What is Berkshire Hathaway Worth?

Following the release of Q2 earnings, I have updated my intrinsic value estimate for Berkshire Hathaway and concluded the stock remains undervalued.  Here are the components of my intrinsic value (fair value) estimate for Berkshire:
 
1.Cash and marketable securities (Insurance) $140B
2.Bonds $20.5B
3.Equities $308B
4.Equity investments $16.7B.  For accounting purposes, equity investments are 20-50% ownership positions in other companies. Berkshire has the following equity investments:
1.Kraft Heinz 26.6%
2.Pilot Flying J’s Travel Centers 38.6%
3.Berkadia 50%
4.ETT 50%
5.  Adjustment for overvalued equities ($55B).  One thing I like to do as part of my intrinsic value estimate is to go through all of Berkshire’s top holdings and determine if any of them are meaningfully over or undervalued and make the necessary adjustment. The value for equities on Berkshire’s Q2 balance sheet is based on market values at that time.  If you believe stocks always trade at fair value, you should adjust these figures based on today’s market prices instead of market prices at the end of Q2.  Instead of using today’s market prices, I adjust them to my own intrinsic value estimates.  For example, at the end of last year I thought Kraft Heinz and Verizon were undervalued and BYD and Apple were overvalued.     
 
6.  Operating companies $355B.  Berkshire owns around 65 companies including Burlington Northern Santa Fe, GEICO, Duracell, Dairy Queen, Lubrizol, Fruit of the Loom, Net Jets, Pampered Chef, Forest River, Benjamin Moore Paint, Shaw Carpet, See’s Candies, to name a few.  Most of these companies have leadership positions in their industries and generate high returns on capital.  I calculated a weighted average P/E ratio based on the major businesses (BNSF 17/BH Energy 16/Mfg Service & Retail 18) of 17.5 which is well below the multiple of the market today.  This group of businesses has annual earning power of more than $20 billion which puts the value at $355B.  Year over year comparison are meaningless, but if you compare 2021 to 2019, the operating companies increased earnings 16% in the first half of 2021.
 
Total value: $785 Billion.         

Shares outstanding were 1,519,576.  Total value / shares outstanding puts the A shares intrinsic value at ~$517,000 and the B shares at ~$345.  Yesterday, the stock closed at $288 making the shares 17% undervalued.   
 
 
 
 
 
Disclosure: Long BRKB
 
 
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