TIP810: Berkshire Hathaway 2026 Valuation w/ Chris Bloomstran
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In this comprehensive three-part episode of We Study Billionaires, Stig Brodersen and Preston Pysh welcome Chris Bloomstran to explore Berkshire Hathaway’s projected 2026 valuation, emphasizing a 9.3% year-over-year increase in intrinsic value to just over $1.2 trillion. Bloomstran dissects multiple valuation methodologies—sum-of-the-parts, gap-adjusted earnings, and price-to-book ratios—highlighting that despite misleading short-term earnings drops due to currency translation and one-time write-downs, the core operating businesses in railroads, energy, and manufacturing remain robust. He praises Greg Abel’s inaugural CEO letter for its cultural authenticity and operational depth, signaling a hands-on leadership style that aligns with Berkshire’s enduring principles. The discussion extends to macro risks, including unsustainable S&P 500 valuations (26x earnings, 12.8% margins), the dangers of AI-driven capital expenditure outpacing cash flow, and the hollow nature of share repurchases that fail to reduce share count. Bloomstran underscores the importance of long-term compensation structures, succession planning, and personal integrity—factors he believes are as vital as financial models in preserving investor value. He shares personal anecdotes, including being humbled by Charlie Munger’s critique and recovering from a Twitter hack used to promote Solana scams, reinforcing his commitment to thoughtful, long-form communication. The episode closes with Bloomstran’s dedication to mentoring future investors through his annual letters, now archived at SemperAugustis.com, and a humorous warning against fake accounts impersonating him.
Berkshire Hathaway’s intrinsic value grew 9.3% year-over-year to $1.2 trillion, driven by strong underlying operations in railroads, energy, and manufacturing.
Greg Abel’s leadership style is hands-on and culturally aligned with Berkshire’s values, signaling continuity and discipline in capital allocation.
S&P 500 valuations at 26x earnings and 12.8% profit margins are unsustainable, with mean reversion likely due to rising AI-related capital expenditures.
Share repurchases have not reduced the S&P 500’s share count over 25 years, indicating they primarily benefit executives rather than shareholders.
The most effective compensation structures align with long-term value creation, not short-term stock price manipulation.
…and 3 more takeaways available in PodZeus
Berkshire's 2026 Intrinsic Value & Earnings Reality Check
“If you look at the main key moving drivers, the railroad was up. Its earnings were up almost 9% for the year. The energy business was up almost 7% for the year. And the manufacturing service retail groups' earnings were up 4.5%.”
Greg Abel’s First CEO Letter & Capital Allocation Evolution
“I thought it was good. I don't know what else the world would have expected. He spent however many pages it was, 16 or 17 pages and he talked about culture and he talked about the big moving parts and summarized the key subsidiaries and what was going on with those businesses.”
The S&P 500’s Valuation Crisis & AI Capital Overload
“If you take margins down from today's 12.8% to 10 and you're going to crucify a 26 multiple to earnings. So multiples come in when margins come in.”
Succession Planning and Cognitive Longevity
“I've got enough people in my universe that would, I believe, be candid and say, Chris, you know, you're starting to slow down. You need to think about not having your finger on the trigger of capital.”
The Power of Compound Interest at Market Lows
“If you could put money to work on that day, would you for a third of a century and you would have made 15% per year and change by having bought the low for the next third of a century through September 30, 1964.”
“If you take margins down from today's 12.8% to 10 and you're going to crucify a 26 multiple to earnings. So multiples come in when margins come in.”
“If anyone named Chris Broomstein is trying to sell me Solana coins, I don't think it's you. You can take that as a compliment.”
“If you look at the main key moving drivers, the railroad was up. Its earnings were up almost 9% for the year. The energy business was up almost 7% for the year. And the manufacturing service retail groups' earnings were up 4.5%.”
Hosts
Guest
Berkshire Hathaway
organization
Warren Buffett
person
Chris Bloomstran
person
S&P 500
other
Greg Abel
person
Ted Wessler
person
AI Capital Expenditure
other
charlie munger
person
x (formerly twitter)
other
sempers letter
other
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