No. of Recommendations: 33
Holding Weight P/E
AAPL - Apple Inc. 26.24 39.99
AXP - American Express 15.44 22.3
...
MA - Mastercard Inc. 0.74 39.43
AMZN - Amazon.com Inc. 0.7 47.67
96.21 24.94647059
Just a reminder that you can't average P/E ratios, neither simple average nor weighted average. Just imagine one company with zero earnings (or losing money) and you'll see why.
Do to math on them, invert them all to get earnings yields, then do the average (or weighted average) of those EY figures to get the overall earnings yield on the portfolio. Then invert again if you want a P/E ratio.
(as an aside, the same thing applies to attempts to average P/E ratios over time--one period of losses or even super tiny earnings will demonstrate the absurdity of that exercise)
Using bottom-up trailing four quarters EPS, I get
S&P 500: P/E 27.80
S&P Equal weight: P/E 20.71
Berkshire portfolio: P/E 21.28
Using "current run rate" earnings, I get these numbers: (using the Value Line figure, which takes two quarters of actual earnings excluding extraordinary earnings, plus two quarters of estimates)
S&P 500: P/E 25.23
S&P Equal weight: P/E 18.46
Berkshire portfolio: P/E 19.45
These are relatively high weighted average valuation levels for Berkshire's portfolio compared to history. Simple explanation: Apple does not currently have a high earnings yield. Pretty remarkable that even after selling around 70% of the position, it's still almost the same market value as the next two positions combined.
For the relatively small fraction of Berkshire's portfolio which is not disclosed, I fill in the earnings yield of the S&P 500 equal weight as a proxy.
Jim
