BRK Stock Trading Below Intrinsic Value!!!
•March 10, 2026
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Why It Matters
Restarting Berkshire’s buybacks could boost its share price and signal a broader move by mega‑cap companies toward active capital returns amid low‑yield environments.
Key Takeaways
- •Greg Abel proposes 7% discount rate for Berkshire valuation.
- •Lower discount rate pushes intrinsic value above $1 trillion.
- •Buybacks favored over cash holdings amid inflation and low yields.
- •Expected annual earnings growth of 5‑6% supports higher valuation.
- •Size constraints limit buyback size to roughly $40‑100 billion.
Summary
The video examines Greg Abel’s recent claim that Berkshire Hathaway’s stock is trading below its intrinsic value, prompting a potential restart of share repurchases. Abel argues that, unlike Warren Buffett’s historic 10% discount rate, a more realistic 7% rate better reflects today’s macro environment, especially with inflation outpacing Treasury yields. Using a simplified valuation model, the presenter shows that applying a 7% discount to Berkshire’s estimated $40 billion of annual earnings, combined with cash and equity holdings, lifts the company’s intrinsic worth to roughly $1.1 trillion—well above the current market cap. By contrast, a 10% discount yields a valuation near $650 billion, underscoring how sensitive the metric is to the discount assumption. Key excerpts include Abel’s remark that “I can do 7%, which is more rational,” and the suggestion that Berkshire could allocate $40‑100 billion annually to buybacks without inflating the share price. The analysis also highlights inflation’s erosion of cash returns and the limited upside of Treasury yields, making repurchases the most efficient capital deployment. If Berkshire proceeds, the market may reinterpret the conglomerate’s growth prospects, potentially lifting the share price and setting a precedent for other large, cash‑rich firms to favor buybacks over low‑yield investments. The shift also signals a strategic departure from Buffett’s era, emphasizing pragmatic valuation and shareholder return in a higher‑inflation landscape.
Original Description
Berkshire is back to buybacks because the stock is trading below intrinsic value. Unfortunately this tells us more about Greg than other...
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