{"id":1088,"date":"2026-04-13T01:48:46","date_gmt":"2026-04-13T01:48:46","guid":{"rendered":"https:\/\/www.sterlingcooper.info\/blog\/?p=1088"},"modified":"2026-04-13T01:48:46","modified_gmt":"2026-04-13T01:48:46","slug":"warren-buffett-agrees-with-sterling-coopers-analysis-of-the-hidden-value-of-berkshire-hathaway-inc","status":"publish","type":"post","link":"https:\/\/www.sterlingcooper.info\/blog\/warren-buffett-agrees-with-sterling-coopers-analysis-of-the-hidden-value-of-berkshire-hathaway-inc\/","title":{"rendered":"WARREN BUFFETT AGREES WITH STERLING COOPER&#8217;S ANALYSIS OF THE HIDDEN VALUE OF BERKSHIRE HATHAWAY, INC."},"content":{"rendered":"<div class=\"article-image-slot image-slot-placeholder\" data-is-first=\"true\" data-doc-id=\"cms\/api\/amp\/image\/AA20Fwz9\">\n<div class=\"article-image-slot\">\n<div class=\"article-image-container polished\" data-t=\"{&quot;n&quot;:&quot;OpenModal&quot;,&quot;t&quot;:13,&quot;b&quot;:8,&quot;c.i&quot;:&quot;AA20FrId&quot;,&quot;c.l&quot;:false,&quot;c.t&quot;:13,&quot;c.v&quot;:&quot;finance&quot;,&quot;c.c&quot;:&quot;finance-saving-investing&quot;,&quot;c.b&quot;:&quot;Investopedia&quot;,&quot;c.bi&quot;:&quot;AA1741Xl&quot;,&quot;c.tv&quot;:&quot;finance&quot;,&quot;c.tc&quot;:&quot;economy&quot;,&quot;c.hl&quot;:&quot;Why Warren Buffett believes book value cannot capture a business's real worth&quot;}\" data-test-id=\"AA20Fwz9\">\n<div class=\"image-caption-container image-caption-container-ux-impr articlewc-image-caption-container\"><span class=\"image-caption\">Intrinsic value is superior to book value when assessing the true worth of a business, Warren Buffett says. <\/span><\/div>\n<div><img loading=\"lazy\" decoding=\"async\" class=\"alignnone size-full wp-image-994\" src=\"https:\/\/www.sterlingcooper.info\/blog\/wp-content\/uploads\/2026\/02\/Screenshot-39.png\" alt=\"\" width=\"1280\" height=\"768\" \/><\/div>\n<\/div>\n<\/div>\n<\/div>\n<h3 class=\"article-sub-heading\">Key Takeaways<\/h3>\n<div class=\"article-list-slot\">\n<ul>\n<li data-t=\"{&quot;n&quot;:&quot;blueLinks&quot;,&quot;t&quot;:13,&quot;a&quot;:&quot;click&quot;,&quot;b&quot;:76}\">Warren Buffett has pointed out that <a href=\"https:\/\/www.investopedia.com\/articles\/investing\/110613\/market-value-versus-book-value.asp\" target=\"_blank\" rel=\"noopener\" data-t=\"{&quot;n&quot;:&quot;destination&quot;,&quot;t&quot;:13,&quot;a&quot;:&quot;click&quot;,&quot;b&quot;:1,&quot;c.t&quot;:7}\">book value can significantly misstate<\/a> the intrinsic value of a business.<\/li>\n<li data-t=\"{&quot;n&quot;:&quot;blueLinks&quot;,&quot;t&quot;:13,&quot;a&quot;:&quot;click&quot;,&quot;b&quot;:76}\">He prefers using intrinsic value, &#8220;the discounted value of the cash that can be taken out of a business during its remaining life.&#8221;<\/li>\n<li data-t=\"{&quot;n&quot;:&quot;blueLinks&quot;,&quot;t&quot;:13,&quot;a&quot;:&quot;click&quot;,&quot;b&quot;:76}\">Buffett goes so far as to say, &#8220;In all cases, what is clear is that book value is meaningless as an indicator of intrinsic value.&#8221;<\/li>\n<\/ul>\n<\/div>\n<p data-t=\"{&quot;n&quot;:&quot;blueLinks&quot;,&quot;t&quot;:13,&quot;a&quot;:&quot;click&quot;,&quot;b&quot;:76}\"><a class=\"recommendation-inline-link\" href=\"https:\/\/www.investopedia.com\/articles\/financial-theory\/08\/buffetts-road-to-riches.asp\" target=\"_blank\" rel=\"noopener noreferrer\" data-t=\"{&quot;n&quot;:&quot;destination&quot;,&quot;t&quot;:13,&quot;a&quot;:&quot;click&quot;,&quot;b&quot;:1,&quot;c.t&quot;:7}\">Warren Buffett<\/a> has repeatedly reminded investors that <a class=\"recommendation-inline-link\" href=\"https:\/\/www.investopedia.com\/terms\/b\/bookvalue.asp\" target=\"_blank\" rel=\"noopener noreferrer\" data-t=\"{&quot;n&quot;:&quot;destination&quot;,&quot;t&quot;:13,&quot;a&quot;:&quot;click&quot;,&quot;b&quot;:1,&quot;c.t&quot;:7}\">book value<\/a> is often a poor measure of a business.<\/p>\n<p data-t=\"{&quot;n&quot;:&quot;blueLinks&quot;,&quot;t&quot;:13,&quot;a&quot;:&quot;click&quot;,&quot;b&quot;:76}\">The calculation itself is simple: take the <a class=\"recommendation-inline-link-ai\" href=\"https:\/\/www.investopedia.com\/terms\/t\/tangiblenetworth.asp\" target=\"_blank\" rel=\"noopener\" data-t=\"{&quot;n&quot;:&quot;destination&quot;,&quot;t&quot;:13,&quot;a&quot;:&quot;click&quot;,&quot;b&quot;:1,&quot;c.t&quot;:7}\">total assets minus liabilities<\/a>. But book value, Buffett says, frequently misrepresents reality, whether by overstating or understating what a business is truly worth.<\/p>\n<p class=\"continue-read-break\" data-t=\"{&quot;n&quot;:&quot;blueLinks&quot;,&quot;t&quot;:13,&quot;a&quot;:&quot;click&quot;,&quot;b&quot;:76}\">Over the years, Buffett has written about the shortcomings of using <a class=\"recommendation-inline-link pseudoStyle\" href=\"https:\/\/www.investopedia.com\/terms\/b\/bookvaluepercommon.asp\" target=\"_blank\" rel=\"noopener noreferrer\" data-t=\"{&quot;n&quot;:&quot;destination&quot;,&quot;t&quot;:13,&quot;a&quot;:&quot;click&quot;,&quot;b&quot;:1,&quot;c.t&quot;:7}\">book value per share<\/a> (BVPS) to value Berkshire Hathaway. As chair of the company, Buffett has preferred to focus on a company\u2019s intrinsic value instead.<\/p>\n<h2 class=\"article-sub-heading\">Buffett: Book Value Is a Limited Tool<\/h2>\n<p data-t=\"{&quot;n&quot;:&quot;blueLinks&quot;,&quot;t&quot;:13,&quot;a&quot;:&quot;click&quot;,&quot;b&quot;:76}\">Warren Buffett believes that book value, although an easily calculable number, is of limited use. For businesses where <a class=\"recommendation-inline-link\" href=\"https:\/\/www.investopedia.com\/terms\/b\/berkshire-hathaway.asp\" target=\"_blank\" rel=\"noopener noreferrer\" data-t=\"{&quot;n&quot;:&quot;destination&quot;,&quot;t&quot;:13,&quot;a&quot;:&quot;click&quot;,&quot;b&quot;:1,&quot;c.t&quot;:7}\">Berkshire Hathaway<\/a> had full control, for example, the <a class=\"recommendation-inline-link-ai\" href=\"https:\/\/www.investopedia.com\/ask\/answers\/010815\/what-difference-between-book-value-and-carrying-value.asp\" target=\"_blank\" rel=\"noopener\" data-t=\"{&quot;n&quot;:&quot;destination&quot;,&quot;t&quot;:13,&quot;a&quot;:&quot;click&quot;,&quot;b&quot;:1,&quot;c.t&quot;:7}\">carrying value of those assets<\/a> on the balance sheet could be far different from the businesses\u2019 true <a class=\"recommendation-inline-link\" href=\"https:\/\/www.investopedia.com\/ask\/answers\/05\/bookvintrinsic.asp\" target=\"_blank\" rel=\"noopener noreferrer\" data-t=\"{&quot;n&quot;:&quot;destination&quot;,&quot;t&quot;:13,&quot;a&quot;:&quot;click&quot;,&quot;b&quot;:1,&quot;c.t&quot;:7}\">intrinsic value<\/a>.<\/p>\n<div class=\"intra-article-module\" data-t=\"{&quot;n&quot;:&quot;intraArticle&quot;,&quot;t&quot;:13}\">\n<div class=\"articlePageIntraArticleFullWidth left-image-intra-ad full-bleed-image-intra-ad intra-ad-rm-bg intra-ad-rm-h\">\n<div class=\"intra-article-relatedcontent\">\n<div class=\"video-wrapper   \" tabindex=\"0\">\n<div class=\" videocard1PP video-embed-common related-video-divider-bottom videocardRelatedVideo\">\n<div class=\" content-video-container  large-title    \" data-t=\"{&quot;n&quot;:&quot;ContentVideoPlayer&quot;,&quot;t&quot;:61,&quot;c.i&quot;:&quot;AA204WQs&quot;,&quot;c.l&quot;:false,&quot;c.t&quot;:61,&quot;c.v&quot;:&quot;finance&quot;,&quot;c.c&quot;:&quot;financenews&quot;,&quot;c.b&quot;:&quot;Fin Tek&quot;,&quot;c.bi&quot;:&quot;AA1PA9pH&quot;,&quot;ext&quot;:{&quot;videoId&quot;:&quot;AA204WQs&quot;,&quot;videoCs&quot;:&quot;AA1PA9pH&quot;,&quot;eventType&quot;:31,&quot;timeElasped&quot;:2,&quot;videoFormatCode&quot;:1006,&quot;title&quot;:&quot;Warren Buffett\u2019s 4 most important lessons for surviving 2026&quot;,&quot;videoDuration&quot;:978,&quot;fr&quot;:&quot;en-us_finance&quot;,&quot;playType&quot;:&quot;embed&quot;,&quot;playerTech&quot;:&quot;MSNPlayer&quot;,&quot;size&quot;:&quot;612x344&quot;,&quot;isContinuous&quot;:false,&quot;isMuted&quot;:true,&quot;playDuration&quot;:3,&quot;inline&quot;:true,&quot;vCard&quot;:1,&quot;videoPlayerType&quot;:&quot;BingMM&quot;,&quot;videoUrl&quot;:&quot;https:\/\/youtu.be\/xhQzvlL5KBk?si=O69cLLzBOUlg3VyK&quot;,&quot;perf&quot;:{}},&quot;c.hl&quot;:&quot;Warren Buffett\u2019s 4 most important lessons for surviving 2026&quot;}\">Buffett described how Berkshire\u2019s book value per share in 1964 was $19.46, but that the intrinsic value of the business at the time was far less because the company\u2019s textile assets were worth less than their stated values.<\/div>\n<\/div>\n<\/div>\n<\/div>\n<\/div>\n<\/div>\n<p data-t=\"{&quot;n&quot;:&quot;blueLinks&quot;,&quot;t&quot;:13,&quot;a&quot;:&quot;click&quot;,&quot;b&quot;:76}\">Fast forward to December 2001, and book value per share had grown to nearly $38,000, and almost $100,000 by December 2011. However, those figures actually <em>understated <\/em>the intrinsic value of the company, with the stock&#8217;s <a class=\"recommendation-inline-link\" href=\"https:\/\/www.investopedia.com\/terms\/p\/price-to-bookratio.asp\" target=\"_blank\" rel=\"noopener noreferrer\" data-t=\"{&quot;n&quot;:&quot;destination&quot;,&quot;t&quot;:13,&quot;a&quot;:&quot;click&quot;,&quot;b&quot;:1,&quot;c.t&quot;:7}\">price-to-book ratio<\/a> falling from around 2.0 to 1.15 over the same ten years. As Buffet noted, most of Berkshire Hathaway\u2019s underlying businesses were \u201cworth far more than their <a class=\"recommendation-inline-link\" href=\"https:\/\/www.investopedia.com\/terms\/c\/carryingvalue.asp\" target=\"_blank\" rel=\"noopener noreferrer\" data-t=\"{&quot;n&quot;:&quot;destination&quot;,&quot;t&quot;:13,&quot;a&quot;:&quot;click&quot;,&quot;b&quot;:1,&quot;c.t&quot;:7}\">carrying values<\/a>.\u201d<\/p>\n<p data-t=\"{&quot;n&quot;:&quot;blueLinks&quot;,&quot;t&quot;:13,&quot;a&quot;:&quot;click&quot;,&quot;b&quot;:76}\">The moral of the story: book value can mislead in both directions. It can overstate or understate the true value of a business.<\/p>\n<h2 class=\"article-sub-heading\">Book Value vs. Intrinsic Value vs. Market Price<\/h2>\n<div class=\"article-list-slot\">\n<ul>\n<li data-t=\"{&quot;n&quot;:&quot;blueLinks&quot;,&quot;t&quot;:13,&quot;a&quot;:&quot;click&quot;,&quot;b&quot;:76}\"><strong>Intrinsic value <\/strong>is \u201cthe <a class=\"recommendation-inline-link\" href=\"https:\/\/www.investopedia.com\/terms\/d\/dcf.asp\" target=\"_blank\" rel=\"noopener noreferrer\" data-t=\"{&quot;n&quot;:&quot;destination&quot;,&quot;t&quot;:13,&quot;a&quot;:&quot;click&quot;,&quot;b&quot;:1,&quot;c.t&quot;:7}\">discounted value of the cash<\/a> that can be taken out of a business during its remaining life.\u201d This is an estimate, and as such is subjective and sensitive to both interest rates and future cash-flow assumptions. But it is the only logical basis for valuation, Buffett says.<\/li>\n<li data-t=\"{&quot;n&quot;:&quot;blueLinks&quot;,&quot;t&quot;:13,&quot;a&quot;:&quot;click&quot;,&quot;b&quot;:76}\"><strong>Book value<\/strong> is an accounting measure and not a reflection of a business\u2019s real economic value. At Berkshire Hathaway, Buffett only uses the change in book value per share as a rough proxy to track changes in intrinsic value, but cautions investors to never confuse the two.<\/li>\n<li data-t=\"{&quot;n&quot;:&quot;blueLinks&quot;,&quot;t&quot;:13,&quot;a&quot;:&quot;click&quot;,&quot;b&quot;:76}\"><strong>Market price<\/strong> is a third number that can get in the way, as it often reflects short-term market sentiment more than anything else.<\/li>\n<\/ul>\n<\/div>\n<h2 class=\"article-sub-heading\">Buffett&#8217;s Way of Doing Business<\/h2>\n<p data-t=\"{&quot;n&quot;:&quot;blueLinks&quot;,&quot;t&quot;:13,&quot;a&quot;:&quot;click&quot;,&quot;b&quot;:76}\">\u201c[B]usinesses logically are worth far more than net tangible assets when they can be expected to produce earnings on such assets,\u201d Buffett wrote. He prefers to measure a business\u2019s \u201ceconomic\u201d performance, which is far superior to tracking its book value or even its earnings per share.<\/p>\n<h3 class=\"article-sub-heading\">Look-Through Earnings<\/h3>\n<p data-t=\"{&quot;n&quot;:&quot;blueLinks&quot;,&quot;t&quot;:13,&quot;a&quot;:&quot;click&quot;,&quot;b&quot;:76}\">To assess a firm&#8217;s economic performance, Buffett likes to focus on the <a href=\"https:\/\/www.investopedia.com\/terms\/l\/look-through-earnings.asp\" target=\"_blank\" rel=\"noopener\" data-t=\"{&quot;n&quot;:&quot;destination&quot;,&quot;t&quot;:13,&quot;a&quot;:&quot;click&quot;,&quot;b&quot;:1,&quot;c.t&quot;:7}\">look-through earnings<\/a>, rather than accounting constructs.<\/p>\n<p data-t=\"{&quot;n&quot;:&quot;blueLinks&quot;,&quot;t&quot;:13,&quot;a&quot;:&quot;click&quot;,&quot;b&quot;:76}\">To make his point, Buffett has used the analogy of a college education. The tuition paid and lost income and experience while attending school is the \u201cbook value.\u201d The relevant value, however, is the <a class=\"recommendation-inline-link\" href=\"https:\/\/www.investopedia.com\/terms\/p\/presentvalue.asp\" target=\"_blank\" rel=\"noopener noreferrer\" data-t=\"{&quot;n&quot;:&quot;destination&quot;,&quot;t&quot;:13,&quot;a&quot;:&quot;click&quot;,&quot;b&quot;:1,&quot;c.t&quot;:7}\">present value<\/a> of the lifetime incremental earnings that the degree makes possible. For some, the intrinsic value (i.e., economic payoff) is greater than the price (cost). For others, it&#8217;s not.<\/p>\n<p data-t=\"{&quot;n&quot;:&quot;blueLinks&quot;,&quot;t&quot;:13,&quot;a&quot;:&quot;click&quot;,&quot;b&quot;:76}\">The analogy emphasizes his overall point: focus on intrinsic value rather than cosmetic accounting. In either case, the book value concept has no real use in assessing one&#8217;s professional value creation.<\/p>\n","protected":false},"excerpt":{"rendered":"<p>Intrinsic value is superior to book value when assessing the true worth of a business, Warren Buffett says. Key Takeaways Warren Buffett has pointed out that book value can significantly misstate the intrinsic value of a business. He prefers using intrinsic value, &#8220;the discounted value of the cash that can be taken out of a [&hellip;]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[54],"tags":[],"class_list":["post-1088","post","type-post","status-publish","format-standard","hentry","category-berkshire-hathaway"],"_links":{"self":[{"href":"https:\/\/www.sterlingcooper.info\/blog\/wp-json\/wp\/v2\/posts\/1088","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.sterlingcooper.info\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.sterlingcooper.info\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.sterlingcooper.info\/blog\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/www.sterlingcooper.info\/blog\/wp-json\/wp\/v2\/comments?post=1088"}],"version-history":[{"count":1,"href":"https:\/\/www.sterlingcooper.info\/blog\/wp-json\/wp\/v2\/posts\/1088\/revisions"}],"predecessor-version":[{"id":1089,"href":"https:\/\/www.sterlingcooper.info\/blog\/wp-json\/wp\/v2\/posts\/1088\/revisions\/1089"}],"wp:attachment":[{"href":"https:\/\/www.sterlingcooper.info\/blog\/wp-json\/wp\/v2\/media?parent=1088"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.sterlingcooper.info\/blog\/wp-json\/wp\/v2\/categories?post=1088"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.sterlingcooper.info\/blog\/wp-json\/wp\/v2\/tags?post=1088"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}