Ben Gilbert: belief

Transcript context

…Yup. A little bit more bear case stuff. If you think about capital allocation, if you think about maybe the way Jeff Bezos does it, ideally there are lots of potential growth engines inside your company to invest in, to allocate your capital to. Otherwise, you have to go and fight it out with every other investor for every publicly available investment vehicle. The only growth engine that Berkshire really has a meaningful growth engine is Geico and that's not a real growth engine. It's really hard for them to consume capital internally in a way that would meet any hurdle rate that would be exciting. They have to keep going shopping to deploy capital at this point. There's an element there that's a little bit scary if you're thinking about investing in a tech company versus Berkshire which of course, you never really should be thinking about one or the other. They're completely different buckets, but they don't have an internal growth engine inside that company. The last one is a little bit more nuanced angle on the thing that I mentioned before about if you do a sum of parts analysis on Berkshire then you have to look at everything that's currently marked to market which is eye popping. There's definitely a lot of people out there that think that the stock is trading at a discount of the intrinsic book value of the holdings. That, of course, would be the case if you fully valued the cash that's on their balance sheet. But if you think about the multiples of the stocks that they own, I mean Apple has gone from being valued at something like 7X earnings to now like 30X earnings. To believe that Berkshire is underpriced argument, it's fundamentally based on agreeing that Apple is worth what it's trading for, which maybe is true with Apple but you're also agreeing that BNSF is worth industry multiples for railroads which if you’d look around are also meaningfully expanded recently. I just think asset prices are really high. There's definitely this element of if you believe Berkshire's undervalued then I think you're being pretty generous with how you value the sum of all the parts. Yup. I think that's true but there's the capital allocation question of all assets being overvalued right now, so if you're going to take capital out of Berkshire, where are you going to put it?…

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