No. of Recommendations: 19
In early 2023, I posted about using an alternative to Book Value for calculating P/BV of Berkshire.
https://www.shrewdm.com/MB?pid=192596782&wholeThre... (original post)
https://www.shrewdm.com/MB?pid=462231598&wholeThre... (updated info)
The idea is to smooth the noise out of Book Value by creating a (log) trend line for inflation adjusted Book Value, and using the current value on the trend line, rather than the latest BV. I occasionally update the calculation and thought I'd share it in case anyone is interested.
For end of Q2 2024, Book value is $418800 ($279.20 per B). Trend book value is $411520 ($274.35). So, currently the two values are fairly close to each other.
Monday's close of $413.72 places it at 1.48 time BV, and 1.51 times Trend BV. Not particularly inexpensive by either measure.
I know Warren is mindful about moving the market minimally while doing his daily purchases, but the sum total of all purchases with so much more to come has to be very supportive of the price. It seems like his share purchases might have created a structural change in the market and I wonder what the range of future P/BVs will be. I'm thinking we'll see P/BV breaking below 1.3 far less often going forward than we've seen in the past.
