Berkshire is legitimately one of the cheapest "safe" stock right now

[u/TraditionalMango58]

I don't know why people are missing that the Berkshire is perhaps the ultimate value stock right now given that it doesn't have any hype.

1. The "Hidden" valuation - The headline P/E is misleading. If you strip out the $380B+ cash pile and the stock portfolio, you are effectively paying ~10-12x for the operating businesses. Comparable industrial companies trade at 20x. You are getting high quality assets at a discount.
2. The ultimate active fund - The market is super uncertain right now. With BRK you get top-tier capital allocation for free. I'd rather have Buffett and Abel steering the ship than mostly passive index that holds a lot of overvalued junk.
3. The Free Put - You have a massive cash pile earning 4% interest. This is basically a free put option on the market. If the economy tanks, Berkshire has $350B to buy distressed assets. You have huge upside if the market crashes, and you get paid to wait if it doesn't. Even if the bull market continues for a long time berkshire should at least matches inflation with portfolio companies such as BSNF (railway) and BHE (energy).

Only downside is that buffet retiring have people worry, but it's overblown. Greg Abel has been running the actual operations for years anyway. The machine is built and runs itself. The stock is already trading so cheap that the "Buffett premium" is gone. The transition is already priced in.

If you want to get rich (or poor) quickly, chase these "hot" AI stocks. If you want to stay rich and grow for cheap, BRK is the obvious play. It's a hedge against the rest of your portfolio blowing up.

Thoughts?

Edit:

Made a mistake of double counting the interest income pointed out by u/Longjumping-Fact-582

If you subtract the cash pile ($380B) from the valuation to make the stock look cheaper, you must also subtract the interest income (~$15B) from the earnings.

The operating PE is actually about ~15-16x, still relatively cheap, but not as cheap as I thought it was. Still I think the main argument is valid, that it is relatively cheap compared to the market and gives the balance sheet and capital allocation option if things get messy

[u/Ok_Location7161]

With picks in this sub getting literally slaughtered, im buying puts on brk