Berkshire Hathaway on a Napkin

Berkshire Hathaway's ((BRK.A), (BRK.B)) 2006 annual report shows $61.5 billion held in common stock.

If the company sold this stock at market to a sovereign fund perhaps, it would yield around $47 billion after tax. Cash on hand would then swell from $38 billion to around $85 billion.

If the company issued an $85 billion dividend, then its current market cap net of the dividend would shrink from $217 billion to $132 billion.

The company had Q3 2007 trailing earnings of $13.85 billion.

In other words, net of cash and marketable securities, Berkshire's wholly owned businesses are selling for a trailing PE of 9.5. (at $141,000/share).

Disclosure: Author has a long position in Berkshire Hathaway

Comments

[investirim]

You should substract income and capital gain from your actual common stock in your new earnings for your P\E ratio since you sold them then it is less cheap. By the way, I like last week annoncements.

[Mike McCoy]

Nice job in understandably explaining Berkshire's resources. A few comments:

- Let Buffett keep the stock. He gets better returns than we do, plus we wouldn't have to pay taxes on him selling it, and on us receiving it as a dividend.

- Let Buffett keep the cash. And let him keep investing it in companies like ISCAR, Marmon, and creating businesses like Berkshire Hathaway Assurance.

Berkshire gets even cheaper when you factor in the effect of having Buffett manage our assets.

[K. RameshBabu]

But finance.yahoo.com/q/ks... also shows that there is a $34.72B debt. Doesn't this figure in the valuation?