Author Topic: Berkshire closed down to near book value  (Read 22247 times)

racemize

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Re: Berkshire closed down to near book value
« Reply #80 on: May 16, 2020, 10:13:51 AM »
The numbers are good. Maybe you can point where I made a mistake.

At least according to ycharts 2010 eps was around 13$ which would be a cagr of ~14%.
Don't know about ycharts. I used the 10-k. See attached.

Missing the stock split--in today's numbers it was $13.16


thepupil

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Re: Berkshire closed down to near book value
« Reply #81 on: May 16, 2020, 10:40:21 AM »
and just big picture, GOOG went from $30 bilskys to $166 bilsky's of revenue over that time frame.

i make this point often enough, but I'll just say that one can own both Berkshire and large cap tech. I think Berkshire's grown its intrinsic value per share over the last decade at a very nice rate that has preserved and grown shareholder purchasing power. Regardless of whether they are currently "expensive"* large cap tech has done that to a far greater degree and created gobs more value. This doesn't invalidate Berkshire ownership and you are still allowed at the Berkshire meetings if you admit you own tech stocks. Even dear Uncle Warren has made one of the FAAMG's his third largest subsidiary (1. Insurance 2. Railroad 3. Apple).

you don't have to choose between the two.

*I think they are and I think Berkshire is "cheap"...anti-berkshire sentiment is high and love for FAAMG seems to know no bounds, but we shouldn't kid ourselves and pretend that Berkshire has grown in value in the same way these cash spewing colossi of capitalism have over the past decade. 
« Last Edit: May 16, 2020, 10:42:11 AM by thepupil »

Viking

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Re: Berkshire closed down to near book value
« Reply #82 on: May 16, 2020, 10:44:05 AM »
Another factor boosting S&P 500 earnings per share data the past 10 years is the huge amount of debt taken on by corporations to buy back shares. Some call it effective use of balance sheet and others call it financial engineering.

BRK did not ‘lever up’. Did the opposite in fact by building cash to $135 billion. This should matter when looking at earnings moving forward. Especially as we start the ‘most severe recession since the Great Depression’.
« Last Edit: May 16, 2020, 10:51:50 AM by Viking »

physdude

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Re: Berkshire closed down to near book value
« Reply #83 on: May 16, 2020, 10:51:44 AM »
The numbers are good. Maybe you can point where I made a mistake.

At least according to ycharts 2010 eps was around 13$ which would be a cagr of ~14%.

Yes, that is probably right. What is interesting is that it is not really that different from Berkshire's 12.6% but you might be forgiven for thinking that there was a vast difference in Google's favor by the way it is generally talked about.

rb

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Re: Berkshire closed down to near book value
« Reply #84 on: May 16, 2020, 10:59:00 AM »
The numbers are good. Maybe you can point where I made a mistake.

At least according to ycharts 2010 eps was around 13$ which would be a cagr of ~14%.
Don't know about ycharts. I used the 10-k. See attached.

Missing the stock split--in today's numbers it was $13.16
Thanks racemize. I was surprised that the Google's number was so low too and did double check - not well enough.

So that puts Google's EPS CAGR at 15.7% vs 12.6 for Berkshire. It's still not bad for that decrepit company.

The point I was trying to make is how well actually BRK did with rail and bricks and all the other boring stuff. If they have another one of these "lost decades" and one buys it at these prices I suspect that one will do quite well.

thepupil

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Re: Berkshire closed down to near book value
« Reply #85 on: May 16, 2020, 11:05:38 AM »
Another factor boosting S&P 500 earnings per share data the past 10 years is the huge amount of debt taken on by corporations to buy back shares. Some call it effective use of balance sheet and others call it financial engineering.

BRK did not ‘lever up’. Did the opposite in fact by building cash to $135 billion. This should matter when looking at earnings moving forward. Especially as we start the ‘most severe recession since the Great Depression’.

Hmmm,

1) bank’s de-levered and de risked over the past decade.
2) large cap tech is extremely cash rich (GOOG, FB,MSFT, AAPL) and did not really lever up (though some did issue bonds) and these are the drivers of the index’s sales growth and stock price return (unsure on EPS)
3. Most of the S&P 500 has what I’d regard to be low debt to EBITDA

Can you point me to some S&P 500 specific data that indicates they levered up? And what % of the S&P the guilty parties conprise? The corporate / US wide includes PE owned and small companies which are a different and far more levered story

I have looked at this before and always conclude that large cap blue chip stocks have little balance sheet risk. My posts on this (and counters to it are in an old thread I can’t find at this time)

ValueMaven

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Re: Berkshire closed down to near book value
« Reply #86 on: June 13, 2020, 04:44:59 PM »
Bought more just below $180.  Seems like 99/00 to me when Berk became extremely cheap.  Interesting confluence of many events: rails all-time highs, GEICO booming, APPL all-time highs, insurance pricing improving, stability of uts....yet sitting on a ton of cash, banks underperforming, equity portfolio is mixed.  Frankly, I have FV pegged at $240 - $260 currently.  By my estimation BRK is trading below ~1.2x BV, more like 1.15x currently.  Apply a reasonable multiple to the earnings (below market), add back investment-per share and I think you get a fair target for where it should be trading. 

In terms of next acquisitions - I dunno - Oaktree would have been extremely interesting to buy - but not typical BRK; something countercyclical?  WEB mentioning how $130B in cash is not high for worst-day outcomes was a really bad comment IMHO....Dont break it up - but start a small divy policy...esp given how stable the operating biz's have shown to be. 

Others - thoughts?? 

LC

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Re: Berkshire closed down to near book value
« Reply #87 on: June 13, 2020, 05:40:31 PM »
I was buying in the 170s, and already own calls I purchased back in the 180 range.

I feel pretty good about Brk's main areas. The cash gives optionality as well.
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aws

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Re: Berkshire closed down to near book value
« Reply #88 on: June 16, 2020, 07:58:28 AM »
Berkshire seems to keep finding a way to get relatively cheaper.  In the past month or so the market cap is up $25 billion, but Berkshire's investment portfolio is up about the same $25 billion, so Berkshire as a business is the same price it was at the lows in May.  Much of that growth is Apple, which at the current market values represents 20% of Berkshire.

It's not like I need to sell or anything and actually I'd like to buy quite a bit more, so I shouldn't really mind, but sometimes the simian part of your brain just wants to see numbers getting bigger.  It's getting to the point now that I want to use Berkshire as a proxy for cash in my portfolio, where if I sell something else I immediately roll the proceeds into Berkshire.  It's about 1/3rd cash anyway.