No. of Recommendations: 2
"" The recent death of Berkshire Vice Chairman Charlie Munger at 99 highlights the key-man risk at Berkshire, with the incomparable Warren Buffett now 93. Buffett is impossible to replace but he has positioned Berkshire to succeed without him, and the stock should do just fine with him still at the helm in 2024.
The case for Berkshire starts with what CEO Buffett calls a “Fort Knox” balance sheet, with over $150 billion in cash, or about 20% of the company’s market value. Earnings are growing too, with Berkshire’s after-tax operating profits up nearly 20% so far in 2023. They could hit $40 billion this year, powered by higher interest income on Berkshire’s cash and strong insurance underwriting results, helped by a turnaround at Geico. Berkshire’s equity portfolio, led by Apple, is having a great year.
The stock looks reasonably priced, valued at 1.4 times estimated year-end 2023 book value and about 18 times next year’s projected earnings. The Class B shares, at $356, trade at a 2% discount to the Class A stock and look like the better bet.
“Berkshire shares are attractive in an uncertain macro environment,” wrote UBS analyst Brian Meredith in a recent note. He puts intrinsic value at about $600,000 per Class A share and carries a price target of $620,000, versus a recent $545,000."" Andrew Bary.
