Post New

Hi All,

Just to follow along with my calculations and making sure I do this correctly, I find that the current book is in fact the peak book.

1: Berkshire Hathaway shareholders' equity = 539883 M$ (2nd quarter, p. 3)
2: On an equivalent Class A common stock basis = 1,447,541 (as of 30-Jun-2023, p. 25)
3: Book Value per A share = 539883 / 1.447541 = 372965.60
4: Book Value per B share = 372965.60 / 1500 = 248.64

If I look at today's price (358.48), then the price per peak book = 358.48/248.64 = 1.442, which looking at the table from Jim's post at: http://www.datahelper.com/mi/search.phtml?nofool=y... looks like its on the boarder of 7.8% and 5.1% forward returns. Alternately looking at his formula:

Forward Real Return = 0.01550203*PB^3 + 0.28840172*PB^2 - 1.36877657*PB + 1.38544636 = 0.0571 or 5.7%

Given some cash to put into the market, it seems like now might not be a great time to add to BRK. Thoughts?

--G

Given some cash to put into the market, it seems like now might not be a great time to add to BRK. Thoughts?

Depends on your hold period.
If you're looking at holding the position more than a couple/few years, it doesn't make a whole lot of difference.
It's not as if the stock is wildly overvalued, it's just a little above the modern average.

My various models currently expect returns mostly in the range inflation-3.9% to inflation+4.0% in the next year, median inflation+1.0%. One optimistic outlier expects inflation + 7.0% (bases simply on P/B and price since 2003).
Those aren't awe inspiring short term numbers, so if you'd like something with high odds of looking very good within a year, Berkshire might not be your best short term horse for the race.

The reason for the wide range, and the substantial pessimism of some of them:
Some models use book, some use my value metric, some use a mix of the two.
My value metric is quite a bit more conservative than book at the moment, as it values Apple based on a multiple of earnings rather than current market value.

Jim

I was checking in on the Price to Peak Book ratio and found this thread.

Here are my book value calculation numbers for the last quarter:

Equivalent Class A common stock basis, there were 1,445,546 shares outstanding as of Sept. 30, 2023
Berkshire Hathaway shareholders' equity 525,330 million.
Book value per A share: $363,413
Book value per B share: $242.3

This is less than the book value of $372,966 per A share, $248.64 per B share that hiphop calculated for Quarter 2 and which he reported as the current Peak Book in the OP. Both are higher than seen in the data reported by longtimebrk here: https://www.shrewdm.com/MB?pid=496446242&wholeThre... there is a missing couple quarters of data, so I'm trusting hip hop has the right data when he says it's the peak book.

Current price per B share: $360.85

Current Price to Peak Book: $360.85/$248.64 = 1.45

Valuation a little worse than average I guess, but not so richly valued for me to think about selling any, not generally something I consider.

Post New

Berkshire Hathaway FAQ

---

Contact Shrewd'm
Contact the developer of these message boards.