--- ticker: "BRK-B" company: "Berkshire Hathaway Inc. (class B)" date: "2026-10-15" view: "Hold" fair_value: 465 price: 525.68 price_source: "market data NYSE:BRK.B close" price_time: "2026-10-15T20:00:00Z" price_vs_fair_value: "+13.0%" bear: 369 bull: 564 exit_price: 705 page: "https://alpha.dming.si/research/2026-10-15-brk-b" --- # BRK-B · Berkshire Hathaway Inc. (class B) · Hold Research report as of 2026-10-15, partly unblinded. Page: https://alpha.dming.si/research/2026-10-15-brk-b We value BRK-B at $465 a share. The report's $525.68 price (Oct 15, 2026) was 13% above fair value: Hold. _Not restated: an insurer: model.py values earnings, not GAAP operating income, so the shared method's fade and EV/EBIT anchor do not apply._ | Lens | Range | Marks | | --- | --- | --- | | Our report | $369 to $564 | fair $465 | | Street targets (2) | $604 to $604 | average $604, median $604 | | Price | | $525.68 | Bands run from our bear to bull and the Street's low to high. Street targets forecast future prices, not value today. Market data, captured Oct 16, 2026. | Figure | Value | | --- | --- | | Fair value | $465 | | Price | $525.68 (market data, Oct 15, 1:00 PM PT) | | Five-year return | 5.8% (a year, at the price) | | Bear / bull | $369 / $564 | | Exit price | $705 (on Dec 31, 2031) | | Confidence | 55% | _As of 2026-10-15 · partly unblinded (before building the model we read that H1 2026 buyback cash over shares retired implies an average buyback price of ~$486)_ - **Fair value today:** $465 per class B share, discounting at an 8.29% cost of equity (the yearly return investors require for owning the stock) - **Price:** $525.68, market data NYSE:BRK.B close, 2026-10-15 20:00 UTC → downside 11.4% - **Five-year exit price:** $705 on 2031-12-31, from the long fade (growth and returns on new capital fade toward mature levels over 15 years, then 3% terminal growth; $701 at 10 years, $708 at 20). The outside view, which values the parts at what similar listed companies trade at, gives $751 as a check. - **Five-year return:** 5.8% a year from today's price (Berkshire pays no dividend); 5.6% if all cash stays in T-bills, 6.7% if all of it is deployed at the cost of equity - **Purchase price:** $391 is the price at which we would expect the 12% yearly hurdle return ($387 with all cash idle, $407 with all of it deployed) - **Bear / bull today:** $369 / $564 from coherent operating cases: the bear is a severe but plausible bad outcome, the bull the matching good one (weighted 25/50/25 with the central case: $466) - **Confidence:** 55%, meaning: our subjective probability that the value on 2031-12-31 lands within ±20% of $705 (not calibrated) - **Moat:** Wide: float (insurance premiums held before claims are paid) that costs nothing in an average year (10-year combined ratio 93.0%; claims plus expenses as a share of premiums, where lower is better), an irreplaceable western rail network, and $359B of cash and T-bills for buying whole businesses - **Market expects:** the float, BNSF (the railroad), BHE (Berkshire Hathaway Energy) and MSR (manufacturing, service and retailing) at 18.5x 2027 earnings after the portfolio and cash at market (ours 14.9x), or operating earnings 29% above our path, or a property and casualty (P&C) insurance combined ratio of 83.2% for ever (ours 93.5%) - **Key driver:** the cost of equity: +1 point is −$46 a share; next, year-five operating earnings (±10%, ±$21) and the combined ratio (±2.5 points, ±$15) - **Street:** $541 average target, 7 analysts (2 Buy, 4 Hold, 1 Sell), range $490-604, 12-month, market data 2026-10-15; revision trend not available (an expectations reference, not validation) **We rate Berkshire a Hold: we value a class B share at $465 and it trades at $525.68.** The price is 13% above our central value and 35% above the purchase price, but inside our bull case ($564). Roughly half of Berkshire's value is cash and listed stock that we take at market. The call rests on the other half: what the operating businesses and the insurance float are worth, and what Berkshire does with its cash. **How we got there.** We first valued Berkshire blind, meaning without looking at its price: $491 ($490.74; commit `b950f61`, pushed before the price was read). Two reviewers then checked it: a model auditor, who reruns every script, and an advocate, who argues the opposite side. Review changed five things, each on dated filing or market evidence, or on the change to our valuation method on `main` (section 2), none of which depends on BRK's price. The largest is the cash: Berkshire's own record says its cash pile has grown, not been spent, so the central case now leaves today's excess cash in T-bills and deploys 55% of the cash the businesses send up, −$20.19. Net move: −$25.24, to $465 (section 10). Both reviewers kept Hold, and so do we. **The anchor risk.** Before building the model we read an average buyback price of about $486, implied by H1 2026 buyback cash over the shares retired. That price level may have anchored (pulled our estimate toward itself) the work. The model auditor traced no input to it, but we cannot rule it out, so treat any closeness to $486 as a warning, not as support. **Terms used below.** The central case is our best estimate. The bear and bull cases are the severe but plausible bad outcome and the matching good one; only the central case sets the call. The float is premiums collected before claims are paid; Berkshire owes it to policyholders but invests it meanwhile. GEICO is Berkshire's car insurer. ## 1. Berkshire is worth $465 a B share: $221 of cash and listed stock, $244 of operating businesses Berkshire is a holding company of unlike parts. One class A share converts into 1,500 B shares; at 2026-06-30 there were 2,147.5M B-equivalent shares (10-Q Note 18). Values below are per B share at 2026-10-15 (`output.txt`, central case). | Part | How valued | Per B share | | --- | --- | --- | | Equity portfolio (13F holdings and five Japanese trading houses marked to the 2026-10-15 close, Occidental preferred and warrants), less 21% deferred tax on $235B of unrealised gain. A 13F is the quarterly filing of a fund's stock holdings | Market | $136 | | Kraft Heinz and Occidental common at market, less tax on the gain over carrying value; Berkadia; fixed maturities | Market | $19 | | Excess cash: $359.2B of cash and T-bills less $177.5B backing the float, $6.8B for Taylor Morrison (paid 2026-07-24) and $10B of operating cash, plus after-tax T-bill interest from 7/1 to 10/15 | Face today; held in T-bills to 2031 | $78 | | Parent debt ($20.8B, yen notes revalued), wildfire liability accrued but unpaid ($572M pre-tax) and wildfire claims beyond the accrual ($3.5B after tax, our assumption) | Deducted | −$12 | | **Market items, net** | | **$221** | | Float stream, BNSF, BHE, MSR, and the cash they send up to 2031, less holding-company cost | Long fade to 2046, discounted | $244 | | **Fair value** | | **$465** | So nearly half the value is cash and listed stock that we take at market, and the call rests on the other half: what the operating businesses and the float are worth, and what Berkshire does with the cash. - **Insurance.** Float of $177.5B (6/30/26) costs nothing in an average year. We treat it as a debt to policyholders, take the matching T-bills out of cash, and value only what shareholders get: the after-tax T-bill yield on it plus after-tax underwriting profit, about $9.5B in 2027. We call that the float stream. Central case: a 93.5% P&C combined ratio for ever, Berkshire's own 10-year average (93.0%, letter) plus GEICO's 2026 slippage (H1 combined ratio 89.3% against 81.7%, loss ratio +4.9 points; 10-Q). 2025 was 87.1%. - **BNSF** (the railroad). Revenue +9.8% in H1 2026 on 4.3% more volume and fuel surcharges; margin 34.5% in 2025. Central: +7% in 2026, then +4% a year, margin to 37% by 2031. After-tax earnings $6.2B in 2027. - **BHE** (Berkshire Hathaway Energy, the utilities). $4.0B after tax in 2025, $2.0B in H1 2026 (+11%). Central: +4% a year from $4.15B. It pays the parent no dividend; its subsidiaries borrowed a net ~$2.7B in H1 2026 (10-Q). The PacifiCorp wildfire accrual is $2.85B to date, $572M of it unpaid. The Oregon Supreme Court hears the class-liability appeal on 2026-11-03. - **Manufacturing, service and retailing (MSR).** $13.6B after tax in 2025, $7.7B in H1 2026 (+15%, with OxyChem from 2026-01-02, tariff refunds and divestiture gains in Q2). Central: $15.0B in 2026, $15.6B in 2027 with a full year of Taylor Morrison, then +4%. Berkshire gives no guidance, so there is no guidance record to measure. ## 2. The long fade values Berkshire at $465, and no fade horizon reaches the price Our valuation method has taken the long fade as the value since commit `3e798e2ac` on `main` (2026-10-15). Each part's earnings run 15 years past 2031, with growth fading to 3% and the return on new capital fading to its mature level, then a terminal value at 3% growth. The outside view (what similar listed companies trade at) and the value-driver formula (which links value to growth, return on new capital and the discount rate) are printed beside it as checks, never averaged in. | Case | Exit: long fade, 15 years | 10 / 20 years | Outside view (check) | Fair value at 8.29% | Purchase at 12% | | --- | --- | --- | --- | --- | --- | | Bear | $559 | $561 / $558 | $629 | $369 | $310 | | Central | $705 | $701 / $708 | $751 | **$465** | $391 | | Bull | $853 | $837 / $867 | $859 | $564 | $473 | - **The fade's year-five multiples (central)** on 2032 earnings, with the formula beside each: - float stream 19.3x (formula 17.3x at 2.5% growth; the fade ends at 3%); - BNSF 14.0x (14.0x at a 10% mature return); - BHE 12.9x (13.0x); - MSR 15.3x (16.1x). The fade's horizon barely matters here: 10 to 20 years moves central fair value from $463 to $467, all below the price. The blind model also had a judged multiple (a multiple we chose ourselves) and took the median of three values; in every case the median was the fade, so dropping the judged multiple moves no case by more than its terminal growth change (section 10, the row on the valuation method). - **Outside view.** Peer forward P/E medians (market data, 2026-10-14): - insurance 12.6x; - rail 21.3x; - utility 16.6x; - MSR 20.4x (72% industrial, 28% distribution and retail). It sits 7% above the fade. Rail and industrial peers trade on returns that BNSF and MSR, carried at Berkshire's purchase prices, do not earn on new capital. Street consensus EPS for industrials is usually adjusted for acquisition amortisation; our MSR earnings also leave it out (it is booked in "other"), so the basis matches. The peers' ten-year median multiples are not in the saved data, so the split of the gap between rates and the business is not measured. - **Cost of equity 8.29%:** - 10-year Treasury 5.19% (FRED, 2026-10-14); - Damodaran implied equity risk premium (ERP) 4.20% (2026-10-01); - Blume-adjusted median beta of 23 fixed peers, 0.738. Beta measures how much a stock moves with the market; the Blume adjustment pulls a raw beta toward 1. Comparisons: - Berkshire's own beta (market data, 0.601 raw, 0.733 Blume) gives 8.27% and $467: the purchase price moves 0.2%. - Damodaran's Diversified industry beta (0.88, 0.92 Blume-adjusted, harsher) gives 9.05% and $429, purchase price $374. The fade is sensitive to the discount rate: +1 point is −$46. The blind model's median hid most of this, because a higher rate pushed the fade below the judged multiple, which does not move with the rate. - **Cash, set from Berkshire's own record.** The blind model let all excess cash, and all the interim cash (the cash the businesses send up to the holding company to 2031), grow at the cost of equity. Review asked what the record says. Berkshire's filings ($B; 10-K 2024 for 2022-23, 10-K 2025 for 2024-25, 10-Q Q2 2026; `output.txt`): | Period | Free cash (operating cash flow less capex) | Acquisitions | Buybacks | Net equity purchases | | --- | --- | --- | --- | --- | | 2022 | 21.9 | 10.6 | 7.9 | 34.3 | | 2023 | 29.8 | 8.6 | 9.2 | −24.2 | | 2024 | 11.6 | 0.4 | 2.9 | −134.1 | | 2025 | 25.0 | 1.1 | 0.0 | −13.8 | | H1 2026 | 11.0 | 9.7 | 4.8 | 11.6 | | Total | 99.4 | 30.8 | 24.3 | −126.2 | - Cash and T-bills went from $146.7B at 2021 year-end (market data consolidated) to $318.0B (2024), $369.0B (2025) and $359.2B (2026-06-30). The pile grew; none of the 2021 pile was spent. - Acquisitions and buybacks took $55.1B of $99.4B of free cash, 55.4%. The rest, and $126B of net stock sales, went into T-bills. - The 2025 letter (published February 2026) calls the cash "dry powder" and says Berkshire will aim to own productive businesses over Treasuries, but also that it acts patiently whatever the size of the pile. There is no 2026 letter yet. So the central case keeps today's excess cash in T-bills to 2031 (0% deployed, at 3.24% after tax) and deploys 55.4% of the cash the businesses send up, both computed in `model.py` from the table. That costs −$17.08 (pile idle) and −$3.10 (interim cash 44.6% idle), −$20.19 in all on the blind method (from $486.67 to $466.48). Against it, H1 2026 drew the pile down by $9.8B, $19.6B a year; at that pace from today the central is $471 (+$5). If Berkshire deploys everything at its cost of capital: $486, exit $735, purchase price $407, return 6.7%. One generous assumption remains: the equity portfolio is assumed to stay invested, though Berkshire sold a net $126B of stock over the period. - **Sensitivities** (`output.txt`): - combined ratio 96% / 91%: $451 / $480; - T-bill yield 3%: $449; - cost of equity +1 point: $420; - year-five operating earnings ±10%: $445 / $486; - mature return on new capital ±2 points: $456 / $472; - wildfire $8B instead of $3.5B: $463. ## 3. After the price was read: the market pays 18.5x for the operating parts, we pay 14.9x At $525.68 the market value is $1,129B (6/30 share count). Take out the $474B of market items and add back the capitalised holding cost. That leaves $661B for the float, BNSF, BHE and MSR: 18.5x their 2027 earnings of $35.6B. Our central value pays 14.9x. One lever at a time (`unblinded-output.txt`), the price needs one of: - operating earnings 28.7% above our path from 2027 on; - a P&C combined ratio of 83.2% for ever, better than 2025 (87.1%), against a 10-year average of 93.0%; - 4.5 more turns on every part's 2032 earnings. Price to book is 1.51x ($348 of book per B share at 6/30/26). - **Five-year return.** Today's price to our central exit returns 5.8% a year (5.6% with all cash idle, 6.7% with all of it deployed): 1.2% in the bear, 9.7% in the bull. To earn the 12% hurdle from here, the 2031 exit has to be $949, above our bull ($853). - **Alpha's view.** Alpha is Capfolio's statistical ranking model, which scores stocks from their reported data. `alpha rank BRK-B --raw --json --allow-stale-model-cache`, as of 2026-10-15: rank 221 of 713, score 69.1, "Above Average". - Grades: expectations B, growth B, momentum C, valuation C. - Integrity verdict WARN. Alpha's middling valuation grade agrees with us. Its momentum grade is C despite the recent run: market data daily bars show the stock up from $515.62 (2026-10-09 close) to $525.68 (2026-10-15 close), and headlines describe a ten-day winning streak. - **Street.** market data shows an average target of $541 from 7 analysts (2 Buy, 4 Hold, 1 Sell). Its Q3 EPS estimate of $5.83 a B share is about 4-7% above what our segment forecasts sum to, so our near term is not far from it (the review check for a central case far from the Street does not apply). ## 4. The market sees a fortress and a deploying buyer; we see a good business priced for its best results - **The market's thesis.** A fortress at a modest premium to book. - Greg Abel, Berkshire's chief executive, is now deploying: OxyChem $9.4B, Taylor Morrison $6.8B, $4.8B of buybacks in H1 2026. - In the news since the blind commit was pushed, unverified: a reported ~$10B in Alphabet's private placement (an AI-generated market data recap); $930M in Bending Spoons; Lennar purchases. - Insurance earned 87% combined ratios in 2025. - **Ours.** The businesses are fine, but the price pays for insurance results at their best year or better, and for a cash pile that the record says mostly waits. - **Deployment.** This is where the market could be right. If Abel puts the pile to work at a fair price, our value rises by up to $20 (to $486), still 8% below the price. The H1 2026 drawdown pace gives +$5. - **What settles it.** - GEICO's loss ratio over the next four quarters. - The cash pile in the Q3 10-Q and the next letter: a sustained drawdown into whole businesses moves us toward the deployed case. - Whether Berkshire keeps buying its own stock above about $500. Its rule is to buy only below intrinsic value, so heavy buying at today's price would say management's value is well above ours. - The advocate estimates (from weekly bars) that the 6.83M B-equivalent shares retired between 6/30 and 7/29 cost about $3.4B at ~$495. The Q3 10-Q will settle that and our buyback falsifier (the buyback condition in section 7). - **Edge.** Small. This is a well-understood company, and we are 11% from the price. ## 5. The advocate's best case for the other side is $502-519, still below the price The advocate's best case was $502-519 on the blind cash treatment, still below the price, so it cannot make a Buy. - **Our insurance assumption may be too harsh.** - H1 2026 ran at 88.2% (10-Q unit tables), the five-year average is 90.7% and the twenty-year 92.2% (letter). - At 90.7% the central value is $482, still below the price. Against it: - H1 had no significant catastrophes and about $1.3B of reserve releases; - GEICO's loss ratio rose 4.9 points; - the 2025 letter says P&C pricing is softening. - **The cash may be deployed.** All of it at the cost of equity adds $20; section 2 gives the record against it. - **The float may be worth more than its stream.** Counting half the float-backing T-bills at face adds $14 (all of them, $28); see section 10 for why we do not. - **Our multiples may be too low for an irreplaceable rail network.** Rail peers trade at 21x. At their multiple the outside view gives $751 at exit, and the price needs 4.5 more turns on everything. - **Management's own act.** The H1 2026 buybacks say management valued the stock above about $486 then. That says nothing about $526, and it is also the figure that may have anchored us (see the top). - **The case-weighted value is $466**, the same as the central, so the weights do not argue for the other side. ## 6. The bear case is $369, 30% below the price - Combined ratio 97%, flat float, T-bills at 3%. - BNSF margin slips to 33%; MSR flat after a weak 2027. - $8B of wildfire claims plus $1B at HomeServices. - All excess and interim cash idle in T-bills at the bear's 3% yield (2.37% after tax), taken at face today. - Mature returns on new capital below the cost of equity (BNSF 8%, BHE 8%), so growth adds nothing; the fade gives 12-17x. That gives $369 today, 30% below the price. ## 7. Catalysts and falsifiers Catalysts: - **Q3 2026 results**, expected Saturday 2026-10-31 (not confirmed). Market data lists 2026-11-02. Q3 2025 was posted on the Saturday before its Monday 10-Q filing (2025-11-03). Our forecasts are in the record. `assumptions.md` gave 2026-11-07 as the expected date; the date is moved here on the filing pattern, and no value changed. - **2026-11-03.** The Oregon Supreme Court hears the James Phase I appeal. - **By 2026-11-16.** The Q3 13F shows the deployment. - **Late February 2027** (expected). The annual report, letter and the 2026 combined ratio. Falsifiers (what would prove us wrong, and what we would do): - Buybacks above $5B in a quarter at an average above $500 a share: management's value is above ours, so re-examine the returns the fade assumes. - The P&C combined ratio above 96% for 2026 or 2027: weight the bear ($369). - BNSF's 2027 operating margin below 33% or above 37%: each margin point is about $1 a share today. - The Oregon Supreme Court upholds class-wide liability in James: take the bear's wildfire charge. - An acquisition above $30B at more than 15x earnings: excess cash deployed below our cost of capital. - Cash and T-bills below $300B by 2027-06-30 with the money in whole businesses at a fair price: move the central toward the deployed case (+$20). ## 8. Four automatic review checks fired Each report is run against a fixed list of review checks. A check never changes a number; it tells the reviewers where to look first. Those that fired, each of medium severity: - **Net move from the blind value.** The net move is −$25.24 (−5.1%). - The largest single change is the cash deployment share, −$20.19. - It rests on Berkshire's 10-Ks, 10-Q and letter, not on a management claim about the future or a Street figure. - **A lenient input where a harsher sourced one existed.** Our peer beta (0.738) is lighter than Damodaran's Diversified beta (0.88, Blume-adjusted 0.92): −$36.1, purchase price $374. The peer set and the beta rule were fixed blind; the method allows either. - **A batch of reports all on one side of the price.** This is one of a batch of reports on 2026-10-15 that all landed below the price (MSFT, ASML, NOW, CRM, VEEV and this one). - **Bridge items with no filing line.** Two items in the bridge from business value to a share price have no filing line: - the $10B of operating cash; - the wildfire charge beyond the $2.85B accrual. Both are our assumptions, with sensitivities. Checks that did not fire: the view changing from the blind view; fair value very close to or very far from the price (−11.4%); the outside view more than 30% from the fade, or the fade's 10- and 20-year values straddling the price (the outside view is +6.6% from the fade; the 10- and 20-year values, $463 and $467, are both below the price); a central case far from guidance or the Street; fair value moving more than 10% between our peer beta and Berkshire's own (+0.2%); an option, convertible or warrant missing from the share count (Berkshire has no options, convertibles or warrants on its stock); no filing read; and reviewers moving the central value more than 20% (−5.1%). ## 9. Sources and the trail - Model: `model.py` → `output.txt`; after the price: `unblinded.py` → `unblinded-output.txt`. Every review finding's dollar effect below is printed by `model.py` ("review findings measured on the central case"). - Filings and company texts in `data/`, with price-revealing lines withheld: - 10-Q Q2 2026 (filed 2026-08-10) and 10-Q Q3 2025; - 10-K 2025 and a 10-K 2024 excerpt; - the 2025 letter; - six 8-Ks and three press releases; - the 13F filed 2026-08-14. - Market data: market data (peers, holdings closes, the BRK-B profile after the blind commit was pushed, the 2021 consolidated cash), FRED rates, Damodaran betas and ERP, market data (Tokyo closes before the blind commit was pushed; the BRK.B price, targets, Q3 date and news after). ## 10. How each reviewer finding was answered Two reviewers ran: a model auditor and an opposite-side advocate. Capfolio's coordinating agent then worked from the auditor's rerun. The auditor reran both scripts byte for byte and confirmed these inputs: - shares; - cash and T-bills; - float; - the portfolio and its deferred tax, each counted once; - parent debt; - rates and ERP. It found pensions $2.05B in surplus (10-K 2025 Note 24); we leave that out, which is harsh by about $1. Effects are on the central fair value, measured in `model.py` on the final method unless the row says otherwise. "Accepted" means the model changed. | Finding | Answer | Evidence, dated | Effect | | --- | --- | --- | --- | | $572M pre-tax wildfire liability accrued but unpaid at 6/30; the bridge deducted only claims beyond the accrual | Accepted: deducted after tax ($452M) | 10-Q Q2 2026 Note 16, filed 2026-08-10 | −$0.21 | | A review note overstated the effect of BNSF's judged multiple | Moot: the judged multiple has left the method (the method-change row below). BNSF's fade multiple is 14.0x, equal to its formula | `output.txt` | $0 | | Excess and interim cash grow at the cost of equity but sit in T-bills at 3.24% after tax | Accepted, after Capfolio's coordinating agent asked for the record. The central now deploys 0% of today's excess cash (the pile grew from $146.7B to $359.2B since 2021) and 55.4% of interim cash (acquisitions and buybacks over free cash, 2022 to H1 2026) | 10-K 2024, 10-K 2025, 10-Q Q2 2026; 2025 letter; market data 2021 balance sheet | −$20.19 on the blind method ($486.67 → $466.48): −$17.08 pile, −$3.10 interim | | Bear: cash marked at 85% and then grown at the cost of equity is the same as deploying it at 4.96%, so the bear did not charge idle cash | Accepted: bear excess and interim cash idle in T-bills, at face today. The auditor measured $372.4 at the 4.10% yield; the bear uses its own 3% for idle cash, as for its float stream | Auditor's rerun; FRED DTB3 | bear $384 → $368.78 on the blind method (−$15.2); $369.23 final | | BHE paid the parent 56% of earnings in the interim, but pays no dividend and its subsidiaries borrowed ~$2.7B net in H1 2026 | Accepted: BHE pays nothing to 2031 in every case. Its value arrives at the exit through its fade | 10-Q Q2 2026, filed 2026-08-10 | −$5.41 | | $10B operating cash has no filing line; the filing's only figure is the $30B buyback floor | Rejected. The floor is consolidated cash and T-bills, which the $177.5B of float-backing T-bills we already exclude more than cover; deducting $30B more counts it twice. $10B stays our assumption (see the bridge-items check in section 8) | 10-Q Q2 2026 buyback policy | would be −$7.3 | | Damodaran Diversified beta 0.88 | Rejected for the central: the peer set and beta were fixed blind, and the method takes the peer median. Shown beside it, Blume-adjusted (0.92) as the peers are. The coordinating agent's −$13.56 was on the median method, which hid most of the rate effect (section 2) | Damodaran January 2026 | would be −$36.1 (fair $429, purchase $374) | | Combined ratio 93.5% against the 20-year 92.2% | Rejected: 93.5% is the 10-year 93.0% plus GEICO's 2026 slippage, set blind. The 20-year figure includes years before GEICO's loss-ratio rise | Letter, February 2026; 10-Q | would be +$7.6 | | Deferred tax charged in full while gains are realised slowly ($9.5B in H1 2026) | Rejected for the central: Berkshire sold large gains in recent years, and the timing is not forecastable from a filing. Disclosed | 10-Q Q2 2026 | would be +$11.5 if halved | | BHE's 4% growth ignores production tax credits running off (2025 tax benefit −$1.785B) | Disclosed, not quantified: no filing gives the run-off schedule. A downside to BHE beyond the central | 10-K 2025 | not measured | | The report used the leaked ~$486 as support | Accepted: the support is removed, and the top of the report says the leak may have anchored the value | Auditor | $0 | | Mark holdings to the 10-15 close; add excess-cash interest from 6/30 to 10/15 | Accepted: closes of the 29 holdings and USDJPY on 2026-10-15 (market data), and T-bill interest at 4.10% after tax. Dividends over the same window are still left out | market data closes 2026-10-15; FRED DTB3 | +$0.82 mark, +$0.73 interest | | Corporate cost $0.35B → $0.15B because parent interest is in "other" and parent debt is also deducted | Rejected for now: the 10-K says "other" includes interest, but gives no split, and the $0.15B is the advocate's estimate. Disclosed as a possible double charge | 10-K 2025 | would be +$1.6 | | Combined ratio 92.0% (H1 2026 88.2%; 5-year 90.7%) | Rejected, for the reasons given for the 93.5% combined-ratio row above and the advocate's own caveats: H1 had no significant catastrophes and $1.3B of reserve releases; GEICO's loss ratio is up 4.9 points; the letter says pricing is softening | 10-Q; letter | would be +$8.8 (+$16.4 at 90.7%) | | Count half the float-backing T-bills at face | Rejected. The float is owed to policyholders. Its T-bills' yield is already in the float stream, so counting their face as well counts the same dollars twice. The letter's "capital we hold to pay future losses" supports the liability view | Letter; 10-Q | would be +$13.8 (advocate's own measure +$16.7); all at face +$27.7 | | T-bill yield 4.6% instead of 4.10% | Rejected: 4.10% is the observed 3-month rate (FRED DTB3, 2026-10-14); the gap to the 10-year may be term premium, as the advocate notes | FRED | would be +$7.7 | | The valuation method changed on `main`: the long fade is the value, with fixed levers (15 years, 3% terminal growth) and the 10- and 20-year values printed; no judged multiple | Accepted. The fade's terminal growth moves from 3.5% (businesses) and 2.5% (float) to 3% for all; the judged multiple and the median are gone. Every case's median was already its fade | Commit `3e798e2ac`, 2026-10-15 | −$0.98 ($466.48 → $465.50); bear +$0.45, bull −$1.23 | | Buybacks of 6.83M B-equivalent shares 6/30-7/29, ~$3.4B at ~$495 (advocate's estimate from weekly bars) | Noted: the share count is from the 10-Q cover; the cost will be in the Q3 10-Q. It may trip our buyback falsifier | 10-Q cover, filed 2026-08-10 | $0 | Net of the accepted changes: −$5.41 (BHE payout) −$0.21 (wildfire accrual) +$0.82 and +$0.73 (marks and interest) −$20.19 (cash) −$0.98 (method) = −$25.24, from $490.74 to $465.50. The two changes that raise value (marks and interest) are marks to a date and a known omission; the larger changes lower it. ## 11. Friction log: what went wrong in the work itself - Market data returns 402 for Tokyo tickers; market data OHLCV worked for the five trading houses. - berkshirehathaway.com's news page came back compressed to curl. WebFetch read it, then the linked PDFs downloaded directly. - pypdf is not installed; `pdftotext -layout` worked. - The secret scanner flagged a peer's numeric CUSIP in the market data profile JSON. The identifier fields were dropped from the saved peer file. - Market data needed a new sign-in, so the price is the vendor's close. - Found late: the equity statement's buyback cash divided by Note 18's share change gives an average buyback price. That is a way for the price to leak into blind work for any company that buys back stock, and it was not in our research procedure's list of such routes. It is now in `tools.md`. - The reviews found three blind-model mistakes: - an interim payout for BHE that the filing contradicts; - cash grown at the cost of equity while the record shows it idle; - a bear that marked cash down and then grew it at the cost of equity, which charged nothing. No review check pointed at any of them. A check for "cash or a cash-like pile grown at the cost of equity" would have. - The three-value median hid the fade's sensitivity to the cost of equity (+1 point was −$19 on the median, −$46 on the fade). - Bigdata.com was not used (0 of 3 calls).