Quick Value 3.1.20 ($BRK)
Quick Value 3.1.20 ($BRK)
Berkshire Hathaway - No opinions, only stats and facts here...
Market Performance
Market Stats
My favorite economic releases are probably retail spending and personal income/outlays (recently released).
Wages have been recovering as the Government has “plugged” the hole for consumers. With stimulus checks going out again, it’s time to reload consumer balance sheets yet again!
Pretty wild that personal savings rate has been way way above trend for an entire year now. Thanks Uncle Sam!
What’s really fascinating is the ebb and flow in consumer sentiment. This index (based on consumer survey responses) has been inching lower for a few months now. It’s only a few points higher than the “start” of the pandemic in April 2020.
What does this mean?
With consumer spending data AND savings data running high, consumers STILL are not feeling optimistic about the future!
Quick Value
Berkshire Hathaway ($BRK)
Operating earnings over the past few years — flat for 3 years running.
Investment portfolio…
Railroad carloads…
Real estate brokerage has seen some rapid growth thanks to refinancing activity…
Manufacturing is a $60bn revenue business and Service / Retailing ~$75bn… Total margins between 8-9% depending on which year you’re looking at…
Building products has been a bright spot within the Manufacturing portfolio…
And here’s the Service / Retail portfolio…
Updated cash flow sources and uses over the years…
Finally, a quick recap of the Buffett 2-column method…
Cash and investments — Cash at $134bn, stocks at $281bn, equity method (i.e. Kraft) at $17bn, and fixed income securities at $20bn = $452bn or $189 per B share
Non-insurance earnings — Giving Berkshire the benefit of COVID, call it ~$17bn in net earnings from non-insurance businesses. Call it anywhere between 13-16x earnings for this business = $220-272bn or $92-114 per B share
B shares currently trading at $240 per share so maybe a 15-20% discount to intrinsic value? I haven’t gone back to look at the valuation mix between investments and operating earnings but you’re getting most of your value in the equity portfolio. I know, had to sneak an opinion in there…