Comments on: Barron’s Pans Buffett’s Berkshire

By: The Weeks Top Stories at Value Investing News Value Plays

The Weeks Top Stories at Value Investing News Value Plays — Tue, 08 Sep 2009 05:04:02 +0000

[...] 7. Barron’s Pans Buffett’s Berkshire [...]

By: ryan

ryan — Sat, 29 Dec 2007 23:59:00 +0000

nevermind the last comment, my bad.

By: Chad Brand

Chad Brand — Wed, 19 Dec 2007 17:29:00 +0000

Consensus estimates for 2007 EPS is $6,297 per share, which gives BRK a P/E of 21+ or so. Yahoo! Finance lists the P/E as 15, but you can’t take that number at face value a lot of the time (computers don’t take out one-time items when calcuating ratios for web sites). So I think that’s how Barron’s figured the P/E (using operating earnings). For non-operating income (stocks, etc) you add in the value of public investments.

I think BRK will (and should) carry a premium while he is alive and well, but the real question is, does that premium go down a bit when someone else is running the show…

By: Gentex

Gentex — Wed, 19 Dec 2007 17:02:00 +0000

First, BRK's P/E is roughly 15, not 20+.

Second, I would suggest a better quick and dirty valuation would be done in three parts: 1- Insurance, 2- Operating Companies, 3- Stock/Bond Portfolio.

1. Insurance based on revenue (1x) and eps (8x) multiples is worth 40+ billion.

2. Operating companies have ttm earnings of ~$5billion. With a 13x multiple that's worth $65 billion

3. Stock and Bonds worth ~$100 billion.

Total = 40+65+100 = 205 billion which is roughly equal to the market cap at today's prices ($135k per A share).

$47 billion in cash is not counted here and assumed to be needed for insurance operations.

IMO, this is a conservative valuation. 18% overvalued -- not so much, mildly overvalued at $150k per A share -- perhaps.