We Study Billionaires - The Investor’s Podcast Network

TIP625: Berkshire Hathaway w/ Chris Bloomstran

Apr 21, 2024

Chris Bloomstran, a legendary investor from Semper Augustus with an impressive 11.5% compounded growth rate, shares his insights on valuing Berkshire Hathaway. He dives into the complexities of capital allocation, emphasizing the importance of cash management in portfolio performance. Bloomstran discusses the five components of stock market returns and provides a thoughtful analysis of Berkshire's intrinsic value and its capital strategies. Plus, he highlights the ethical obligations of investors and the importance of preparation in uncovering investment opportunities.

01:16:56

Episode guests

Chris Bloomstran

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Quick takeaways

Cash reserves impact portfolio returns but strategic capital deployment is key for optimal performance.

Managing cash reserves and capital allocation are crucial for long-term investment success.

Valuation of Berkshire Hathaway using 'sum of the parts' approach reveals structural advantages and intrinsic value.

Deep dives

Chris Brunstren's Exceptional Track Record Highlights Investment Success

Chris Brunstren, along with his company Semper Augustus, has displayed an impressive investment track record. Since 1999, their returns have averaged 11.5% compared to 7.6% for the S&P 500. This outstanding performance translates to nearly $15 return for each dollar invested with Chris, significantly surpassing the S&P 500's return of $8 per dollar.

The Rise of Profit Margins

01:42

Factors Determining Total Returns of Common Stock

01:25

Passion Leads to Efficiency and Success

01:27

Maximizing Returns and Avoiding Cash Holdings

01:22

Intro

2min

Cash Management in Asset Strategies

20min

The Moral Obligations of Investors and the Value of Preparation

5min

Analyzing Berkshire Hathaway and S&P 500 Returns

17min

Berkshire Hathaway Unpacked

9min

Berkshire Hathaway's Capital Strategies

12min

Berkshire Hathaway's Financial Mastery

16min

Stig has invited legend investor Chris Bloomstran from Semper Augustus to teach us how to value Berkshire Hathaway on today's show. Semper Augustus has an outstanding track record with a compounded annual growth rate of 11.5% on equities since his fund's inception on 2/28/1999, compared to 7.6% for the S&P500.

IN THIS EPISODE YOU’LL LEARN:

00:00 - Intro

01:37 - The impact of holding cash on your portfolio returns.

24:07 - How to understand the five different components that make up stock market returns.

33:14 - How to estimate the expected return of being invested in the S&P500.

40:57 - What the intrinsic value of Berkshire Hathaway is.

45:51 - How Berkshire Hathaway has allocated capital since 2018.

Disclaimer: Slight discrepancies in the timestamps may occur due to podcast platform differences.

BOOKS AND RESOURCES

Join the exclusive TIP Mastermind Community to engage in meaningful stock investing discussions with Stig, Clay, Kyle, and the other community members.
Stig’s 2023 masterclass with Chris Bloomstran on valuing Berkshire Hathaway | YouTube Video.
Stig’s 2022 masterclass with Chris Bloomstran on valuing Berkshire Hathaway | YouTube Video.
Stig’s masterclass with Chris Bloomstran on equity valuations | YouTube Video.
Chris Bloomstran’s website.
Read Chris Bloomstran’s letters to his clients.
Buffett resource on CNBC.
Check out all the books mentioned and discussed in our podcast episodes here.
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