- Berkshire reported $7.02b operating earnings versus $5.87b from prior year
- Buffett repurchased $6.6b of shares about 1%
- Cash on books increased to $145B represents $62 per BRK/B shares or 21% of value.
Current Price: $284 Price Target: $330 (raised from $300)
Position Size: 3.0% TTM Performance: 65.2%
Highlights from Berkshire’s annual meeting:
- Greg Abel will succeed Warren Buffett as CEO
Buffett quote regarding retirement: “People talk about the ageing management at Berkshire,” he said. “I always assume they’re talking about Charlie, when they say that. But I would like to point out that in three more years [when Munger turns 100], Charlie will be ageing at 1 per cent a year. No one is ageing less than Charlie.”
- Munger said Bitcoin is “disgusting and contrary to interest of civilization.”
- Buffett said they are “seeing very substantial inflation”
- Buffett criticized Robinhood for “taking advantage of the gambling instincts of society”
- SPACs make it hard to find acquisitions at a bargain until this period ends
Highlights from quarter – solid cyclical rebound
- Railroads – YoY revenue rose 5.1% and earnings fell -5.8% with pandemic slowdowns
- Berkshire energy – YoY revenue up 31% and earnings up 63%
- Manufacturing, service and retail – Profits rose 15% YoY
- Insurance revenues rose 4.29% and profits up 109% YoY though BRK’s insurance profits are very lumpy.
Valuation: Berkshire is selling at a 18% discount to intrinsic value using sum of the parts. Their cash of $145b represents $62 per share for B shares.
Berkshire remains a core holding, is currently undervalued, defensively positioned and cyclically sensitive to the economic recovery.
Please let me know if you have any questions.
Thanks,
John
($brk/b.us)
John R. Ingram CFA
Chief Investment Officer
Partner
Direct: 617.226.0021
Fax: 617.523.8118
Crestwood Advisors
One Liberty Square
Suite 500
Boston, MA 02109