is having such a big pile of cash? Maybe hes saying to himself" I'm to old for this sh.t, I will just buy some treasury"

@Value-Investing 2 ай бұрын

as discussed in the vid, BRK will continue to be BRK

@roberttaylor3594 2 ай бұрын

hmm. I just bought CP for my RRSP...maybe it should have been BRK. My RRSP is where things get 'coffee canned' so they have to be super reliable...and I don't care about the dividend, just total growth.

@jayshankarchandran321 2 ай бұрын

Hi Sven , I follow your chanel can you look and do a deep dive on Centene (Ticker : CNC).

@Value-Investing 2 ай бұрын

thanks for suggesting!

@jayshankarchandran321 2 ай бұрын

@ also do you think BGS is undervalued at the current price.

@johnmcquaid7524 2 ай бұрын

Brk.b is always a buy & hold for me.

@continuouscompounding 2 ай бұрын

If u got in at a low cost basis u would perform a lot better just holding

@Value-Investing 2 ай бұрын

:-)

@continuouscompounding 2 ай бұрын

Thanks for the video! I own BRK.B

@Value-Investing 2 ай бұрын

thanks for sharing, now go for BRK.A :-)

@karimmourabitamari6540 2 ай бұрын

I don't much stuff other than Berkshire. If you are patient, it is a bargain at any price.

@abhishekcastelino 2 ай бұрын

Long BRK, are you able to provide an overview of PayPal and/or Google to contrast? Thanks in advance!

@Value-Investing 2 ай бұрын

thanks for suggesting!

@MiguelMartinezmtzzz 2 ай бұрын

Great, but no dividends no party (I know, I know dividends are not tax efficient!).

@Value-Investing 2 ай бұрын

:-)))

@ussul6524 2 ай бұрын

You know Sven.. sometimes IDK. I am watching your videos the other and nothing seems like really good. I have these periods in market when I would rather sell and sit on it.

@Value-Investing 2 ай бұрын

the summary, for the better: kzbin.info/www/bejne/pX_EhZmbqM2rZ7s

@gamingoninteluhdgraphics6296 2 ай бұрын

No bad, but for this performance is it not better to buy sp 500 or even better Nasdaq ?

@jonnes__4657 2 ай бұрын

But BRK will have less stock fluctuation risk in a recession! .

@gamingoninteluhdgraphics6296 2 ай бұрын

@jonnes__4657 yes, but at the end of the day we are looking at pure performance (most of us). Nasdaq index fund will be better (at lesser risk).

@mariof1468 2 ай бұрын

@@gamingoninteluhdgraphics6296nasdaq are very likely more risky than brk..

@johnkraemer96 2 ай бұрын

Do it tell us your performance in 10 years!

@continuouscompounding 2 ай бұрын

I personally buy BRK when it dips I.e. during covid

@jhghjghj1 2 ай бұрын

You lost me at "Berkshire is always a BUY" :) I'm stunned how value investors quickly forget about the key principles when it comes to everything related to Mr. Buffet.

@mikep4745 2 ай бұрын

I up-voted you b/c on its face that statement makes little sense. However.... BRK does continue to move forward like a bulldozer on low gear.

@continuouscompounding 2 ай бұрын

The best time to buy BRK is when the stock dips and ppl are pessimistic.

@continuouscompounding 2 ай бұрын

And I agree no stock is always a buy unless ur return expectations are very low

@gianlucaottani8779 2 ай бұрын

If you stop watching at "Berkshire is always a buy" , maybe you shouldn't comment the video..😅

@Value-Investing 2 ай бұрын

everything is a buy for somebody, BRK now is a Better buy than 98% of other things out there!

@theonewhoknocks2835 3 күн бұрын

energy gets smoked in a recession

@pawepasternak959 Ай бұрын

Czytam komentarze i bardzo nie rozumiem narzekania. Firma siedzi na ogromnej gotówce. Jakby sprzedali wszystkie aktywa to by mieli ponad 1bln dolarów w gotówce wystarczy za to kupić obligacji i w najgorszym przypadku zarobią 4-5% rocznie czyli około 50mld rocznie. Nie musieli by nic robić aby zarobić 50mld. Lepsze są firmy które mają zadłużenie 100%-200% w stosunku do rocznych zarobków i wystarczy że wzrosną stopy procentowe o 1% i sypie sie cała firma. Pozdrowienia z Polski :)

@Value-Investing Ай бұрын

ne razumi Polski!

@druvaciam5407 2 ай бұрын

SP500 average return is 10% so 7.2% is lower than expected SP500...

@Value-Investing 2 ай бұрын

10% is the average yes, but not from this level forward :-)

@francescodp1506 2 ай бұрын

Warren recently stopped buybacks. According his capital allocation philosophy, this is because he believes Berkshire is fairly/over priced. Plus, stock volatility is relatively low but most of the businesses owned by Berkshire are cyclical. I don't see any margin of safety here. No risk of losing money in the long term by holding Berkshire but there is the risk of low returns, even lower of Sven's forecast. I prefer risking waiting for a lower stock price (if ever will go lower).

@Value-Investing 2 ай бұрын

thanks for sharing, of course!

@francescodp1506 2 ай бұрын

@@Value-Investing I appreciate you, Sven!

@micurzeszow7307 2 ай бұрын

Honestly i did not know they (we) also own Brooks... BRK still suprises me even though i am shareholder since Dec 2018...

@franciscocabrerabrito5945 2 ай бұрын

Same. Usual buyer of them and boy when I saw the graph...I couldn't believe it😂

@Value-Investing 2 ай бұрын

:-)

@magalengo 2 ай бұрын

Berkshire’s 2 top operating managers have less than 1/3 of their net worth in Berkshire stock, not exactly confidence inspiring.

@continuouscompounding 2 ай бұрын

I mean that can be a lot or too little depending on who you ask. I think incentives still very much in line with 1/3 of net worth.

@Value-Investing 2 ай бұрын

thanks for sharing!

@scottiebumich 2 ай бұрын

you are crazy. You are making things much more complicated. Use SOTPs. Operating income valued using operating assets and then use market value of equities. If you back calculate the 'earnings' from BRK's equity portfolio you will come up with a value LESS than BRK. This is because their APPLE holdings is valued at a MUCh higher multiple than BRK's operating earnings. Their "$40 in hidden earnings" is not hidden, it's right there shown as 'long term investments'.

@LorenzoPeluso-bp7ui 2 ай бұрын

would love to see an in depth update on paypal

@Value-Investing 2 ай бұрын

thanks for suggesting!

@stefand5472 2 ай бұрын

ADM compliance Chief to resign, Q3 results to be delayed

@Value-Investing 2 ай бұрын

thanks for sharing!

@jonnes__4657 2 ай бұрын

🗽 Correct Sven, always consider for BRK in addition to operating earnings the hidden earnings from the investment-portfolio (minus dividends)... 👍 Thx for analysing! .

@Value-Investing 2 ай бұрын

:-)