Very interesting. Is there a way to add leverage as a factor? As the "Buffett's Alpha" paper notes, Buffett used about 1.7x leverage. I actually think it's materially higher in the earlier BRK years, but over time it has come down. But that's a big difference if you buy KO that returns about 10% a year versus holding KO with leverage and getting 17% a year (not even counting the negative cost of that 1.7x leverage in the form of underwriting profits, which would boost the return even higher). The way I think about it - with KO he's doing a 50-year LBO at about 2x leverage on a massive company that's way too big for any PE shop to take out. So he's the only marginal buyer with leverage who finds KO attractive, even at higher valuations. Even the individual investor or hedge fund will get margin-called and pay ridiculously high interest to hold KO using broker leverage, whereas he won't. Thus, KO and other low beta stocks are consistently underbid.