2021 Q4 BV

[backtothebeach]

Any educated estimates for 2021 year end book value? Low $220s?

[adesigar]

My guess is 229.

 

Equity portfolio went up by about 40 Billion in the quarter but we don't know how much he spent on buybacks

 

[Dynamic]

I'm broadly in agreement.

Something like $227 to $229 book value per B share depending on earnings and insurance reserve adjustments and similar annual accounting decisions that affect things (and the premium to BV spent on stock repurchases)

 

The portfolio (excluding KHC) gained about 40.2 billion USD before 21% taxes, principally deferred, assuming no undisclosed changes were significant and no dramatic readjustment of preferred stock and warrant valuations, which beat the SP500 capital index by 2.1% for the quarter, and probably with a higher dividend yield too.

 

[backtothebeach]

Great estimates. From reported numbers I get:

 

BH Shareholders' Equity in million

506199

 

Equivalent A shares at year end

1477429

 

BV per A

342622

 

BV per B

228.41

 

Edited February 26, 2022 by backtothebeach

[ValueMaven]

Call it 1.4x B.V. give or take a touch ... seems fairly reasonable 

[RiskAdjReturn]

paying 1.4x a concentrated mutual fund nav basically, with maybe only "suppressed" value in nav coming from energy and rail carrying cost accounting. sure the zero cost float has some intrinsic value, but in low rate environment, not so much...

 

good luck!

[nwoodman]

1 hour ago, RiskAdjReturn said:

paying 1.4x a concentrated mutual fund nav basically, with maybe only "suppressed" value in nav coming from energy and rail carrying cost accounting. sure the zero cost float has some intrinsic value, but in low rate environment, not so much...

 

good luck!

But what value do you place on Buffett being on the end of the phone when it inevitably starts to ring.   No crystal ball but this could morph into a liquidity event in a heart beat.  

 

https://www.zerohedge.com/markets/traders-brace-chaotic-fx-market-open-ruble-set-collapse

 

[RiskAdjReturn]

7 hours ago, nwoodman said:

But what value do you place on Buffett being on the end of the phone when it inevitably starts to ring.   No crystal ball but this could morph into a liquidity event in a heart beat.  

 

https://www.zerohedge.com/markets/traders-brace-chaotic-fx-market-open-ruble-set-collapse

 

this is way overdone. look at Fed in march 2020. that was the fat pitch for Berkshire but it never happened when Powell became the backstop. furthermore, Berskshire has alot more public equities than cash!!!....

 

really, this ticker is overhyped. I would like it at maybe a little over nav. but seriously, why pay for a passive chunk of AAPL at 1.4x the price you can buy apple yourself. and why pay 1.4x cash you can create yourself? etc

[nwoodman]

3 minutes ago, RiskAdjReturn said:

this is way overdone. look at Fed in march 2020. that was the fat pitch for Berkshire but it never happened when Powell became the backstop. furthermore, Berskshire has alot more public equities than cash!!!....

Perhaps you are right.  However,  I think this sort of set up with the Fed unlikely to step in and the potential for unintended consequences from the Russia sanctions suits his playbook better than a global pandemic.  Don’t disagree with your view on the current valuation though, I am not a buyer at these levels.  However I do live in hope that he gets a crack at a decent sized opportunity or two.

[gfp]

RiskAdjReturn, curious what "tickers" you like better and own in size currently?

[ValueMaven]

1.4x BV on a BV that is CLEARLY massively understated ... hmmm ... also how about a biz that is generating a durable $25B+ in Operating Earnings. @RiskAdjReturn

Try again...

[RiskAdjReturn]

57 minutes ago, ValueMaven said:

1.4x BV on a BV that is CLEARLY massively understated ... hmmm ... also how about a biz that is generating a durable $25B+ in Operating Earnings. @RiskAdjReturn

Try again...

well, pretty much anything at spot market prices (1.0, not 1.4x). yes it has operating earnings you are trying to cash a check that's already been cashed. the book value of the businesses that generate those earnings is in the nav. sure the cost may be understated some from his purchase price + goodwill + capex....but it isn't so suppressed. otherwise we would see massive ROIC/ROE. rather we see solid ROE + then market price appreciation in holdings. on those $25B in earnings, let me know what you think the book value associated with those businesses is....it's probably $150B or so. ie, its in there..and you are paying 1.4x for it..

 

look, I like the name at the right price, but now isnt the right price...and with aapl being so much of the basis?? well, I can create aapl at 1.0x with fresh tax basis

[gfp]

So not a single "ticker" or "name" to share with us amateurs?

[RiskAdjReturn]

Just now, gfp said:

So not a single "ticker" or "name" to share with us amateurs?

here's one: spy

[gfp]

So your bet is SPY outperforms BRK going forward.  Got it, Thanks

[RiskAdjReturn]

1 minute ago, gfp said:

So your bet is SPY outperforms BRK going forward.  Got it, Thanks

not sure why you are getting chippy. I just don't beleive ~ 1.4x a fairly marked to market nav is a good price, compared to paying 1.0x for other diverse stocks and 1.0x for cash, to replicate berk at moment. the apple concentration is also not something that is attractive at 1.4x

[cubsfan]

^^ It's an interesting idea thinking you can recreate BRK just buy picking a bunch of low NAV stocks.

Just think, Buffett's whole career reduced to that!

[RiskAdjReturn]

1 minute ago, cubsfan said:

^^ It's an interesting idea thinking you can recreate BRK just buy picking a bunch of low NAV stocks.

Just think, Buffett's whole career reduced to that!

no, not low nav stocks....just talking about buying stocks at spot (ie spy at market price)....vs paying for berks net asset at 1.4x

[DooDiligence]

1 hour ago, RiskAdjReturn said:

not sure why you are getting chippy. I just don't beleive ~ 1.4x a fairly marked to market nav is a good price, compared to paying 1.0x for other diverse stocks and 1.0x for cash, to replicate berk at moment. the apple concentration is also not something that is attractive at 1.4x

 

I appreciate your pushback on BRK but think you waffled with SPY.

[backtothebeach]

Lol, When the name of this site starts with “Corner of Berkshire” it is only natural that people get a little chippy when you’re calling Berkshire just another “ticker”. 
I find it kind of refreshing, good to challenge the narrative.

Somehow Buffett has grown book value at inflation +8% or so very reliably over the years. I think people see Berkshire almost as a volatile but ultimately reliable bond that pays out an 8 to 10% coupon (which you could realize by selling 8% of your holdings every year, preferably when the price is high).

How much over par value would you pay for a 30 year AAA rated bond that pays 8%?

Or a preferred stock that has a $7.5 perpetual dividend? WFC-PL trades at $135 at the moment. 

 

Edited February 28, 2022 by backtothebeach

[adesigar]

4 hours ago, RiskAdjReturn said:

here's one: spy

So what you are saying is that BRK at 1.4xBook is expensive and SPY at 4.43xBook is cheap. 

 

[RiskAdjReturn]

1 hour ago, adesigar said:

So what you are saying is that BRK at 1.4xBook is expensive and SPY at 4.43xBook is cheap. 

 

lol. no.

 

go think about it some more :>)

[DooDiligence]

17 hours ago, RiskAdjReturn said:

lol. no.

 

go think about it some more :>)

 

Switching the burden of proof? 

 

You started this and SPY was a lazy answer.

Talk your book.

 

[gfp]

You can buy a nice western railroad at 1x market price and pay no premium and feel better about it but it will cost you over $150 Billion.  (11x Book Value)  Or there is a comparable railroad held on Berkshire's books at $46 Billion (BNSF member equity) that can and does dividend out 100% of the free cash flow tax free.

 

Berkshire's tax basis in Apple doesn't really matter when discussing book value since the taxes Berkshire hasn't paid are fully subtracted from book.  So is $147 Billion in useless float and a bunch of other liabilities that will never be paid.  What do you think the insurance companies are carried at on Berkshire's books?  Right around accounting net worth.  This isn't a company loaded with bogus goodwill.  They haven't even purchased a big company recently, only written one down by $10B and further reduced accounting net worth by repurchasing $53 Billion worth of shares at a premium to book.

 

I get it that some people think Berkshire is fully valued at 1.4x trailing book but the 'Berkshire is a fund and should trade at "NAV"' argument is not correct.

 

How would you value this $147 Billion liability?

 

edit:  happy mardi gras morning!!!!!  take it to the streets!

Edited March 1, 2022 by gfp

[boilermaker75]

@gfp Happy Mardi Gras!