My apologies for posting the question rather than the answer, but has anyone calculated BV as of June 30th? I’m thinking that a very crude guess might be a 1.5% increase over Q2 from dividends, interest and operating earnings, minus about a $65B loss in the equity portfolio before adjustment to deferred tax, and about 5 million shares repurchased, which would put BV at about $460B, BV/share at about $314K and June 30 P/BV at about 1.30. I’m sure some of you have made more accurate estimates. If so, thanks for sharing.
I’m not sure of the reliability of this site, but ycharts reports the current p/b for brk.a as 1.204 for July 1, 2022. It has these stats for the past five years:
Minimum p/b 0.9157 on March 23, 2020
Maximum 1.597 on December 18, 2017
Average 1.358
Median 1.264
but has anyone calculated BV as of June 30th?
By my calculation it was at $209 before any buybacks.
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My guess is $212-$215 per B giving a current p/b ratio of around 1.29
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I just thought I’d chime in with my usual suggestion:
Book per share will probably be lower at June 30 than it was at March 31.
If the purpose is to get an estimate of value, ignore the new book value if it’s lower, just use the highest to date.
It’s more accurate to assume that dips in book per share are transient than it is to assume that the value of a share has fallen in a quarter along with market prices.
Both assumptions are flawed, but the first one is more reasonable.
Historically peak-to-date book has been the better predictor of share value and price a couple of years later.
Fancier version, more like what I do:
Use the highest to date (almost certainly the March 31 figure) of an adjusted book figure.
My suggested adjustment is reported book minus an estimate of any possible overvaluation you might perceive in the big stock positions.
I’m conservative, so at March 31 I knocked off quite a lot.
So, you could use the highest-to-date of that method, which again would be the calculation from March 31.
Even fancier:
If I do my “test for possible overvaluation” exercise the same way again now, I’d knock off much less.
In general, the stocks have a slightly higher rate of earning power than they did then.
(I do use some eyeballing in this exercise for cyclical adjustment, but the general trend is up)
In effect I think the equity portfolio is worth more than it was then, assuming no changes.
Meaning my “adjusted peak book” would be a bit higher at June 30 than at March 31, not lower.
The best demonstration of the general reasoning:
Forget the market price of the really big stock positions. They’re not being sold any time soon.
Does anyone think a share of Apple is actually worth less than it was three months ago?
If the goal is estimating the value of a share of Berkshire, pick a method that is consistent with your answer to that question.
No doubt there are better ways to estimate the value of the stock portfolio than what I have done.
(basically I use lower of market value and 21 times eyeballed cyclically adjusted earnings, just to trim the risky froth)
But I can’t think of any good reason to suppose that those businesses are actually worth less in aggregate than they were a few months ago.
Jim
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“But I can’t think of any good reason to suppose that those businesses [in the equity portfolio] are actually worth less in aggregate than they were a few months ago.”
Nor can I, but their market value is less, and not in a transient way. Equities, at least the broad market, are still overvalued. If we can estimate the fair value of the companies in BRK’s equity portfolio, that’s great, but we then have to recognize that BRK’s adjusted BV as of March 31 was considerably lower than the non-adjusted BV, and that today’s P/adjusted BV is considerably higher than the 1.20 number based on March 31 non-adjusted BV. With equity prices still inflated, price to adjusted BV is probably closer to 1.4 than to 1.2. IV to adjusted BV is around 1.5.
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“But I can’t think of any good reason to suppose that those businesses [in the equity portfolio] are actually worth less in aggregate than they were a few months ago.”
…
Nor can I, but their market value is less, and not in a transient way. Equities, at least the broad market, are still overvalued. …
No argument.
As always, rather less true of Berkshire’s portfolio than of the broad market, but definitely still valid.
If you used market value when things were bubbly, then sticking with highest-to-date numbers isn’t that prudent.
Some percentage of the drop is likely the erosion of temporary overvaluation.
But I have been applying a haircut to some of the stock portfolio for a while, with a cap based on some guesses about cyclically adjusted earnings and sane multiples.
In absolute dollar terms mainly Apple, also Coke and Moody’s.
Since the portfolio’s general earning power isn’t lower than at March 31, I don’t value the stock portfolio any lower.
I’ll look at the June 30 market value and knock off a smaller amount than I did at March 31 as the prices are lower now.
I haven’t done that in detail yet, but the net result is likely to be very close to flat.
My numbers are still cyclical, but not as much.
My several quarters of “excessive” conservatism on Apple are now making it all look like steady progress in value.
I’m much less interested in finding the one true value of a share than I am in having a yardstick of progress that means the same thing through time.
Jim
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“But I can’t think of any good reason to suppose that those businesses [in the equity portfolio] are actually worth less in aggregate than they were a few months ago.”
All values are relative. Higher interest rate means higher discount rate, which means less value of future earnings.
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All values are relative. Higher interest rate means higher discount rate, which means less value of future earnings.
About seven false assumptions built into that which I don’t subscribe to.
But whatever : )
Jim
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As always, rather less true of Berkshire’s portfolio than of the broad market
Oil is a global commodity and Oil price is determined by global demand/ supply. Oil price determines the value of the Oil companies. Just because OXY is in Berkshire their value will not undergo any change is wishful thinking, at best, delusional at worst.
We have seen how airlines stocks went almost worthless during pandemic. That is an extreme example of just because something is in Berkshire balance sheet that doesn’t automatically make them defy all laws of markets, economy, etc.
As always, rather less true of Berkshire’s portfolio than of the broad market
…
Oil is a global commodity and Oil price is determined by global demand/ supply. Oil price determines the value of the Oil companies.
Just because OXY is in Berkshire their value will not undergo any change is wishful thinking, at best, delusional at worst.
I wasn’t talking about Occidental Petroleum shares.
I was talking about Berkshire’s entire stock portfolio.
But I’m pretty sure you noticed that, so maybe you shouldn’t call me delusional…
You’re a smart guy, no doubt you can think of a alternative condescending insult that fits better.
The weighted average earnings yield on Berkshire’s stock portfolio is 1.2% higher than the average among S&P 500 firms,
so the average big stock is 20% more expensive than Berkshire’s holdings in that sense.
This isn’t a perfect metric, but it’s in the right ballpark.
Berkshire doesn’t hold big positions in firms without solid earning power.
Jim
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"As always, rather less true of Berkshire’s portfolio than of the broad market
…
Oil is a global commodity and Oil price is determined by global demand/ supply. Oil price determines the value of the Oil companies.
Just because OXY is in Berkshire their value will not undergo any change is wishful thinking, at best, delusional at worst.
I wasn’t talking about Occidental Petroleum shares.
I was talking about Berkshire’s entire stock portfolio.
But I’m pretty sure you noticed that, so maybe you shouldn’t call me delusional…
You’re a smart guy, no doubt you can think of a alternative condescending insult that fits better."
It is rather comical that a poster who aims to “educate” the board members here endlessly struggles with basic reading comprehension.
jk
P.S.
somewhere down the road this poster will also indicate to the board members how he only responds and doesn’t initiate insults.
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I was talking about Berkshire’s entire stock portfolio
I am talking about Berkshire’s entire stock portfolio only. Sometimes an extreme example helps to deliver the message. Because you will endlessly argue about mythical “value” and happily indulge in accounting/ value investing slight of hand. Something may be very pronounced for Oxy is still applicable for the rest of the portfolio.
You’re a smart guy, no doubt you can think of a alternative condescending insult that fits better.
When it comes to being rude, and condescending insults, I am still learning from you, the best. Clearly not a quickstudy.
It is rather comical that a poster who aims to educate the board members here…
Now now, don’t jump to hasty conclusions about people.
Keep an open mind about motivations.
Jim
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See the master strikes! You are posting for the same reasons I am posting. If you somehow believe you are here for the benefit of humanity… see my earlier post… delusion at the worst level.