Mohnish Pabrai: BNSF Value Exceeds Berkshire Hathaway Market Cap

[https://www.youtube.com/watch?v=qKSyo6B21k0](https://www.youtube.com/watch?v=qKSyo6B21k0) (Discussed in the first 3-minutes.) This is a slightly dated Mohnish Pabrai video/talk, but I found something he said very interesting. He’s discussing valuation of businesses early on and said it can be hard to figure out a proper agreed upon metric/method. For example, he said Burlington Northern Railroad (now BNSF) has a replacement value (meaning, you had to rebuild its entire business from scratch) of $700-$800B, which is greater than the entire market cap of Berkshire Hathaway (at that time). Yet, the earnings you may be getting from it would not justify that replacement valuation. Is there something to this we can take away to use for valuation purposes? Replacement cost is interesting, b/c businesses with a heavy physical component need maintenance and eventual replacement over time. That can be very costly. Like replacing a 100-year old home’s plumbing and HVAC system. Gotta tear open walls and floors and put in new stuff. Labor. … Hopefully, a company has cash built up to do it or will have to take on debt/dilution. And maybe or maybe not you can pass that cost on to customers (if an essential monopoly - sure, probably). Anyways, for physical/”asset-heavy” businesses, how do you factor in (if at all) a concept, such as replacement cost, into valuations.