Berkshire Hathaway - What Matters - Updated 20 November 2023

Nothing new with BRK's Q3 2023 earnings - making good money, especially now that the $160 billion in cash yield 5% as it is all in short term (3 month) Treasuries. Just that gives $8 billion in cash a year.

However, Warren Buffett has been selling more stocks compared to buying which indicates the market is expensive and one should be careful.

More in my video on Buffett's selling shares!

8 Sept 2023 - Too expensive!! In good times BRK can make $40 billion of value per year! Market capitalisation is 800 billion, thus PE is 20. Yes, it is cheaper than the market, but the historical PE is between 10 and 20, so buying at 20 is simply risky!

VIDEO UPDATE (Even Warren tells you NOT TO BUY NOW)

2022 Q4 Earnings Update

Very simple:

BRK's earnings from operations over the last 12 months have been $31 billion, if I add $8 billion from the hidden earnings (BRK reports only the dividend that it gets from Apple, not the other earnings) I get to $39 billion. Q4 already shows a slowdown in earnings as at $6.7 billion it was the slowest quarter of the year.

Thus, I stick to my model where BRK's average value created for shareholders is $36 billion per year through cycles (recessions, insurance disasters etc.). With a market cap of $668 billion, the true PE ratio is around 18.55. BRK's historical PE ratio goes from 10 to 20, thus BRK is now trading on the expensive side - great business, but higher risk and lower expected reward ahead - likely around 5 to 7% per year long-term. Not bad, but not for me.

I'll keep watching and sooner or later the time will come to see BRK at a PE of 10 to average cycle earnings - that is the time to buy - it happens on average once every 12 years:-)

Berkshire Hathaway 2023 Stock Analysis.pdf
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