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Chris Bloomstran

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2026-04-26

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2026-04-26

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1. “Is a process to try to get the service people at X to fix the problem, which they finally did. But it took a couple weeks and way more man hours and energy on Semper's end to try to recover that than we wanted. So I'm there, but I don't post as much on the site. I usually, when something material happens at Berkshire, I talk about it and I still have fun, but I only look at my Twitter account, my ex account once every week or two now.”

   2026-04-26 · We Study Billionaires · TIP810: Berkshire Hathaway 2026 Valuation w/ Chris Bloomstran · IDENTIFIED FROM THE TRANSCRIPT

2. “You get what you pay for. They're all on the website. Semperaugustus.com. We've got the archives of the letters and a bunch of the podcasts that I've done in recent years, various interviews, some of the stuff with Kate Welling. But as soon as you drop this, we'll have it posted and we'll keep it up. So we've got the archive of the letters and then a separate tab for interviews and podcasts. And I'm still on Twitter, though, less. In fact, during the letter writing process this year, my Twitter account got hacked, my ex account got hacked. Some cryptocurrency group, I got a notice. I was working on the letter. I got a notice thing. So somebody's logged in from an unfamiliar device, changed your password. And by the time I saw that 30 minutes later, my password had been changed. I couldn't get into the account. And in short order, there was a Solana-based outfit that was sending out messages using my user profile. And it was.”

   2026-04-26 · We Study Billionaires · TIP810: Berkshire Hathaway 2026 Valuation w/ Chris Bloomstran · IDENTIFIED FROM THE TRANSCRIPT

3. “Completely unintended I commit. I'm going to commit to you now, Stig. This will be the secular peak of the separate letter.”

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4. “And he wrote back and said, you're going to have to recalibrate because when you read my letter a few days after your release years, you're going to see it's the shortest one that I've ever written. And I've done nothing a lot. I tried to cut 35 pages of my some of the parts intrinsic value commentary out. And a couple of friends said, Chris, it's your letter. Just do it. People that think the letter is too wrong. Anyway, they're going to think it's too long, whether you write 50 pages or 180, whatever it was this year.”

   2026-04-26 · We Study Billionaires · TIP810: Berkshire Hathaway 2026 Valuation w/ Chris Bloomstran · IDENTIFIED FROM THE TRANSCRIPT

5. “Which my friend Harvey Eisen put up the money for and tried to get Warren to fly down to attend my talk and have dinner the night before. This was just last year. Not because Warren did it and not because he had to teach, but his mentor, Ben Graham, was such an important figure for him. Warren and Charlie have been such important for us as Berkshire Acolytes. What little that I've learned over time, I take immense joy in being able to share. And when young investors or students, I find they're reading the letter, it's pretty gratifying. And I'll never be as great of a teacher as Warren. But what little I know, I'm happy to share and I do it with more verbosity for sure. But in trying to get, even told Warren, I'm trying to shrink the letter. I told him a few years ago I was going to shrink it by 2.6 pages a year so that when I was his age, which was then 91, we'd have matching length.”

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6. “You're nice to say that, and I appreciate that. It means more than you'll know. As I said in my trivia de Warren, he didn't have to teach. I mean, the archive of the Berkshire letters, the older letters were Warren teaching about executive compensation and disciplined underwriting and nuances on accounting. And he didn't have to do that. He could have just written a quick three-page letter about the subsidiary and dotted the I's and crossed the T's, but he taught. And then he entertained students and he would speak on campuses. In later years, he would have large groups of students come visit. And so I'm fortunate and blessed that, I don't know, seven, eight, nine, ten times there's no consistency to it, but I find myself being asked to speak on college campuses. I've been at Notre Dame every year for the last several years. I've spoken at Columbia a bunch of times in New York. I've spoken in my son's investment principals, Warren Buffett class.”

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7. “I also know my clients are going to read it, some of whom are more sophisticated than others. I also know students are going to read it and learn from it, so I try to write a myriad audience that have different levels of sophistication. But I always put a reasonable amount of effort into it knowing that he is looking at it every year.”

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8. “Well, one of the biggest honors and surprises that I had was, geez, might have been 2002. I've got the letter hanging in my office, but I received a letter from Warren letting me know that a friend of his. And our letters have only been on our website in public since 2015 letter. So we would send our letters just to our clients and to my 30 or 40 quirky friends, right? Somehow my letter made its way to him and he wrote that somebody, a friend of mine, sent me, friend of mine, well, I'm talking for it now, friend of mine being Warren, sent me a copy of your January 1, 1999 letter, which I thoroughly enjoyed. And if you'd have any of your prior letters, police send them my way and any future letters, I'd love to read anything you write. So he's been reading my letters. And we have some back and forth over the years. But so, I mean, I write the thing at a level where I know Warren's going to read it.”

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9. “I think there's a quirkiness to people that are listening to your regular podcasts or reading my letters. There's an intellectual curiosity about the investing world that people self-select into listening to you or reading me or listening to us talk once a year.”

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10. “Seeing the start to tail SP compounding at 12 and change from $100 to $4.5 million, knowing that Bersher grew to 6.1 million for each hundred is pretty impressive. And that's the legacy of the track record. And then I've got more of a testament to what he did for teaching and integrity and the way businesses should be run. So there's a 10-page section of the letter that I hope even if you don't like getting into the accounting nuances of conglomerates. There's about a 10-page testament to Warren that's partly track record and partly human record, but it's pretty fun reading. At least it was fun writing for me.”

    2026-04-26 · We Study Billionaires · TIP810: Berkshire Hathaway 2026 Valuation w/ Chris Bloomstran · IDENTIFIED FROM THE TRANSCRIPT

11. “The single best moment in history of the stock market to buy the SP 500, June 1, 1932, you compounded it 12 point, whatever it was, I think it was 12.1%, maybe it was 12.5%. But you grew $100 to $4.4 million Berkshire grew $100 to $6.1 million in 33 fewer years. Berkshire Hathaway on Warren's Watch outperformed the S&P 500 over nearly a century, buying the market at the absolute low. I think, and I said in the letter and we'll see if Warren will agree, because he's going to read that part at least, whether Charlie would have been impressed with that. Because even though it's just pure compound interest and pure algebra.”

    2026-04-26 · We Study Billionaires · TIP810: Berkshire Hathaway 2026 Valuation w/ Chris Bloomstran · IDENTIFIED FROM THE TRANSCRIPT

12. “Would you be willing to lose 99% of your money on that date? And you know where I'm going with this? September 30, 1964, and put your money in one company stuck for the next 61 years. Well, yes, you would have because on that 99% decline from the measurement period, the first, the beginning of the fiscal year when Warren got controlled of Berkshire, Berkshire compounded 19.7% and grew each hundred dollars to 6.1 million dollars. The S&P could have fallen 99% from 10,000 to $100 and still grow. So during that period where Berkshire grew to 6.1 million at 19.7% by growing at 10%, the S&P grew from $100 to $45,000. So $45,000 against $6.1 million. And that's how you can fall 99.26% or whatever it is. But you can do it twice because if you do the whole record from”

    2026-04-26 · We Study Billionaires · TIP810: Berkshire Hathaway 2026 Valuation w/ Chris Bloomstran · IDENTIFIED FROM THE TRANSCRIPT

13. “June 1. So SP 500. June 1. 1932, the SP had fallen 86.2 or 86.4% from its peak in 1929. The Dow Jones, which is what you talk about, had fallen 89%. And kind of more famously, I think it was July 8, 1932, that the Dow traded its low, but the S&P's low was on June 1, 1932 at $4.40 on the day of the Dow low. It was $4.41. So it was a penny cheaper a month earlier, five weeks earlier. In any event, from that day. So 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. Compounding at that rate for that... You turn each hundred dollars into just about $10,000. So, Hunter Bagger in a third of a century.”

    2026-04-26 · We Study Billionaires · TIP810: Berkshire Hathaway 2026 Valuation w/ Chris Bloomstran · IDENTIFIED FROM THE TRANSCRIPT

14. “Talk about the track record, and there's several things in it. His performance record versus the SP at the moment he announced his retirement first weekend in May. There was no trailing one, two, three, four, five, six, seven, eight, nine, ten-year return. Berkshire outperformed an every yearly interval, looking backward as of that date, which is pretty incredible. But on a 99% return. So what would be the single best day in the history of the stock market, the U.S. stock market, to put money to work? What single day would it be? I'll ask you.”

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15. “Year, and then I updated this year with better numbers. I was able to calculate market returns, S&P 500 returns from all of the big secular peaks and troughs over the last 100 years. So 29 peak, 32 trough, 37, 42, 66 peak, so on and so forth. And it's pretty amazing the differentials of putting capital to work near a secular peak, not even at, but if you do it at a secular peak or at a secular low, the difference in compounding series. And so I ran the numbers over time. And it's amazing how much disparate, how widely disparate that the returns get from the famous Ebotson 10.5%. And I realized something. So you've read the letter and maybe you didn't read this part, but there's a section, I think, from pages 94 to 104 that everybody should read because it's my tribute to Warren.”

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16. “No, I mean, I think this is great. I'd encourage everybody, I'll tell the story. So we didn't cover it. We didn't get to it. But a couple years ago, I started off my letter with my story of, I don't know, 10 years ago. I was trading a bunch of messages with Warren about something different. But I noted that I just calculated that Bercher could decline by 99.3% in share price and still have outperformed the S&P 500. And in his correspondence back with the other stuff, he noted, Ben Graham would be proud, but let's not test math. So there I was a couple weeks later at Charlie's meeting in Westco and Pasadena. I said, hey, I came up with this number and ran a biomed. Compound interest. That's not impressive. And so you just slink away and go back to your seat. You just crushed me. So in going through last...”

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17. “That the non appellates bodies tend to live longer, and you're sitting, Oh my god, I played college football. That just scratches a few years from my life. But then he said, obviously the women tend to outlive men and noted that in his later years he was convincing Charlie to do the sex change operation. I could contemplate something like that to add a few years to the runway. Kidding aside, I think between sudden how you go bankrupt, Bill, we'll gradually at first and then suddenly, well, that's either how you go out and either physically go out suddenly or you mentally go out gradually. And I think we've got a pretty good formal and informal structures in place to accommodate either or any combination of the two.”

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18. “As much friends now as they are clients, I've got enough people in my universe that would, I believe, would be candid and say, Chris, you know, you're starting to slow down. You need to do something. You need to think about not having your finger on the trigger of capital. I'm confident that there are enough people that think enough of me, that know me well enough and that I trust and mutually, there's a mutual trust that I would do the same for them and I think they would do the same for me. without expressly I became able to say that with certitude. I've got friends who would say, Chris, you're an idiot. You need to stop. You've got early dementia and you need to focus on family. And I think we're set on that front. I hope it doesn't come to that. I mean, I really do think the pine box, although, you know, I may not get 100 years because as Charlie or Warren said a couple years ago, after Charlie had passed, he noted that A, having neither of them been athletes, that they're bothering.”

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19. “We've got young investment people working with us that are evolving and growing. We have a plan in place to essentially, respectively, with a good friend of mine, merge our operations in the event that I or he running his firm would depart suddenly. So he's somebody that I'd be very comfortable having my family's capital with and my clients' capital with. So we've got that in place as well. But I think to your point about a slow cognitive decline, we talk about Tulipomania. This is my roundtable where I've got 30, 32 really my best friends, colleagues, contemporaries, peers in the investment world that I've gotten over the years. We get together for four days in St. Louis and go through 12 or 13 companies and have a lot of great discussions and eat well and drink well between my family and my colleagues and even my clients, many of whom are”

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20. “Like Charlie did 34 days shy of his 100th birthday or just struggle enough with my vision where I'm having a hard time reading 10Ks at age 95 to pass. Will never sell the firm. I hope at 57 I get at least another three decades to do what I'm doing. I love what I do. I've never felt like I'm doing this thing. I've got a responsibility to our clients. If I were to get hit by the proverbial bus, institutions are just going to move capital. We've got an obligation to people that have been with us for a long time, that entrust us with capital, that if I were to not get hit by a bus and to have cognitive decline. And I worry about it because I played football at a high level and I had a number of concussions. And so, you know, you sit there on a Saturday or a Sunday morning and go, geez, I'm drawing a blank on remembering somebody's name. Hopefully that's not the football. Maybe it's that I'm getting older or maybe it's the fact that I had too much red wine last night on the weekend, some combination of the three. But I think, so business-wise, if something were to happen suddenly, Chad knows the portfolio like the back of his hand.”

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21. “Well, for those that don't know what you're talking about, Guy Spear, mutual friend of ours, is deep in the Berkshire world as an acolyte. He runs a really nice business called Aquamarine. He's got a very good long-term track record. He's struggling with, always struggling with a pretty bad form of brain cancer. And he had his family join him at one of my dinners in Omaha last year, and he was in recovery. And we thought full remission and thought he was in good shape. And it came back late last year. you know, praying that he gets through it. He's got a wonderful family, but he made the very, very difficult decision to focus on his health and his family and close his firm and return the capital to his investors. And that's just a brutal thing because I'm sure like Warren and Charlie, like me, I mean, I hope I'm 57 years old. And my plan is to go out either in a pine box.”

    2026-04-26 · We Study Billionaires · TIP810: Berkshire Hathaway 2026 Valuation w/ Chris Bloomstran · IDENTIFIED FROM THE TRANSCRIPT

22. “Supports for stock prices go away because now the dollars are going into the ground in data centers or into space, which go off on another tangent. So they may not be the supportive salve that the market has had. And so for that, if we keep giving executives two or three percent of the companies per year, you may see the dilution factor go up and up and up. It's been pretty modest in the last five years, but that could very well increase. And a rising share count is deleterious to the investor's return. It's one of your four multiplicative factors.”

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23. “I'll add to that Sherry purchase thing that even though a trillion is a big number, kind of back to the AI and the CapEx spending, those numbers are so big in $650 to $750 billion for the current year, they're going to consume more than all of the cash flow from operations for Microsoft, Meta, Google, Amazon, that there's less capacity to keep buying the stocks back. And so you've seen sherry purchases among some of those 20 largest businesses start to decline. And that also, back to the argument about PEs and multiples and what the right numbers are, even though a trillion is a big number, it's shrinking. I've got a chart in the letter that shows repurchases a percentage market cap going down and down and down. Well, that's partly a function of the prices, the valuations, the PEs going up and up and up. But if fewer dollars are committed to the share repurchase, one of those big”

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24. “The moment he or she becomes CEO. And so the compensation of that person needs to be sufficiently high relative to the 1.2 or 3 trillion of assets. And it'll be a larger number, depending on how many shares Berkshire buys back over time. But you want the comp to be high enough. So the CEO might need a $25 million salary. I mean, it's crazy, it sounds to somebody needs $25 million. That's a reasonable amount of comp to run a business the size of Berkshire Hathaway. We could talk all day about sherry purchases and executive compensation. It's so badly done in so many places that when you find it done reasonably well, it's pretty glorious.”

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25. “Proxy voting companies when they weigh in on governance don't look at it the right way. They don't look at it this way. Those folks are not aligned with shareholders' best interests. They're aligned with ESG and DEI and all kinds of crazy stuff. Berkshire should be approximate on how to do it, but it can't be. And I go back to Greg's compensation and him saying I'm going to buy the stock back. He was fortunate to be in a position to be rich when he became CEO. And he got rich because he owned 1% of BHE. The next CEO is not going to come to the party with a net worth of six or seven or eight hundred million dollars.”

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26. “Price to higher and higher levels at 26 times earnings, even if you take the MAG 7 out, 22 times earnings for the SP 493, the sherry purchases have been largely folly because they're not executed the way they should be executed. I don't know what fixes that because if you get the job as CEO when you're 60 and they give you a bunch of stock on the barrel head because that's what your competitors get and that's what the compensation consultant says you should get I'm going to get rich by driving the stock price up for four years and I may be aggressive with my accounting I may set performance hurdles back to the aligning shareholders that are not aligned and I don't know how you fix that I don't think there's any regulatory scheme that can fix it more likely than not the action of the stock market and a deep recession a really deep recession may serve to fix it but I guarantee you that the”

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27. “Now, where there's more need for capital. So since June 2020, the share count has actually risen by 3.3%, which is staggering to me that you can spend a trillion dollars. And the share count still goes up. And now for 25 years, there's no change to the share count. In fact, for 25 years, it's grown by 1.8%, but you're essentially if 30 to 40 percent of what every company makes goes to retire shares, you have not shrunk the share count. Who got rich? The executives. And you could say in the case of the shareholder, those repurchases supported the stocks. And that's why we're trading at 26 times earnings today. And that's probably the case. But those were dollars that didn't go into reinvestment and property, plant, and equipment or acquisitions. That was money that was spent simply levitating a stock to make executives rich, driving up stock.”

    2026-04-26 · We Study Billionaires · TIP810: Berkshire Hathaway 2026 Valuation w/ Chris Bloomstran · IDENTIFIED FROM THE TRANSCRIPT

28. “So, you had a period of 15 or 20 years where the issuance of stock to employees, largely executives, largely the top executives, was about 2% of outstanding shares per year. And then for a bunch of years they were buying back on average, they being the S&P 500 aggregate of companies were buying back 2.7%. So there was a period of time where they shrunk the share account by seven tenths of 1% per year. Then you get periods like the financial crisis where the banks blow up and they have to recapitalize and the share count balloons up. So what you get is a buy high solo mentality because most companies aren't price sensitive to their share purchases. They're simply trying to offset the dilutions that's coming from giving huge dollar amounts of money. I mean, compensation packages that are way higher than Greg's $25 million. And so we've gotten to the point.”

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29. “And they were getting stock options. And it was wonderful as the stock went up because you got an option at 30 bucks a share and now it was 60 bucks a share, so you doubled against your cost. And Silicon Valley hadn't figured out offsetting dilution with sherry purchases. And then you had the big market crash and the tech bubble imploded, the S&P dropped 50%, the Nasdaq dropped 80%. There were people that had exercised stock options where the stocks had then declined so much that they had a tax liability that exceeded the value of what their shares were worth. And so they shifted from stock options to a larger preponderance of restricted shares, which are less dilutive because you're not giving away as many shares. There's no option component to it with a restricted stock, whether it's got a performance quotient to it or not, is basically the value of the stock at the moment you give it away and you earn it over some vesting period with or without some performance hurdle.”

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30. “Trillion, which is a big number, and it's the first time that number will be a trillion, is 40, whatever, 44, 45% of net income should probably rather look at the repurchases as a percentage of cash flow from operations. But on average, cash from operations is roughly going to match net income. It's materially different for some businesses, but on average, they tend to be pretty close. And so a third or 40% of profits on average for the last 40 years have gone to sherry purchases or have cash from operations. It's staggering to think that over the last quarter, so if you go back to the late 90s, if you go back to the 90s, the share count for the S&P grew dramatically. It grew by something like 40%. Microsoft share count was just growing exponentially because they were giving 6 or 7% of the shares per year to their employees, not just the top executives, but everybody was getting shares.”

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31. “I think you're fighting a losing battle. And you've had various congresspeople, senators, representatives talk about banning sherry purchases. Well, there's nothing evil about a sherry purchase and done intelligently the way Berkshire has done it over time, the way we like to see our companies do it is there's an acknowledgement that the stock is trading a discount to fair value and we don't have a better use for the capital. So buy your share price and when it's cheap, if we've got opportunities to make good and great returns on equity or capital doing something else, then we should do that first. And don't do it with leverage and accessibly put the company at risk just for the sake of tricking the share cap. The trillion's interesting because if you do, I don't know, where earnings wound up officially once all the companies reported for the fourth quarter, but I think estimates when I put my letter together were 263 and change per share for the S&P, which is, I don't know, two and a quarter trillion dollars.”

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32. “Public, and Elon's suing him, and it's not going to be a lawsuit with an M in front of the Ilians. It's not going to be a millions lawsuit. It's going to be a billions lawsuit. So there's OpenAI specific. And the guy, Sam, went to high school, Sam School is my daughter three quarters of a mile from where I'm sitting right now. I don't cheer against people, but when a guy sits there on a stage a couple days ago and says intelligence, we're going to sell it like a utility, like water or electricity. My skin crawls a little bit. And so I don't think they will raise enough money to have the resources to be the one that wins this thing. Maybe they do. Maybe they don't. I don't need to play in the game, but I think it's a tough hurdle, but it's a proxy for it's going to be a tough hurdle for the aggregate of all of these guys in this arms race because the numbers are just frankly staggering. And I don't see how you've got enough revenue.”

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33. “But Google's got their ad supported platform, Meta, which has their llama free, is massively ad supported. Anthropic is just, my understanding is, and there's even an article in this morning's journal, they're just killing open AI with the success in corporate corporations with their Clawed models. And so OpenAI share of AI search has dropped from mid-80s to mid 60s and it's falling fast. You've got regulatory risk. We're going to find out on fair use. Europeans are very aggressive on this run. And you've got a lawsuit from Elon when Sam A flipped from this thing as a not-for-profit, which is what he and Elon agreed to at the outset. Elon put, I think, $38 million into this thing. Sam A Flip over a couple different degrees to now a fully for-profit. They're planning on going.”

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34. “$40 billion they raised at a $300 billion valuation. Then they did one just this past October at a $500 billion valuation, but the same $6.6 billion that they collected in the earlier one, insiders were cashing out. So they did a $500 billion valuation and the insider sold 6.6 billion dollars worth of the private company stock. Now they're running out of cash and they're raising another $100 billion. So you and I could build car plants. We can build models if somebody's willing to give us a whole bunch of money. But you ask what could go wrong? Well, the entities that have more resources than that are embedded in more architectures.”

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35. “Just did it at 750. But NVIDIA came in with Capital, Masa came in, Softbank came in with Capital. And so here's an entity, Sam A's, OpenAI, that's raised, call it 73. They've already burned through 50. They're burning through it fast. And the valuation rounds just went higher and higher. So two years ago, not even two years ago, year and a half ago, they did one. This is after Microsoft. Microsoft stopped putting money into it. And they negotiated it well because they own the IP. So if OpenAI fails, Microsoft owns open AI chat GPTs AI. So you had a funding round in October of 24. They raised $6.6 billion at $157 billion valuation. $157 is a lot greater than 6.6, but 6.6 would be for a fraction of the business. Then they did one a few months later.”

    2026-04-26 · We Study Billionaires · TIP810: Berkshire Hathaway 2026 Valuation w/ Chris Bloomstran · IDENTIFIED FROM THE TRANSCRIPT

36. “That train first and then infer. But the dollars being spent are incredible. So if you go back over the history of OpenAI, I thought it would be fun to go through the various of their 16 or 17 funding rounds. And Microsoft came in early with a couple of funding rounds at $11 billion. The valuation at those moments was something like 28 or $29 billion. And so to me, I'm not a venture capitalist. I would be a terrible venture capitalist because I don't have vision. But if I'm going to put $11 billion in a business, I want to own $11 billion of the capital or the assets. And there may be a lot of growth to come, and I get that. And so I'm kind of tongue-in-cheek about that. But Microsoft was pretty rational. But then they had these successive funding rounds. And I think cumulatively, open eyes raised something like $73 billion by year end. They're doing a hundred billion dollar funding round at what they hoped was an $830 billion valuation. I think they.”

    2026-04-26 · We Study Billionaires · TIP810: Berkshire Hathaway 2026 Valuation w/ Chris Bloomstran · IDENTIFIED FROM THE TRANSCRIPT

37. “To make a 15% return on the capital that's spent, you need 450 billion dollars in profit. The four big hyperscalers all have cash flow from operations at just over $100 billion. And I'm talking incremental profitability required from revenues that are now $30 billion. So who knows who winds up winning if there can be a winner. I equated AI to past capital cycles involve big capital expenditures in the past, largely funded by debt, the current iteration, oddly being funded by these companies that have enormous free cash and cash from operations, which is changing rapidly because those numbers are starting to exceed cash flow from operations. And then you've got peripheral players like OpenAI. And they're all vying to create these models.”

    2026-04-26 · We Study Billionaires · TIP810: Berkshire Hathaway 2026 Valuation w/ Chris Bloomstran · IDENTIFIED FROM THE TRANSCRIPT

38. “Well, broadly, I touched on it in my comments just recently. The CapEx numbers, even just out of the big hyperscalers, were just shy of $400 billion last year. On $400 billion, the CapEx, if you're writing off the asset over 10 years, which is too long, there's a debate over whether it should be $3 or $4 years or five or six years. It's not about the debate. You're putting depreciation on the income statement, depreciation expense. And it's a real expense. It's a real charge. If your depreciation schedule linearly on a straight line basis is 10 years, on $400 billion of CapEx, that's $40 billion of depreciation expense. As far as I can tell, aggregate revenues supported on this incremental CapEx are about $30 billion. And now we're going to spend projections of perhaps $3 or more trillion dollars cumulatively over a five or six year period of time. On $3 trillion,”

    2026-04-26 · We Study Billionaires · TIP810: Berkshire Hathaway 2026 Valuation w/ Chris Bloomstran · IDENTIFIED FROM THE TRANSCRIPT

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    2026-04-26 · We Study Billionaires · TIP810: Berkshire Hathaway 2026 Valuation w/ Chris Bloomstran · IDENTIFIED FROM THE TRANSCRIPT

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    2026-04-26 · We Study Billionaires · TIP810: Berkshire Hathaway 2026 Valuation w/ Chris Bloomstran · IDENTIFIED FROM THE TRANSCRIPT

41. “Don't like compressing profit margins. And they punish the stocks with lower multiples, lower and lower multiples when margins come in. And I think there's a heck of a lot of risk margins for reasons related to the CapEx, but also reasons related to how the economy is structured and competitive forces. So to me, there's a mean reverting, but it's in a higher level. It's at a durably higher level. I think Warren then was right about the mean reversion. And he would likely, if you put him on the spot, say the same thing today.”

    2026-04-26 · We Study Billionaires · TIP810: Berkshire Hathaway 2026 Valuation w/ Chris Bloomstran · IDENTIFIED FROM THE TRANSCRIPT

42. “On AI being spent for chips and data centers and what have you to support current margins. And when you overlay high margins with high multiples, which is what you have at an extreme with those handful of tech businesses, which were properly rewarded for their economic success. And they were properly rewarded with high multiples. I think you're at an inflection point. And you could say it's an inflection point for the S&P 500, but it's probably in an inflection point for the most richly valued of this large corner of the S&P 500. So long answer to your question, but Warren was wrong, and I don't think the margin goes back to a range of 4.5% to 6%. 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. Wall Street investors in general.”

    2026-04-26 · We Study Billionaires · TIP810: Berkshire Hathaway 2026 Valuation w/ Chris Bloomstran · IDENTIFIED FROM THE TRANSCRIPT

43. “From operations to support cherry purchases, to support all of the things the companies spend money on, if they're going to dedicate this vast amount of money to CapEx. And so when you put CapEx on the balance sheet, regardless of the number of years over which you amortize it for depreciation, you're putting depreciation expense, which largely is maintenance on the balance sheet. And now you're putting interest on the balance sheet, which is interest expense. All of a sudden, you've got depreciation charges which are going to grow very rapidly. They will trail the growth in CapEx. So to me, the profit margins of what had been Capolite businesses are not only at risk, but they're far more likely than not to contract over the next period of years how quickly they contract. I don't know, but they're going to come down. I don't see that there's enough revenue possibility in the relative to the AI money being spent, the CapEx.”

    2026-04-26 · We Study Billionaires · TIP810: Berkshire Hathaway 2026 Valuation w/ Chris Bloomstran · IDENTIFIED FROM THE TRANSCRIPT

44. “15, maybe it's supposed to be 13. And then you take these capillite businesses that have been just unbelievably successful. The Mag7 were 8% of the S&P 500, 14 or 15 years ago. They're 37% of the stock market today, and they're trading at 30 plus times earnings. They also have very high profit margins on average in the low 20s. Well, my roundtable, Tulipomania, in the fall, I made the joke. These things are rapidly turning into EBITDA stories, which is incredible because they were net cash on the balance sheet, free cash generating machines that didn't take any capital. And here you are all of a sudden in this AI arms race, and all of a sudden increasing proportion of cash flow from operations is going to CapEx. These companies have gone from net cash in some cases to a little bit of net debt. You don't have enough cash.”

    2026-04-26 · We Study Billionaires · TIP810: Berkshire Hathaway 2026 Valuation w/ Chris Bloomstran · IDENTIFIED FROM THE TRANSCRIPT

45. “Post the financial crisis, the government piece of total credit market debt is now over 100% of GDP at a point more and more leverage is deleterious economic growth. It's law of diminishing returns. And so indeed, for the last 25 years, real GDP per capita is growing 1%, a little bit less than half its rate of growth. And this is just adjusting for population growth and for inflation. And I would say if the long-term PE, which was always 15 in the last quarter century, if you take it now over 100 years, it's probably 16 or 17 would be the long run average PE growth is a big component to what you should pay for an asset. Faster growing asset warrants a higher PE, lower growing asset, lower PE. If aggregate growth on a real population adjusted growth in the economy, maybe the long run average is not 17 or 16 or even”

    2026-04-26 · We Study Billionaires · TIP810: Berkshire Hathaway 2026 Valuation w/ Chris Bloomstran · IDENTIFIED FROM THE TRANSCRIPT

46. “Variables, and it's really hard to get to more than a 5% return. And depending on where margins and multiples head from here, you can get to a loss for a decade, which is what happened after the 1999 peak. Two interesting things. One, when Warren talked at length many times about the tailwind that he enjoyed from growth in real GDP per capita, the United States was the economic engine of the world. That was the case and real GDP per capita. And I've got a table in the letter that breaks this out by decipes, grew at over 2%, 2.5% for decade, decade, decade. It wasn't the same rate of growth every decade. But when debt levels reached 200 total credit market debt reached 250% of GDP in 2000, now 300, almost 350%. And in even more recent years,”

    2026-04-26 · We Study Billionaires · TIP810: Berkshire Hathaway 2026 Valuation w/ Chris Bloomstran · IDENTIFIED FROM THE TRANSCRIPT

47. “Of historical assets that are carried at historical cost in what's been an inflationary period for the last few years. Book values are understated, meaning returns on equity are overstated. So I don't think you've had a durably wide, meaning across the whole stock market, across the whole S&P 500, increase in returns on equity. You sure have had it in a handful of tech businesses and other companies. And I'd say two things, and I've got my five-factor work that we've had in the letter for two or three years, four years maybe, where I take the five variables that make up return, dollar sales growth, change in the share count, the multiple and the margin, which all four of those are multiplicative factors. And then whatever your dividend yield winds up being, to argue that the high current margins coupled with very high multiples, you can bake in scenarios for each of the five.”

    2026-04-26 · We Study Billionaires · TIP810: Berkshire Hathaway 2026 Valuation w/ Chris Bloomstran · IDENTIFIED FROM THE TRANSCRIPT

48. “And then along came Google, and along came the others. And so the profit margins of those businesses, with the exception of the retail side of Amazon, but the AWS side of Amazon, you've got a handful of very, very profitable businesses from a margin standpoint. And so margins. Now, I do think there's still a mean reverting aspect to margins. But I've seen papers and commentary say that because margins are higher, multiple should be higher. I don't think that's right at all. I mean, if you could argue that returns on capital are durably higher, then I think the multiple on a higher return on capital business should be higher. But if you look at the return on equity and nuances to how it gets overstated in the current environment based on sherry purchases above book value, based on write-offs and write-downs over time, based on the number of the amount”

    2026-04-26 · We Study Billionaires · TIP810: Berkshire Hathaway 2026 Valuation w/ Chris Bloomstran · IDENTIFIED FROM THE TRANSCRIPT

49. “Points to profit margin the tax code at the corporate level for a lot of years was 35%. It changed a handful of years ago to 21%. That added 1% to the aftertax margin, which I thought would get competed away right away. It did not. But then what you wouldn't have known in 99, and maybe you would have for the Microsofts of the world, the cap light, but Microsoft in 99 was doing a 37 or 38%.”

    2026-04-26 · We Study Billionaires · TIP810: Berkshire Hathaway 2026 Valuation w/ Chris Bloomstran · IDENTIFIED FROM THE TRANSCRIPT

50. “Earnings, mid 20s, multiple to earnings contracted, when margins came back down to 5.8%. So he was correct. Were he wrong and what he didn't see was margins by 2021 growing to 13.3% and then falling in 2022, but recovering back to 12.8% most recently. Now of that increase from mid-7s or mid sixes, wherever you would have put the prior range, double it to current levels, 3% of the increase has come from lower and lower interest rates, even though rates ran up in the last few years. We still have an extraordinarily high amount of debt on the corporate balance sheet, but the interest rates are so much lower than they were for several decades that the interest burden, the interest expense, has been lower, and that contributed”

    2026-04-26 · We Study Billionaires · TIP810: Berkshire Hathaway 2026 Valuation w/ Chris Bloomstran · IDENTIFIED FROM THE TRANSCRIPT