Berkshire Hathaway - What Matters - Updated 1 March 2023

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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