What would be correct way to value Berkshire Hathaway given its 1) huge cash pile + public equities and 2) its potential liabilities from insurance business?

Question

With regards to valutaion I assume it is correct to get Enterprice Value first by discounting its free cash flows coming from its OPERATING businessess and then increase the EV by net debt because in BRK case it is negative due to huge cash / investments pile. The trick is whether to take equity investments and government bonds at 100% market value or take it with a discount.

Another thing is its potential liabilities from insurance business, i.e. how to value them. Mistakes can be large, so the question is where it is accounted for  what the off-balance sheet commitments / liabilities the are (if any).

Mark K · Answer

Do you mean decrease the EV by net debt? I.e. as it is negative it is effectively decreasing EV.

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