Author Topic: BRK-A book value and intrinsic value  (Read 26760 times)

shalab

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BRK-A book value and intrinsic value
« on: February 25, 2017, 12:50:57 PM »
In the annual report - it mentions:

shareholder equity:  283,001 Billions
class A equivalent: 172,108 $/share

If including KHC 13.1 Billion and BAC Warrant Gains 10 Billion, the shareholder equity will be 306 B. The current price including these two looks undervalued to me.

Question: is the BAC gain reflected in book value/share or not?




redskin

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Re: BRK-A book value and intrinsic value
« Reply #1 on: February 25, 2017, 01:10:38 PM »
BAC warrants are on the books at fair value.

John Hjorth

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Re: BRK-A book value and intrinsic value
« Reply #2 on: February 25, 2017, 01:34:14 PM »
BAC warrants are on the books at fair value.
redskin,

What's your actual basis [Annual Report 2016] for posting this?
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redskin

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Re: BRK-A book value and intrinsic value
« Reply #3 on: February 25, 2017, 01:50:32 PM »
pg. 49 of annual report.

aws

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Re: BRK-A book value and intrinsic value
« Reply #4 on: February 25, 2017, 01:51:26 PM »
BAC warrants are on the books at fair value.
redskin,

What's your actual basis [Annual Report 2016] for posting this?

The warrants are listed in as an other investment in note 5.  They are listed at fair value, and this amount is included in the insurance segment balance sheet.

Notes to Consolidated Financial Statements
(Continued)
(5)   Other investments
Other investments include preferred stock of Bank of America Corporation (“BAC”), warrants to purchase common stock of
BAC and preferred stock of Restaurant Brands International, Inc. (“RBI”) and in 2015 also included preferred stock of Wm.
Wrigley  Jr.  Company  (“Wrigley”)  and  The  Dow Chemical  Company (“Dow”). Other investments  are classified  as
available-for-sale and carried at fair value and are shown in our Consolidated Balance Sheets as follows (in millions


John Hjorth

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Re: BRK-A book value and intrinsic value
« Reply #5 on: February 25, 2017, 01:57:22 PM »
Thanks a lot, redskin & aws,

That actually skipped my attention. The accounting treatment is actually material here.
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shalab

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Re: BRK-A book value and intrinsic value
« Reply #6 on: February 25, 2017, 04:55:48 PM »
Thanks guys - then the only adjustment is for KHC. 283 + 13 = 296B. So the IV is anywhere from 430B - 475B on 31st Dec 2016. Current market cap 419B. Another 20-24 B will hit the books by end of this year. (if there is no major cat issue or stock market crash). So we are looking at a book value of 315 - 320 B by end of the year. Using the usual multiples - the IV will be anywhere from 470B - 505B without considering acquisition of other businesses, appreciation of stock price in 2017 etc. One can look at 10-20% gains for this year.

If there is corporate tax reform or other changes - things should get even better.

Thanks a lot, redskin & aws,

That actually skipped my attention. The accounting treatment is actually material here.

Valuehalla

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Re: BRK-A book value and intrinsic value
« Reply #7 on: February 25, 2017, 05:23:59 PM »
So if we adjust KHC by fair value,  the BV per B-share is 120,01 $ for 31.12.2016 ?
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shalab

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Re: BRK-A book value and intrinsic value
« Reply #8 on: February 26, 2017, 08:17:07 AM »
Whitney Tilson's IV is at 300K/A share. That is 17.5% higher than the market price now.

Thanks guys - then the only adjustment is for KHC. 283 + 13 = 296B. So the IV is anywhere from 430B - 475B on 31st Dec 2016. Current market cap 419B. Another 20-24 B will hit the books by end of this year. (if there is no major cat issue or stock market crash). So we are looking at a book value of 315 - 320 B by end of the year. Using the usual multiples - the IV will be anywhere from 470B - 505B without considering acquisition of other businesses, appreciation of stock price in 2017 etc. One can look at 10-20% gains for this year.

If there is corporate tax reform or other changes - things should get even better.

Thanks a lot, redskin & aws,

That actually skipped my attention. The accounting treatment is actually material here.

John Hjorth

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Re: BRK-A book value and intrinsic value
« Reply #9 on: February 26, 2017, 09:07:08 AM »
So if we adjust KHC by fair value,  the BV per B-share is 120,01 $ for 31.12.2016 ?
Yes, Valuehalla. [I get 120.04, to be specific - immaterial diff].
”In the race of excellence … there is no finish line.”
-HH Sheikh Mohammed Bin Rashid Al Maktoum, Vice President and Prime Minister of the United Arab Emirates and Ruler of Dubai