No. of Recommendations: 16
In mid to late Feb we were all tossing around P/B on BRK in the low 1.30's, but looking at the referenced chart
(https://ycharts.com/companies/BRK.A/price_to_book_value) I don't see those numbers for that period. At Morningstar it shows 1.42...


I track this fairly assiduously, with particular care given to statement release dates.
That matters because known book per share jumps around a bit. It's really just statistical noise in the broad sweep of history, but it does change.
It dropped an unusually large amount recently with the release of the 2018 year end statements.
Down 7.1% compared to Q3, though up a bit for the year.

Using for each date the most recently available published value for book per share, and closing prices only, for the last few months:
P/B bottomed at 1.231 on 2018-12-24
Average for November: 1.417
Average for December: 1.312
Average for January: 1.314
Average for February: 1.371
Average for March: 1.429

Known book per share dropped quite a bit when the year end statements came out, mainly because of the drop in market prices of some of the stock portfolio.
Underlying earnings, the cash balance, and any reasonably prudent estimate of the true fair value of the firm actually rose in Q4. They make an awful lot of money every week.
But book per share doesn't always catch that.

Average in the month prior to the year end statements which came out on Feb 23: 1.341
Average since the year end statements came out about a month ago on Feb 23: 1.428
Low since the year end statements came out on Feb 23: 1.403 (even though the average price has been 1% higher)

Average P/B since 2010: 1.363. Fifteen year average: 1.430.
Today's close: 1.408. A good buy (I bought shares today), but neither unusually high nor unusually low.

If the current year resembles the past 15-20 years, today's price is consistent with average one year forward returns of inflation plus 5-10%.
The range depends on the specific valuation metric and lookback length you consider.

My nervy prediction since mid last year has been that B shares would trade under $200 less than two months, in total, ever in future.
Though they might trade at arbitrarily low prices, the underlying theory is that such a situation wouldn't last long.
So far we're just over one month total and counting.

Jim
Print the post  

Announcements

What was Your Dumbest Investment?
Share it with us -- and learn from others' stories of flubs.
When Life Gives You Lemons
We all have had hardships and made poor decisions. The important thing is how we respond and grow. Read the story of a Fool who started from nothing, and looks to gain everything.
Contact Us
Contact Customer Service and other Fool departments here.
Work for Fools?
Winner of the Washingtonian great places to work, and Glassdoor #1 Company to Work For 2015! Have access to all of TMF's online and email products for FREE, and be paid for your contributions to TMF! Click the link and start your Fool career.