A $37.2 billion mistake that might now be worth $100 billion. That's not a typo, that's what a decade and a change in industry pricing can do to a valuation.
Berkshire bought Precision Castparts in 2016. The pandemic gutted commercial aviation shortly after, and Berkshire eventually took a write-down of roughly $10 billion on the deal, with Buffett openly telling shareholders he'd paid too much. That admission became one of the more cited examples of even Buffett getting a call wrong.
Here's what changed the conversation this week. GE Aerospace just agreed to pay $11.75 billion for Consolidated Precision Products, a smaller competitor in the same niche, at nearly 26 times projected 2027 EBITDA. Apply that same multiple to Precision Castparts' own financials and Barron's estimates its value near $100 billion, almost triple what Berkshire originally paid.
Worth being precise about what that number actually is. It's a comparable transaction multiple applied to another company's numbers, an analyst estimate, not a confirmed sale price or independent appraisal. That said, it's not pure multiple arbitrage either, Precision Castparts' own performance backs some of this up, revenue up roughly 14% and pretax profit up about 34% last quarter, a genuinely different business than the one struggling through the pandemic years.
My honest read: this is a useful reminder that write-downs capture a moment in time, not a permanent verdict, and that industry wide re-rating can move an asset's implied value dramatically without the underlying company doing anything differently overnight.
What I'd watch from here: whether that $100 billion estimate holds up if GE's own CPP integration hits friction, since the entire multiple rests on one recent deal, not a broad sample.
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Berkshire bought Precision Castparts in 2016. The pandemic gutted commercial aviation shortly after, and Berkshire eventually took a write-down of roughly $10 billion on the deal, with Buffett openly telling shareholders he'd paid too much. That admission became one of the more cited examples of even Buffett getting a call wrong.
Here's what changed the conversation this week. GE Aerospace just agreed to pay $11.75 billion for Consolidated Precision Products, a smaller competitor in the same niche, at nearly 26 times projected 2027 EBITDA. Apply that same multiple to Precision Castparts' own financials and Barron's estimates its value near $100 billion, almost triple what Berkshire originally paid.
Worth being precise about what that number actually is. It's a comparable transaction multiple applied to another company's numbers, an analyst estimate, not a confirmed sale price or independent appraisal. That said, it's not pure multiple arbitrage either, Precision Castparts' own performance backs some of this up, revenue up roughly 14% and pretax profit up about 34% last quarter, a genuinely different business than the one struggling through the pandemic years.
My honest read: this is a useful reminder that write-downs capture a moment in time, not a permanent verdict, and that industry wide re-rating can move an asset's implied value dramatically without the underlying company doing anything differently overnight.
What I'd watch from here: whether that $100 billion estimate holds up if GE's own CPP integration hits friction, since the entire multiple rests on one recent deal, not a broad sample.
#BTC Price Analysis# $BTC #Altcoin Season#
