Must read for Berkshire Hathaway fans

This is the best valuation article I’ve read about Berkshire Hathaway:

Omaha Hold ‘Em: Going All-In On Berkshire Hathaway

Fortunately it’s about my favorite company and 2nd biggest holding. Christopher Owens, the author, has work experience at an investment bank and hedge fund. He invests his own money and does his own research. It seems he is a self educated investor. He fortunately has not lost time and money or polluted his ideas by getting and MBA or a CFA. Before making his own valuation he had read several professional and non professional valuations of Berkshire as well as several years of Berkshire’s shareholder’s letters and SEC filings. The author’s conservatism, rational view, accountancy knowledge and humbleness deserves to be monitored.

I would not judge value or buying decisions based on one article but this is an excellent starting point to get, in my opinion, the best quantitative valuation of Berkshire available. The same valuation approach outlined in the article can be used as a framework to make your own adjustments and personal valuation.

In order to establish good judgments of value qualitative considerations are also strongly recommended. In this case they can be obtained by learning as much as possible about Warren Buffett.

Best wishes and health on this new year and thereafter !
jrv

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About jrv

I was born in Spain and lived in Belgium, Chile, France, USA, Argentina among other places. Currently I am trying to settle down in a wild place. I am "retired", even though now I dedicate more hours "working" for my investments than I ever worked in the real labor market where I used to work in IT and Banking. I am a family man, I have a lovely wife, several sons and one step daughter. I have humble tastes, I like to stay home and read about companies and investments. I started investing at 25 before the internet bubble exploded. I did not know much about investing and liked technical analysis so my results were pretty bad. Fortunately I did not have much to lose. Some years later in 2006 bored of doing only real state investments and with quite a lot of money saved I opened an account in a cheap and excellent online broker and started again. This time I did not want to commit the same mistake, so I decided to follow a model. I heard that Warren Buffett was the best at making money via stocks so I started by reading a lot about him, all of his shareholders letters and several of the books that he recommended. I learned a lot, started applying his investing principles and reading a lot of 10K's. Digested news from lots of different sources. Basically I started buying very good and cheap companies and holding them for ever if possible and if nothing changed fundamentally. When the housing crisis started I was more than 75% cash. At that time I identified good companies at incredibly cheap prices so I invested most of my savings in stocks. In less than I year I doubled. By the second semester of 2009 I turned my software company into an investment vehicle and dedicated myself full time to it. My wife and I decided to change our lifestyle and moved from Belgium to the beach in a wild country. The goal was to keep fixed costs low in order to be able to live with a minimum 6-8% yearly return but specially to move away from the inhuman life of civilization and to have finally some peace and sunny weather to concentrate better on investing. Now I can think and study about companies 60 hours a week and I am doing great. I can finally do what I want full time and can proudly say that I have never been so happy, specially also with my just born 4th son, my other great kids and my sweet wife who supports me fully while I study most of the day and patiently wait for the opportunity to make a swing ! You can learn a bit more about my portfolio by viewing it at www.kuchita.com/view/sumo.php or you may learn more about me and my family by following the link "Author's site" from the menu above.
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