Buffett’s Berkshire Hathaway: Taking A Close Look At Fair Value

  • Estimating fair value for Berkshire Hathaway has historically been relatively straightforward, with book value as a reasonable starting point.
  • However, there was a period in 1998 when the market significantly overvalued Berkshire at 200% of book value, causing Buffett to discourage investors from buying at that price.
  • Overall, valuing Berkshire Hathaway requires careful attention to detail and consideration of various factors. It is not unreasonably priced today despite selling at 1.65 times book value.

Few companies require as much thought as Berkshire Hathaway (NYSE:BRK.A)(NYSE:BRK.B) when it comes to estimating fair value. For most of its history it wasn’t too difficult. Until recently one could take simple book value as a reasonable proxy as