Subject: A few random notes on Q2
A few comments based on the statement. Not much thoughtful discussion, mostly just numbers I jotted down while I was musing over spreadsheets.

In no particular order


I note that float, unusually, hasn't gone up. Same as three quarters earlier in nominal terms.

Trailing-four-quarters net earnings from utilities up 66% from the sum of the four quarters before that, to a new high. Nice to see that the big long dip from the fires seems to be ending. For now, at least.

I track earnings on operating subsidiaries in a way that cuts out most of the volatility: trailing four quarters sum of net earnings from each of utilities, rails, manufacturing/service/retail, and a cyclically adjusted figure for underwriting profit. Investment gains/losses and actual underwriting results are so volatile that in any give quarter or year they don't convey any information about how things are going, generally. Those "steady things" earnings have been quite weak for a few years, mainly with both rails and utilities below their prior norms. The utilities are now back out of the ditch, but rails still not prospering: TTM net income is still 15% below the *lowest* such figure in the fifteen quarterly rolling year figures to end 2022. There are other things going on as well, but generally the "steady things" real earnings have been roughly flat on trend for a few years in real terms, which has been a drag on my overall estimate of the value of a share. If you build a longer run trend of the real earnings per share of this "steady things" set, the current TTM real profit level is 7.5% below where the old trend suggests they should be now.

Investments per share are doing fine. Up inflation + 8.23%/year since mid 2013 (slope of the 32 quarter real log trend line). The current number is a hair above the trend.

The big write-off of Kraft Heinz is obviously bad, but other people have written about that. For the optimists, it is conceivable that it could "bounce" a bit, in that the current carrying value is something like 12% below book value, and they do still make money regularly. Any such bounce or gradual earn-back won't show up in book metrics any time soon, as OTTI adjustments are always down, never up, but it is still a holding that has a return.

Berkadia is not huge, but it has been a pretty good investment. Carrying value is around $450m. Berkshire's proportional net earnings were around $90m last year and distributions received around $65m.

My guess of book per A share was off by a mere $398 (0.06%). Fresh P/B is 1.527 right now.
Real book per share is up in the last one, two, five years by inflation + 8.3%, inflation + 8.5%/year, inflation + 8.5%/year.

My main "two and a half column" valuation metric is a bit more subdued, due to the soft earnings at operating subsidiaries mentioned above. Weak earnings don't hit book directly. Real value per share is up in the last one, two, five years by inflation + 7.7%, inflation + 7.1%/year, inflation + 7.9%/year, quite a big difference compared to the book/share rates.

My investment yardstick is (investments per share - 30% of float to approximate the long run drag from cash + a multiple of "steady things" earnings), with investments per share given a cyclical adjustment if there are any very large positions trading at very high multiples. Using that same method over time, if you look at a (log) trend line fit over the last 10- or 20-years, the value yardstick number is 3.8% or 3.4% below the current point implied by those trends, respectively. These represent a modest slowing, but certainly not catastrophic.

Looking at a hand full of valuation metrics and the relationship they have had to market price per share in the past, looking at 20 years of prices and value metrics suggests that, if the price today were at the average level seen since then, the various metrics would suggest a price today of about $405-435 per B share. Note the "if"--that isn't a prediction, at best just a sense of scale.

Overall I thought it was a much better quarter than the alarmist headlines would suggest. Trailing four quarter real net earnings at operating divisions are still weak and well below the old trend, but they still eked out a new high in real terms by about 1.1%. And investments per share are doing fine.

Jim