find the

Buffett: The best ways to calculate the value of a company

this question is on Berkshires intrinsic

value a substantial portion of the

company's value is driven by operating

businesses rather than the performance

of the securities portfolio also the

values of previously acquired businesses

are not marked up to their economic

value including Geico MidAmerican and

Burlington Northern based on these

factors is book value per share still a

relevant metric for valuing Berkshire

well it's got some relevance but it's

got a whole lot less relevance than they

used to and that's why I I don't want to

drop the book value per share factor but

the market value tends to have more

significance as the decades roll along

it's a starting point and clearly our

securities aren't worth more than we're

carrying for carrying them for at that

time and on the other hand we've got the

kind of business as you mentioned but

we've got some small businesses that are

worth 10 times your so you know what

would their career apart we've also got

some clunkers too but I think the best

method of of course is just to calculate

intrinsic business value but it can't be

precise we know we we think the

probability is exceptionally high that

120 percent under states that although

it was all insecurity absorb all

insecurities you know 120 percent to be

too high but as the businesses have

evolved as we built in unrecognized

value at the operating business is

unrecognized for accounting purposes I

think it still has some use as being

kind of the base figure we use if it

were a private company and televizier

owned it instead we just sit down and

away and calculate the businesses one by

one and and use that as a base value but

that gets it gets pretty subjective when

you've got as many as we do and so I

think the easiest thing is to use the

standards we're using now recognizing

the limitations in them Charlie yeah I

think the equities in the insurance

company offsetting shareholders equity

in the company are really not worth the

full market value because they're locked

away in a high-tech system and so I

basically like it when our marketable

securities go down our own businesses go

up yeah we're working to that end we've

been working that way for 30 years now

or something like that turn we've done a

very good job - yeah they have a lot of

we've replaced a lot of marketable

securities with unmarketable securities

that are worth a lot more

yeah and it's actually a more enjoyable

way to operate - beyond that we know a

lot of people we wouldn't know there was

yeah we will good people