Dear Reader,
This is Dylan Jovine with Behind the Markets.
Happy Thursday.
Today is Thursday, April 23rd.
A Question I've Been Asking Myself
Is Berkshire Hathaway actually cheap?
I've been doing this thought experiment quietly in the background while we've been talking about semiconductors and chip supply chains.
And what I found surprised me.
How Warren Buffett Changed My Life
Many of you know that Warren Buffett is the greatest business teacher of my lifetime.
I found him after losing everything on a single trade in my twenties.
An analyst at my first firm told me to go all-in on a stock called Comtronics at $22 a share.
I put everything I had into it.
Days later I came into the office, looked at my Quotron, and it had opened at $2.
Accounting fraud.
I was wiped out in days.
That experience shook me so hard it sent me on a search for answers.
How do I avoid doing something like this again?
That search led me to Warren Buffett.
And everything I do today is filtered through decades of reading his shareholder letters and really understanding how to analyze a business.
The Question Nobody Is Asking
Buffett retired as CEO at the end of last year.
My first instinct was honest — I don't want to look at Berkshire Hathaway anymore.
My hero is gone.
But whenever I catch myself with a strong opinion like that, I force myself to construct the counter-argument.
So I asked: what is the bull case for Berkshire right now?
And when I ran the numbers, I kept coming back to the same answer.
Berkshire Hathaway might be a screaming buy.
The Math
Berkshire's market cap is roughly $1 trillion.
They are sitting on $373 billion in cash.
They have an equity portfolio — Apple, American Express, Moody's, and others — worth $285 billion.
So if you subtract the cash and the stock portfolio from the market cap, the market is implying that all of Berkshire's operating businesses — the ones Buffett actually bought outright over his career — are worth $340 billion.
That is Warren Buffett's life work, valued at $340 billion.
The Sum of the Parts
I got out the calculator and ran the numbers on each operating business using 2025 after-tax earnings.
BNSF Railroad earned $5.5 billion after tax.
At 20 times earnings, that's a $110 billion valuation.
BHE, the utility and energy company, earned $4 billion.
That implies an $80 billion valuation.
Geico earned $5.4 billion.
Valued at Progressive's multiple, that's $59 billion.
The reinsurance businesses earned $6 billion combined.
At 10 times — average for that group — that's $60 billion.
The MSR industrial group earned $12 billion.
At 16 times, that's $190 billion.
Pilot, NetJets, Home Services, and miscellaneous others add another $30 to $40 billion.
Total sum of the parts: $530 to $550 billion.
The market is currently pricing those same businesses at $340 billion.
That is a 35% to 40% discount to what you would pay if each of these businesses traded publicly at its own industry multiple.
The Greg Abel Factor
Warren Buffett was famously hands-off.
He was conflict-averse.
Even when a CEO was underperforming, Buffett tended to leave them alone.
Greg Abel is different.
He is an operating manager — the kind of executive who gets into the weeds and actually moves margins up.
So the question is not just whether these businesses are cheap.
They are.
The question is whether Abel can improve the operating performance of businesses that Buffett never pushed hard enough.
And I think the answer is yes.
The Bottom Line
Berkshire Hathaway is not Tesla.
It is not SpaceX.
It is not exciting.
But if you are looking for the best stock-based mutual fund equivalent on the market today — something safe, diversified, deeply undervalued — I don't think there is a better answer right now than Berkshire Hathaway.
Greg Abel just put his entire salary into buying shares.
They have started stock buybacks again.
They are telling you exactly what they think the stock is worth.
I ran the numbers multiple times because I kept surprising myself.
I thought you should know.
Anyway, that's all I have.
Have a wonderful day.
I will see you tomorrow.
“The Buck Stops Here,”
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Written by Dylan Jovine