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Someone posted this in the fool's board - thought it is an interesting way to look at BRK. BTW, the book value is not adjusted for KHC market value still. A gap of 12 B pre-tax or about 9B after tax.




Here's a fun way to look at how well they've done lately, and a way of thinking about the cash drag:

A year ago, Berkshire as a whole had shareholders' equity of $263,025m.

Of that, $72,679m was cash which has earned nothing and is still there: the start-of-period dead weight.

So, the "shareholders' assets that produced any earnings" were at $190,346. That still includes tons of goodwill and intangibles.


Shareholders' assets are now at $300,659, up $37,634 in a year.


So, the increase in shareholders' equity represents net earnings of 19.8% on the starting equity at work.

Thought of as a type of after-tax return on capital employed, that's a wonderful number.

It's only 14.3% increase on the entire starting equity balance.

So, the cash drag can be estimated as 5.5% in this quite good year.

That's a pretty high estimate, as Berkshire would have no financial credibility without some big chunk of it.

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For comparison, in the meantime - FRFHF book value decreased from 406 to 378 (or 388 including dividends) - a decrease of -4.4% and MKL increased from 555 to 643 an increase of 15.86%. The former trades at P/B of 1.28 whereas the latter trades at a P/B of 1.65.


BRK trades at a P/B of 1.44 (including KHC stake).



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