Post New

Does anyone have a source that tracks the P/E, preferably weighted P/E, of the Berkshire portfolio? I want to say Jim has posted it from time to time. Thanks in advance for any pointers.

I keep track of the top 5:

Apple Inc
Bank of America Corp
Coca-Cola Co
Chevron Corporation
American Express Company

Current value $195bn
Look through earnings $8bn
Value/Earnings = 24.3

It's a pricey set.

PEs are:
AAPL 40
BAC 16
KO 26
CVX 16
AXP 22

Berkshire ownership ($bn)
AAPL 73
BAC 34
KO 25
CVX 17
AXP 46

EPS info and prices from Google sheets. Could be wrong.

Holding                 Weight   P/E
AAPL - Apple Inc.	26.24	39.99
AXP - American Express	15.44	22.3
BAC - Bank of America 	11.88	16.21
KO - Coca Cola Co.	10.79	25.66
CVX - Chevron Corp.	6.56	16.25
OXY - Occidental Petro	4.94	13.84
MCO - Moody's Corp.	4.4	43.92
KHC - Kraft Heinz Co.	4.29	27.75
CB - Chubb Limited	2.93	11.4
DVA - DaVita HealthCare	2.22	16.52
C - Citigroup Inc.	1.3	20.4
KR - Kroger Co.	        1.08	16.31
SIRI - SiriusXM Holdin	0.93	10
VRSN - Verisign Inc.	0.91	24.03
V - Visa Inc.	        0.86	32.41
MA - Mastercard Inc.	0.74	39.43
AMZN - Amazon.com Inc.	0.7	47.67
	                96.21	24.94647059 

Looking at 96.21 % of the portfolio, the average PE is 24.94. Stuffing that into ChatGPT gave me a weighted average of about 25.09 and 25.70 which seems roughly right

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

Thanks for the "reminder" and the extra info!! Much appreciated.

Post New

Berkshire Hathaway FAQ

---

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