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Greg Abel's two named deals come to 1.5% of Berkshire's market value
A Seeking Alpha analyst values Berkshire Hathaway at $1.18 trillion, about 8% above its market cap, and rests the bull case on Greg Abel putting $10 billion into Alphabet and $6.8 billion into Taylor Morrison. He is long the stock.
The Investor · Invest desk
What happened
- Seeking Alpha contributor Bohdan Kucheriavyi puts Berkshire Hathaway's fair value at $1.18 trillion, about 8% above the company's current market capitalisation, and calls the shares undervalued.
- He credits Greg Abel's leadership with $10 billion invested in Alphabet.
- The same summary cites a $6.8 billion Taylor Morrison acquisition and buybacks resumed under Abel.
Compiled by The InvestorSomething wrong?How this is made
Why it matters
- constraint The distance between the estimate and the market is about $87 billion on a company this size, which the model's own assumptions can create or erase without anything changing at Berkshire.
- decision A buyer underwriting the succession on this evidence is deciding on two transactions plus an unsized repurchase programme.
- exposure The case gives way first at GEICO's loss ratio, because the earnings rebound and the underwriting risk are the same insurance operation read from two directions.
Work backwards from the estimate. If $1.18 trillion is about 8% above where the stock trades, the market capitalisation sitting behind that sentence is roughly $1.09 trillion [1][1]. Bohdan Kucheriavyi, who wrote the piece, disclosed that he holds "a beneficial long position in the shares of BRK.B either through stock ownership, options, or other derivatives" [8], and Seeking Alpha says its contributors include individual investors "who may not be licensed or certified by any institute or regulatory body" [9].
The deal sizes can at least be checked. Ten billion dollars into Alphabet plus $6.8 billion for Taylor Morrison is $16.8 billion [2][3][3], or about 1.5% of that implied $1.09 trillion [4]. Kucheriavyi writes that those deals, alongside resumed buybacks, signal "decisive capital allocation" [4].
Two transactions do tell a prospective holder something a fair value estimate cannot, namely the size at which Abel signs and the kind of asset he will put money into: one large listed equity stake and one outright acquisition [2][3]. Two deals is not much of a record. The article does not size the resumed buyback or give any figure for Buffett's own deployment in his final years, so the comparison that makes Abel the more active allocator rests on the characterisation [3][4].
On the earnings side, Kucheriavyi lists operating earnings rebounding, the energy business accelerating, and higher Treasury yields feeding the coming quarters [5]. In the risk column he puts rising GEICO loss ratios and macro headwinds [6]. Those two lines pull on the same company from opposite ends, and the article quantifies neither. Higher yields lift what the insurance float earns; a rising loss ratio takes money back out at the underwriting line.
He wrote that he remains "bullish and consider BRK.B a solid long-term investment" [7]. I would take the $16.8 billion over the $1.18 trillion, because one is a fact about what Abel signed and the other came out of a model whose inputs nobody has published [1][3]. Two things would move me. If the next quarterly filing shows repurchases running at a multiple of $16.8 billion, then the deployment story is about share count and the 1.5% understates him [3][4]. If the filings show the Alphabet stake was built before Abel held allocation authority, the record credited to him here comes down to one acquisition [2][3].
What to watch
- The size of the resumed repurchase in Berkshire's next quarterly filing, measured against the $16.8 billion of named deals.
- GEICO's loss ratio direction in the next report, the one operating risk the bull case names.
- Whether Berkshire's next 13F shows the Alphabet stake added to, held flat or trimmed.