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Berkshire Hathaway Q1 2012 10-Q


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Operating earnings' data-ipsquote-timestamp=' which exclude some investment results, were $1,615 a share, missing the average $1,780 estimate of three analysts surveyed by Bloomberg.[/quote']

 

Berkshire misses earnings estimates. 

 

Operating results were very good.  If you look at year over year pre-tax earnings by listed segment they were all up strongly (BNSF +15%, Marmon +21% McLane +24%, MidAmerican +7%).  Lubrizol is lumped in 'other' so that isn't a fair comparison, but operating earnings were very good for the quarter.  After a quick read, it's hard to see how this was anything but a very good quarter for BRK.

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So Berkshire trades at 1.14x book value. What is the motivation to buy a generic P&C insurer which largely is a bet on a bond portfolio for the same multiples(1.1-1.2x BV) when you could be getting the ROEs off of Berkshire's great businesses and capital allocation across the investment landscape on all incremental capital generated.

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So Berkshire trades at 1.14x book value. What is the motivation to buy a generic P&C insurer which largely is a bet on a bond portfolio for the same multiples(1.1-1.2x BV) when you could be getting the ROEs off of Berkshire's great businesses and capital allocation across the investment landscape on all incremental capital generated.

 

I used to hold a fair amount of insurance companies and a big part of the thesis consisted of underlevered balance sheets, unused capacity, and aggressive buybacks (AFG, HCC, TRV). The trade-off is increasing yield piggishness.

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