Post New

Inflation-adjusted price of Berkshire, log scale, with various valuation yardsticks shown.
www.stonewellfunds.com/FairValueChart2023-Q3.png

The little spot-in-a-square represents the market close Nov 3. The current valuation level seems to be a bit higher than the post-credit-crunch usual, but also cheaper than most estimates of actual fair value.

The "consensus value" metric is a mix of my "two and a half column" value metric, book per share, and peak-to-date book per share.
The "two and a half column" value per share metric is up inflation+6.0% compared to a year ago, and up inflation + 5.4%/year compared to FY 2019.

For the first time I have put in modest upwards cyclical adjustments for the railroads and utilities, as described here https://www.shrewdm.com/MB?pid=620140634
I haven't bumped up my estimate of their earnings power to recent inflation-adjusted peak levels, but I have bumped them up to recent inflation-adjusted lowest levels.

Based on that consensus valuation metric, and the observed relationship between that and market price in recent years, and assuming that both valuation growth and market multiples resemble the last 15 years or so, the "usual" one year forward price return from here might be estimated as inflation + 3.6%. That will be wrong, but the notion is that it's a 50/50 chance of being too high or too low. The various models I use give one year expectations in the range inflation - 0.1% to inflation + 6.4%.

These are modest numbers because, as noted, the current price seems to be a slightly higher than average market multiple, even if it's not overvalued.

Jim

Many thanks Jim for the update to , what I think, is a great multi year overview of where we have been, where we are, & where we may be going relative to an understandable valuation model.

http://www.stonewellfunds.com/FairValueChart2023-Q...

Kudo's/ C'est magnifique !

ciao

2023-Q3 Book value

Shareholders' equity as of 3Q quarter end = 525,330 million
Class A outstanding as of 3Q quarter end  = 1,445,546 
Class A book value                        = (525,330*1,000,000)/1,445,546 = 363,413
Class B book value                        = 363413/1500 = 242.28

YTD average A & B repurchase price by month expressed using B price

September			366.42
August				361.16
July				347.62
June				335.55
May				329.00
April				308.57
March				308.51
February			306.07
January				312.92

Post New

Berkshire Hathaway FAQ

---

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