Berkshire Hathaway (NYSE:BRK.A) is up over 20% year to date, mainly because it was added to the S&P 500. Some analysts and other pundits are now saying it is overvalued.
But I took a look at the price-to-book ratio since 1995 using year-end numbers from Berkshire’s annual report, and found that BRKA still seems reasonably valued. Here are the numbers:
Berkshire Hathaway Price/Book
The current price-to-book ratio is about 1.4 even after the recent price runup. This is well below the 15 year price-to-book average of 1.687.
I own BRK.A in a taxable account, and would owe a fair amount of income tax if I sold it now. But I might consider a sale if the P/B ratio gets above 1.75. This is equivalent to a BRK.A price of about $150,000.
Full Disclosure: Long BRKA.