The longer your compound capital, the less you need luck and the more you need Shrewdness.
- Manlobbi
Stocks A to Z / Stocks B / Berkshire Hathaway (BRK.A) ❤
No. of Recommendations: 2
What is Berkshire's book value per share expected to be as of Mar 31 and Jun 30? Thanks.
No. of Recommendations: 3
I had the same question.
Bluehorseshoe's estimate for Q1 is $303:
https://www.shrewdm.com/MB?pid=585468682&wholeThre...Stock portfolio is down quite a bit since then, fwiw.
I was browsing how "price to book" has unfolded since the onset of the Great Recession, and one thing that popped out was how the only sustained time the stock hit 1.6+ price to book before 2024 was Dec 2017 - Feb 2018. Book / Peak Book had a big pop in Feb 2018 when Q4 was released, meaning the prior stretch of 1.6+ was really just front running the reporting.
No. of Recommendations: 10
What is Berkshire's book value per share expected to be as of Mar 31 and Jun 30? Thanks. I haven't calculated it. But using a pretty typical extrapolation, and a conservative extrapolation, I'd get the following per B share:
Q Book? Price?
Mar 305-308 $458-463
Jun 310-316 $465-474
Sep 315-324 $472-486
Dec 320-332 $479-498
That is very crude: the range is based on nominal book growth rates of 6.1% (1.5%/quarter) or 10.4%/year (2.5%/quarter) from the most recent figure, and guessing that "normal" pricing is around 1.4 times book, the 15 year average. One could get a lot fancier, but I don't think it's worth the bother. Plugging in current stock market values is fun, but too much is changing too fast. About the best one can say is that this year may end up on the spectrum ranging from normal to below-normal for progress in real value per share.
One could also observe that, with the stock price at $529.50 as I type, to see a good year (or two) for the stock price will require something to happen which is both (a) unusual and (b) good.
Note that the table above is in nominal US dollars. Inflation and currency moves mean that the progress in actual purchasing power wealth will be different. FWIW, the trade weighted US dollar is down 8.2% year to date. To get a feel for the meaning, Berkshire's price is up 16.8% year to date measured in US dollars, but only 7.3% in purchasing power of goods and services which can be traded or compete internationally.
But back to nominal US dollar pricing---
Perhaps too much has been written here about writing calls against one's Berkshire portfolio, being too clever by half, but I note that people were paying $33.15 for September $535 calls yesterday. Ask me how I know...
Anyway, that might force you to sell your stock for net proceeds of $568.15, which compares not badly to the "business as usual" expectation figures in the table above. Or you get an extra return on whatever the stock price does in the next several months, an additional 6.25% or 14.8%/yr rate.
Jim
No. of Recommendations: 1
" One could also observe that, with the stock price at $529.50 as I type, to see a good year (or two) for the stock price will require something to happen which is both (a) unusual and (b) good.'
Seems like you agree Buffett should consider expediting his gifting so that the foundations can sell 6-10 billion plus brkb into a 525-price range.
No. of Recommendations: 7
Seems like you agree Buffett should consider expediting his gifting so that the foundations can sell 6-10 billion plus brkb into a 525-price range.
I don't really think anything about it - I'm just pointing out "if this, then that". If value growth and valuations are typical in the next while, stock price returns will not be.
As for the donations, the shares belong to Mr Buffett. He can do as he likes with them.
If prices are particularly rich, how about suggesting a simple secondary stock offering?
Jim
No. of Recommendations: 1
" As for the donations, the shares belong to Mr Buffett. He can do as he likes with them.
If prices are particularly rich, how about suggesting a simple secondary stock offering?
Jim"
We aren't short of cash hence there is no way Buffett would do a secondary. Unless he has changed his thinking, he wouldn't do a secondary 100 points above what he is willing to pay, which might knock the stock down 5 -10 %, to raise 10 - 20 billion. He might use stock as part of a deal at this valuation tho. After the annual meeting, let's see if he expedites his gifting into 1.75 XS BV?
No. of Recommendations: 9
We aren't short of cash hence there is no way Buffett would do a secondary.
He has in the past. Admittedly not recently, and the stock was trading at 2.33 times known book that day.
As for not needing the cash, as Mr Buffett has noted, the time to raise money is when it's cheap and you don't need it yet. Maybe a quarter of a trillion isn't really enough!
Jim
No. of Recommendations: 0
" He has in the past. Admittedly not recently, and the stock was trading at 2.33 times known book that day."
You got me, what year was that the 1920s? Not in my day.
No. of Recommendations: 8
" He has in the past. Admittedly not recently, and the stock was trading at 2.33 times known book that day."
...
You got me, what year was that the 1920s? Not in my day.
May 1996 with the issue of the B shares.
Jim
No. of Recommendations: 1
No. of Recommendations: 1
Jim, obviously that B secondary was clearly a special situation. Rereading that piece from RW reminded me why I have been sharing his work for decades and I still have great respect for his writings. Anyway, IF, Buffett still believes he has an obligation to warn Mr. Market when he believes brkb is more than fully priced, the proper way to do that currently, would be to expediate foundation selling after the annual meeting. We shall see.
No. of Recommendations: 3
"let's see if he expedites his gifting" You seem really attached to this idea even though it doesn't have much bearing on BRK share price and there are alternative ways for for BRK to take advantage of exuberant stock prices (secondary, etc). Is there a reason to focus on Buffett share gifting? Is it related to change in control and voting power of A shares?
No. of Recommendations: 7
"I haven't calculated it. But using a pretty typical extrapolation, and a conservative extrapolation, I'd get the following per B share:"
This is what I usually do, too... just assume average growth. It works quite well, as BV growth has been remarkably constant since 2000 (least squares growth of 10.6%/yr with r^2 of 0.985). Growth was remarkably constant before 2000 as well, although at twice the growth rate of post 2000 (1981-2000 growth of 26.5%/yr with r^2 of 0.985), so we have to be watchful of another kink in the growth curve.
We also have to be watchful of transitory shocks such as the financial crisis of 2008 or the covid pandemic of 2020. I'm concerned that we may be experiencing another shock right now. GDP growth is slowing, and is forecast to be negative in 2025 according to the Fed's GDPNow model. Also the market price of the equity portfolio is falling, so both Berkshire's businesses and investments are under pressure. I don't want to say that the sky is falling, but Q1 BV growth may have been sub-par, and Q2 BV growth may be negative.
Chicken Little
No. of Recommendations: 1
" Is there a reason to focus on Buffett share gifting?"
Buffett sells 5 billion plus brkb from his control block annually via the foundations. Why not sell into strength, at a very high valuation, two years of gifts, and stay out of the market for two years? A secondary would hurt the stock and the foundations would enjoy lower proceeds from sales, why do that? IF he really doesn't want new buyers to overpay that's the remedy. Does he want the foundations to sell next year into a recession or worse? IF he is bullish, he would be a big buyer in Q-1, we shall see.
