AWMP
2021-04-26
Comment n like please
[开心]
Watch The Berkshire Hathaway Meeting For Fun, But Invest For The Value
免责声明：上述内容仅代表发帖人个人观点，不构成本平台的任何投资建议。
分享至
微信
复制链接
精彩评论
我们需要你的真知灼见来填补这片空白
打开APP，发表看法
APP内打开
发表看法
7
2
{"i18n":{"language":"zh_CN"},"detailType":1,"isChannel":false,"data":{"magic":2,"id":374907972,"tweetId":"374907972","gmtCreate":1619406355496,"gmtModify":1634273724239,"author":{"id":3582435116896373,"idStr":"3582435116896373","authorId":3582435116896373,"authorIdStr":"3582435116896373","name":"AWMP","avatar":"https://static.tigerbbs.com/adee0809ae4254643f609af51486ea3f","vip":1,"userType":1,"introduction":"","boolIsFan":false,"boolIsHead":false,"crmLevel":1,"crmLevelSwitch":0,"individualDisplayBadges":[],"fanSize":17,"starInvestorFlag":false},"themes":[],"images":[],"coverImages":[],"extraTitle":"","html":"<html><head></head><body><p>Comment n like please <span>[开心] </span></p></body></html>","htmlText":"<html><head></head><body><p>Comment n like please <span>[开心] </span></p></body></html>","text":"Comment n like please [开心]","highlighted":1,"essential":1,"paper":1,"likeSize":2,"commentSize":7,"repostSize":0,"favoriteSize":0,"link":"https://laohu8.com/post/374907972","repostId":1196378304,"repostType":4,"repost":{"id":"1196378304","kind":"news","pubTimestamp":1619404363,"share":"https://www.laohu8.com/m/news/1196378304?lang=&edition=full","pubTime":"2021-04-26 10:32","market":"us","language":"en","title":"Watch The Berkshire Hathaway Meeting For Fun, But Invest For The Value","url":"https://stock-news.laohu8.com/highlight/detail?id=1196378304","media":"seekingalpha","summary":"Summary\n\nBerkshire Hathaway's annual meeting will be held on May 1 featuring Warren Buffett and all ","content":"<p><b>Summary</b></p>\n<ul>\n <li>Berkshire Hathaway's annual meeting will be held on May 1 featuring Warren Buffett and all three vice chairmen for the first time.</li>\n <li>Don't expect any market-moving pronouncements.</li>\n <li>Earnings growth and multiple expansion at the non-insurance businesses are the biggest drivers of my valuation estimate increase.</li>\n <li>Berkshire is worth about 13% over current levels based on the sum-of-the-parts model I have used before.</li>\n</ul>\n<p class=\"t-img-caption\"><img src=\"https://static.tigerbbs.com/ed1e4f925f26b817cbf9d54570b38bb2\" tg-width=\"768\" tg-height=\"470\"><span>Photo by Eric Francis/Getty Images News via Getty Images</span></p>\n<p><b>A Different Kind Of Annual Meeting</b></p>\n<p>Berkshire Hathaway (BRK.A) (BRK.B) is known for its annual meetings in which 30,000+ shareholders and Warren Buffett / Charlie Munger fans flock to Omaha the first weekend in May and pack an arena for a marathon Q&A session where just about any question is fair game. The weekend also features opportunities for participants to get together and sample and buy products from Berkshire's numerous subsidiaries. Since 2016, the meeting has been livestreamed for those who just want to see the Q&A session without the fun of a trip to Nebraska. The pandemic unfortunately put a damper on these activities in 2020 when Warren Buffett and non-insurance Vice Chairman Greg Abel sat alone in a dark empty arena taking questions remotely from CNBC's Becky Quick. This year's meeting will also be virtual. The May 1 stannual meeting is moving to Los Angeles for one year to accommodate 97-year old Vice Chairman Charlie Munger who couldn't travel in 2020. The meeting will also feature insurance Vice Chairman Ajit Jain for the first time. Online coverage will begin at 10 AM PDT (1 PM Eastern) with Q&A lasting for 4 hours before the brief formal Annual Meeting with proxy voting wraps things up.</p>\n<p>I personally attended each annual meeting from 2008-2015 and I can say, assuming the format goes back to normal in 2022, every shareholder should attend in person at least once. The carnival-like atmosphere of the weekend is a lot of fun. Where else can you watch millionaires juggle multiple plates so they can score the maximum amount of free buffet food before plopping down big bucks on jewelry to take home?</p>\n<p class=\"t-img-caption\"><img src=\"https://static.tigerbbs.com/35cbd9ec92dfa00d0aafc31429671e43\" tg-width=\"612\" tg-height=\"408\"><span>Source: Getty Images</span></p>\n<p>You probably won't get to talk to Warren or Charlie, but the odds are that you can say hi to some of the on-air personalities and regular guests from CNBC or Fox Business. For those who over-indulged in the free food, there was even a company-sponsored 5k on the day after the meeting to run off the calories.</p>\n<p>The main reason for all the hoopla, though, is the Saturday Q&A session, which is still going on virtually this year. Given what I consider to be Berkshire's transition to more of an operating company, it is long overdue for the operational Vice Chairmen Ajit Jain and Greg Abel to both join Warren and Charlie on stage for questions. Becky Quick does a decent job as questioner, but I will welcome the return of the rotating question format from journalists, equity analysts, and audience members at the next live meeting.</p>\n<p><b>What To Expect From The Q&A Session?</b></p>\n<p>I've never found the Q&A session to be a waste of time, but I've also never heard anything that caused me to make a trade or rethink my investment philosophy. To be honest, you hear a lot of repeat \"greatest hits\" year after year such as never bet against America, think if stocks as parts of a business and not pieces of paper, don't try to predict where the general market is heading, etc. Most of the audience has already heard and believes in this philosophy and is simply indulging in confirmation bias. One journalist described the meeting experience thusly:</p>\n<blockquote>\n \"It’s a lot like going to church, and no matter how long you’ve been away, the rhythm of the service doesn’t change.\"\n</blockquote>\n<p>Source: Corinne Purtill, \"Can the Cult of Berkshire Hathaway Outlive Warren Buffett\"</p>\n<p>So, aside from these old chestnuts, what can we expect to hear at this year's meeting? Here are a few predictions:</p>\n<p>One of the most likely will deal with absolutely horrible timing selling the airlines before they had a chance to recover from the pandemic. This was already being second-guessed when Buffett mentioned it at last year's meeting, and the double since then makes it look even worse.</p>\n<p class=\"t-img-caption\"><img src=\"https://static.tigerbbs.com/884b153778cb386e8ecab5e99f78609b\" tg-width=\"640\" tg-height=\"222\"><span>Source: Seeking Alpha BRK.A Charting Page</span></p>\n<p>I fully expect Buffett to continue defending the decision to sell. He will likely point out that the airlines are worse businesses now compared to before the pandemic, having cut their dividends and diluted their share counts to stay afloat. There is also the issue of hindsight bias. The sales could have been justified given the unknowability of the impact and duration of the pandemic at the time. My personal view is that the airline sales were a rare moment of panic selling from Buffett that was wrong but forgivable in light of his overall career.</p>\n<p>We will probably hear more questions about Berkshire's huge cash pile and lack of buying activity. I expect the usual answers about the lack of cheap investments available and the aversion to paying a dividend. However, we may get some clarity on the buyback policy when we see at what level Berkshire stopped buying back stock (if they did stop) in Q1.</p>\n<p>Although Becky Quick does a decent job of question selection, I do expect the woke crowd to inject a couple of issues into the mix. This year, it could be race relations and climate change. I expect Charlie Munger to give a moral but no-nonsense once sentence response to each. Buffett will say the same thing but more diplomatically. Abel and Jain, as the longer term future leaders, may feel they have to repeat the politically correct answers of other CEOs on these topics. My prediction is that some on the right will be annoyed with them for \"caving\", some on the left will be angry with them for not going far enough, and the practical smart people will just ignore them and focus on how they run the business.</p>\n<p>Speaking of how they run the business, it is unfortunate that equity analysts won't be asking questions, but shareholders can still come up with some relevant ones. On the insurance side, I will be interested to hear about any losses from the February Texas cold snap, how the GEICO giveback and its expiration will impact policy count, and how business interruption claims from the pandemic will be handled. On the non-insurance side, I'd like to hear the latest reads on rail car loadings and construction activity to get a feel on the pace of the recovery and inflation expectations. From Berkshire Hathaway Energy, I will be interested to hear how aggressive they will continue to be with renewable power and how much government programs are driving it. Their investment activity in beefing up the power grid in Texas and elsewhere is also important.</p>\n<p>Bottom line on the Q&A session: enjoy the \"greatest hits\" commentary but pay attention to the operating Vice Chairmen as they discuss their businesses, which are increasingly overshadowing the investment portfolio in importance. As you will see from my valuation estimate, they are already the biggest determinants of value.</p>\n<p><b>2021 Valuation Update</b></p>\n<p>Berkshire's 1Q 2021 earnings release will come out no later than the morning of May 1st ahead of the meeting. It will make for interesting reading ahead of the meeting but will be of limited usefulness in making a forecast for FY 2021. The operating businesses usually have some seasonality that results in higher income in the second half, and year-on-year growth rates will still be distorted by pandemic impacts. The company of course, does not provide guidance either. For my first pass at a 2021 valuation then, I am using 2020 actuals for the operating businesses adjusted for estimated growth rates and forward P/Es for comparable parts of the business. I then add in the value of the equity holdings and earnings power of the insurance business outside of income from equity investments. This is the same sum-of-the-parts valuation method I have been using in my last several Berkshire articles.</p>\n<p><b>Operating Businesses</b></p>\n<p>In the BNSF railroad business, the other 3 big US railroads (CSX, Norfolk Southern, and Union Pacific) are predicted to increase EPS by 20% in 2021. On that basis, BNSF would be expected to earn $6.2 billion. For Berkshire Hathaway Energy, I am assuming no growth in 2021, in line with analyst projections for peer utilities. The February Texas freeze-ups are a possible downside to earnings this year. In the manufacturing businesses, the industrial and building products segments are forecasted to grow in the high single digits but the consumer manufacturing segment is rebounding from a big decline in earnings in 2020. As a result, I am forecasting overall manufacturing business earnings to increase 30% to $8 billion. While this sounds like a lot, it is only 10% higher than pre-pandemic 2019. In Service and Retail, I am forecasting 20% earnings growth to $2.65 billion.</p>\n<p>The total 2021 earnings for the non-insurance businesses add up to $19.9 billion, which is 20% over 2020 and 12.2% over 2019. Peer P/E multiples have expanded an average of 10% since my last valuation estimate. Combining the P/E expansion with the higher earnings, the non-insurance businesses are valued at $403 billion, up from $305 billion in 2020.</p>\n<p><b>Investment Holdings</b></p>\n<p>The equity portfolio was held back in Q1 by Apple (AAPL) which was down about 8% in the quarter. I estimate the total equity portfolio excluding Kraft Heinz (KHC) had a net gain of only $5 billion. Kraft Heinz had a good quarter however, with Berkshire's share of market value increasing by $1.7 billion. Annual dividend income should benefit from the addition of stocks like Chevron (CVX) and Verizon (VZ). I expect $5.4 billion of dividend income in 2021 up from $4.9 billion in 2020. I am showing no gain in the other equity method investments like Berkadia, Pilot, and ETT.</p>\n<p><b>Insurance Earning Power (Excluding Equity Income)</b></p>\n<p>I am estimating insurance income very conservatively in 2021. I am cutting cash and fixed income interest in half from 2020 due to T-bill rates near zero for a full year this year. I am also assuming breakeven underwriting income with expected impacts from the Texas cold snap and a possibly stronger than average hurricane season later this year. The resulting insurance income is over $1 billion lower in 2021 than 2020, and it impacts company valuation by about $15 billion. Nevertheless, I am using the low number for the base case valuation as I made some possibly generous estimates on non-insurance earnings. If you prefer to value insurance earnings on a higher ongoing basis, the $15 billion would add about $6.50 per B share to my final number.</p>\n<p>Finally, for those who have not seen my valuation model or as a reminder for those who have, the equity investments are the only components of the insurance business that I am valuing based on the balance sheet. The rest is valued based on the earnings power as discussed here. Therefore I do not add cash or subtract float liabilities in my valuation. These basically offset each other on the balance sheet in any case. Some may find this method conservative and they are welcome to add in additional value to my final result but I find empirically that doing so always overstates the company's value compared to the market. There is certainly some option value in having cash on hand for deals that may come along but given the rarity of these in the last few years, it is not in the base case.</p>\n<p><b>Putting It All Together</b></p>\n<p>Summing up all the parts, Berkshire Hathaway is valued at $707 billion. The share count as reported on the Form 10-K as of 2/16/2021 indicates 2.297 billion B share equivalents outstanding. That accounts for some buybacks in the first half of 1Q but any activity since then is not reflected. We will see on the 10-K issued on May 1st if there have been further buybacks. The resulting valuation is $307.88 per B share or $461,816 per A share.</p>\n<p><img src=\"https://static.tigerbbs.com/3d81031cb2f9745ac2d59ecd7783fdbc\" tg-width=\"640\" tg-height=\"372\"></p>\n<p><b>Conclusion</b></p>\n<p>The livestream of Berkshire Hathaway's annual meeting on May 1st should see record views. It is the first time that Warren Buffett, Charlie Munger, Ajit Jain, and Greg Abel will all be on stage to take questions. This reflects the evolution of Berkshire from an investment business into a more operations-focused company. Although a lot of the Q&A will probably rehash old investing and life philosophies, it will still be worth watching to become familiar with the new generation of Berkshire leaders and hear their take on how the operating businesses are doing.</p>\n<p>Based on current peer multiples and forecasted earnings growth for 2021, Berkshire's fair value is about 13% above current market price. This valuation uses some conservative assumptions for the insurance business as both investment and underwriting income could be depressed this year. Using a longer term average for expected insurance income could boost the valuation by a couple percent. Berkshire is still worth owning based on steady post-pandemic improvement in the operating businesses with the added benefit of a fortress balance sheet and the capacity to make an accretive acquisition if one comes along.</p>","source":"seekingalpha","collect":0,"html":"<!DOCTYPE html>\n<html>\n<head>\n<meta http-equiv=\"Content-Type\" content=\"text/html; charset=utf-8\" />\n<meta name=\"viewport\" content=\"width=device-width,initial-scale=1.0,minimum-scale=1.0,maximum-scale=1.0,user-scalable=no\"/>\n<meta name=\"format-detection\" content=\"telephone=no,email=no,address=no\" />\n<title>Watch The Berkshire Hathaway Meeting For Fun, But Invest For The Value</title>\n<style type=\"text/css\">\na,abbr,acronym,address,applet,article,aside,audio,b,big,blockquote,body,canvas,caption,center,cite,code,dd,del,details,dfn,div,dl,dt,\nem,embed,fieldset,figcaption,figure,footer,form,h1,h2,h3,h4,h5,h6,header,hgroup,html,i,iframe,img,ins,kbd,label,legend,li,mark,menu,nav,\nobject,ol,output,p,pre,q,ruby,s,samp,section,small,span,strike,strong,sub,summary,sup,table,tbody,td,tfoot,th,thead,time,tr,tt,u,ul,var,video{ font:inherit;margin:0;padding:0;vertical-align:baseline;border:0 }\nbody{ font-size:16px; line-height:1.5; color:#999; background:transparent; }\n.wrapper{ overflow:hidden;word-break:break-all;padding:10px; }\nh1,h2{ font-weight:normal; line-height:1.35; margin-bottom:.6em; }\nh3,h4,h5,h6{ line-height:1.35; margin-bottom:1em; }\nh1{ font-size:24px; }\nh2{ font-size:20px; }\nh3{ font-size:18px; }\nh4{ font-size:16px; }\nh5{ font-size:14px; }\nh6{ font-size:12px; }\np,ul,ol,blockquote,dl,table{ margin:1.2em 0; }\nul,ol{ margin-left:2em; }\nul{ list-style:disc; }\nol{ list-style:decimal; }\nli,li p{ margin:10px 0;}\nimg{ max-width:100%;display:block;margin:0 auto 1em; }\nblockquote{ color:#B5B2B1; border-left:3px solid #aaa; padding:1em; }\nstrong,b{font-weight:bold;}\nem,i{font-style:italic;}\ntable{ width:100%;border-collapse:collapse;border-spacing:1px;margin:1em 0;font-size:.9em; }\nth,td{ padding:5px;text-align:left;border:1px solid #aaa; }\nth{ font-weight:bold;background:#5d5d5d; }\n.symbol-link{font-weight:bold;}\n/* header{ border-bottom:1px solid #494756; } */\n.title{ margin:0 0 8px;line-height:1.3;color:#ddd; }\n.meta {color:#5e5c6d;font-size:13px;margin:0 0 .5em; }\na{text-decoration:none; color:#2a4b87;}\n.meta .head { display: inline-block; overflow: hidden}\n.head .h-thumb { width: 30px; height: 30px; margin: 0; padding: 0; border-radius: 50%; float: left;}\n.head .h-content { margin: 0; padding: 0 0 0 9px; float: left;}\n.head .h-name {font-size: 13px; color: #eee; margin: 0;}\n.head .h-time {font-size: 11px; color: #7E829C; margin: 0;line-height: 11px;}\n.small {font-size: 12.5px; display: inline-block; transform: scale(0.9); -webkit-transform: scale(0.9); transform-origin: left; -webkit-transform-origin: left;}\n.smaller {font-size: 12.5px; display: inline-block; transform: scale(0.8); -webkit-transform: scale(0.8); transform-origin: left; -webkit-transform-origin: left;}\n.bt-text {font-size: 12px;margin: 1.5em 0 0 0}\n.bt-text p {margin: 0}\n</style>\n</head>\n<body>\n<div class=\"wrapper\">\n<header>\n<h2 class=\"title\">\nWatch The Berkshire Hathaway Meeting For Fun, But Invest For The Value\n</h2>\n\n<h4 class=\"meta\">\n\n\n2021-04-26 10:32 GMT+8 <a href=https://seekingalpha.com/article/4421138-berkshire-hathaway-stock-watch-meeting-for-fun-invest-for-value><strong>seekingalpha</strong></a>\n\n\n</h4>\n\n</header>\n<article>\n<div>\n<p>Summary\n\nBerkshire Hathaway's annual meeting will be held on May 1 featuring Warren Buffett and all three vice chairmen for the first time.\nDon't expect any market-moving pronouncements.\nEarnings ...</p>\n\n<a href=\"https://seekingalpha.com/article/4421138-berkshire-hathaway-stock-watch-meeting-for-fun-invest-for-value\">Web Link</a>\n\n</div>\n\n\n</article>\n</div>\n</body>\n</html>\n","type":0,"thumbnail":"","relate_stocks":{"BRK.A":"伯克希尔","BRK.B":"伯克希尔B"},"source_url":"https://seekingalpha.com/article/4421138-berkshire-hathaway-stock-watch-meeting-for-fun-invest-for-value","is_english":true,"share_image_url":"https://static.laohu8.com/5a36db9d73b4222bc376d24ccc48c8a4","article_id":"1196378304","content_text":"Summary\n\nBerkshire Hathaway's annual meeting will be held on May 1 featuring Warren Buffett and all three vice chairmen for the first time.\nDon't expect any market-moving pronouncements.\nEarnings growth and multiple expansion at the non-insurance businesses are the biggest drivers of my valuation estimate increase.\nBerkshire is worth about 13% over current levels based on the sum-of-the-parts model I have used before.\n\nPhoto by Eric Francis/Getty Images News via Getty Images\nA Different Kind Of Annual Meeting\nBerkshire Hathaway (BRK.A) (BRK.B) is known for its annual meetings in which 30,000+ shareholders and Warren Buffett / Charlie Munger fans flock to Omaha the first weekend in May and pack an arena for a marathon Q&A session where just about any question is fair game. The weekend also features opportunities for participants to get together and sample and buy products from Berkshire's numerous subsidiaries. Since 2016, the meeting has been livestreamed for those who just want to see the Q&A session without the fun of a trip to Nebraska. The pandemic unfortunately put a damper on these activities in 2020 when Warren Buffett and non-insurance Vice Chairman Greg Abel sat alone in a dark empty arena taking questions remotely from CNBC's Becky Quick. This year's meeting will also be virtual. The May 1 stannual meeting is moving to Los Angeles for one year to accommodate 97-year old Vice Chairman Charlie Munger who couldn't travel in 2020. The meeting will also feature insurance Vice Chairman Ajit Jain for the first time. Online coverage will begin at 10 AM PDT (1 PM Eastern) with Q&A lasting for 4 hours before the brief formal Annual Meeting with proxy voting wraps things up.\nI personally attended each annual meeting from 2008-2015 and I can say, assuming the format goes back to normal in 2022, every shareholder should attend in person at least once. The carnival-like atmosphere of the weekend is a lot of fun. Where else can you watch millionaires juggle multiple plates so they can score the maximum amount of free buffet food before plopping down big bucks on jewelry to take home?\nSource: Getty Images\nYou probably won't get to talk to Warren or Charlie, but the odds are that you can say hi to some of the on-air personalities and regular guests from CNBC or Fox Business. For those who over-indulged in the free food, there was even a company-sponsored 5k on the day after the meeting to run off the calories.\nThe main reason for all the hoopla, though, is the Saturday Q&A session, which is still going on virtually this year. Given what I consider to be Berkshire's transition to more of an operating company, it is long overdue for the operational Vice Chairmen Ajit Jain and Greg Abel to both join Warren and Charlie on stage for questions. Becky Quick does a decent job as questioner, but I will welcome the return of the rotating question format from journalists, equity analysts, and audience members at the next live meeting.\nWhat To Expect From The Q&A Session?\nI've never found the Q&A session to be a waste of time, but I've also never heard anything that caused me to make a trade or rethink my investment philosophy. To be honest, you hear a lot of repeat \"greatest hits\" year after year such as never bet against America, think if stocks as parts of a business and not pieces of paper, don't try to predict where the general market is heading, etc. Most of the audience has already heard and believes in this philosophy and is simply indulging in confirmation bias. One journalist described the meeting experience thusly:\n\n \"It’s a lot like going to church, and no matter how long you’ve been away, the rhythm of the service doesn’t change.\"\n\nSource: Corinne Purtill, \"Can the Cult of Berkshire Hathaway Outlive Warren Buffett\"\nSo, aside from these old chestnuts, what can we expect to hear at this year's meeting? Here are a few predictions:\nOne of the most likely will deal with absolutely horrible timing selling the airlines before they had a chance to recover from the pandemic. This was already being second-guessed when Buffett mentioned it at last year's meeting, and the double since then makes it look even worse.\nSource: Seeking Alpha BRK.A Charting Page\nI fully expect Buffett to continue defending the decision to sell. He will likely point out that the airlines are worse businesses now compared to before the pandemic, having cut their dividends and diluted their share counts to stay afloat. There is also the issue of hindsight bias. The sales could have been justified given the unknowability of the impact and duration of the pandemic at the time. My personal view is that the airline sales were a rare moment of panic selling from Buffett that was wrong but forgivable in light of his overall career.\nWe will probably hear more questions about Berkshire's huge cash pile and lack of buying activity. I expect the usual answers about the lack of cheap investments available and the aversion to paying a dividend. However, we may get some clarity on the buyback policy when we see at what level Berkshire stopped buying back stock (if they did stop) in Q1.\nAlthough Becky Quick does a decent job of question selection, I do expect the woke crowd to inject a couple of issues into the mix. This year, it could be race relations and climate change. I expect Charlie Munger to give a moral but no-nonsense once sentence response to each. Buffett will say the same thing but more diplomatically. Abel and Jain, as the longer term future leaders, may feel they have to repeat the politically correct answers of other CEOs on these topics. My prediction is that some on the right will be annoyed with them for \"caving\", some on the left will be angry with them for not going far enough, and the practical smart people will just ignore them and focus on how they run the business.\nSpeaking of how they run the business, it is unfortunate that equity analysts won't be asking questions, but shareholders can still come up with some relevant ones. On the insurance side, I will be interested to hear about any losses from the February Texas cold snap, how the GEICO giveback and its expiration will impact policy count, and how business interruption claims from the pandemic will be handled. On the non-insurance side, I'd like to hear the latest reads on rail car loadings and construction activity to get a feel on the pace of the recovery and inflation expectations. From Berkshire Hathaway Energy, I will be interested to hear how aggressive they will continue to be with renewable power and how much government programs are driving it. Their investment activity in beefing up the power grid in Texas and elsewhere is also important.\nBottom line on the Q&A session: enjoy the \"greatest hits\" commentary but pay attention to the operating Vice Chairmen as they discuss their businesses, which are increasingly overshadowing the investment portfolio in importance. As you will see from my valuation estimate, they are already the biggest determinants of value.\n2021 Valuation Update\nBerkshire's 1Q 2021 earnings release will come out no later than the morning of May 1st ahead of the meeting. It will make for interesting reading ahead of the meeting but will be of limited usefulness in making a forecast for FY 2021. The operating businesses usually have some seasonality that results in higher income in the second half, and year-on-year growth rates will still be distorted by pandemic impacts. The company of course, does not provide guidance either. For my first pass at a 2021 valuation then, I am using 2020 actuals for the operating businesses adjusted for estimated growth rates and forward P/Es for comparable parts of the business. I then add in the value of the equity holdings and earnings power of the insurance business outside of income from equity investments. This is the same sum-of-the-parts valuation method I have been using in my last several Berkshire articles.\nOperating Businesses\nIn the BNSF railroad business, the other 3 big US railroads (CSX, Norfolk Southern, and Union Pacific) are predicted to increase EPS by 20% in 2021. On that basis, BNSF would be expected to earn $6.2 billion. For Berkshire Hathaway Energy, I am assuming no growth in 2021, in line with analyst projections for peer utilities. The February Texas freeze-ups are a possible downside to earnings this year. In the manufacturing businesses, the industrial and building products segments are forecasted to grow in the high single digits but the consumer manufacturing segment is rebounding from a big decline in earnings in 2020. As a result, I am forecasting overall manufacturing business earnings to increase 30% to $8 billion. While this sounds like a lot, it is only 10% higher than pre-pandemic 2019. In Service and Retail, I am forecasting 20% earnings growth to $2.65 billion.\nThe total 2021 earnings for the non-insurance businesses add up to $19.9 billion, which is 20% over 2020 and 12.2% over 2019. Peer P/E multiples have expanded an average of 10% since my last valuation estimate. Combining the P/E expansion with the higher earnings, the non-insurance businesses are valued at $403 billion, up from $305 billion in 2020.\nInvestment Holdings\nThe equity portfolio was held back in Q1 by Apple (AAPL) which was down about 8% in the quarter. I estimate the total equity portfolio excluding Kraft Heinz (KHC) had a net gain of only $5 billion. Kraft Heinz had a good quarter however, with Berkshire's share of market value increasing by $1.7 billion. Annual dividend income should benefit from the addition of stocks like Chevron (CVX) and Verizon (VZ). I expect $5.4 billion of dividend income in 2021 up from $4.9 billion in 2020. I am showing no gain in the other equity method investments like Berkadia, Pilot, and ETT.\nInsurance Earning Power (Excluding Equity Income)\nI am estimating insurance income very conservatively in 2021. I am cutting cash and fixed income interest in half from 2020 due to T-bill rates near zero for a full year this year. I am also assuming breakeven underwriting income with expected impacts from the Texas cold snap and a possibly stronger than average hurricane season later this year. The resulting insurance income is over $1 billion lower in 2021 than 2020, and it impacts company valuation by about $15 billion. Nevertheless, I am using the low number for the base case valuation as I made some possibly generous estimates on non-insurance earnings. If you prefer to value insurance earnings on a higher ongoing basis, the $15 billion would add about $6.50 per B share to my final number.\nFinally, for those who have not seen my valuation model or as a reminder for those who have, the equity investments are the only components of the insurance business that I am valuing based on the balance sheet. The rest is valued based on the earnings power as discussed here. Therefore I do not add cash or subtract float liabilities in my valuation. These basically offset each other on the balance sheet in any case. Some may find this method conservative and they are welcome to add in additional value to my final result but I find empirically that doing so always overstates the company's value compared to the market. There is certainly some option value in having cash on hand for deals that may come along but given the rarity of these in the last few years, it is not in the base case.\nPutting It All Together\nSumming up all the parts, Berkshire Hathaway is valued at $707 billion. The share count as reported on the Form 10-K as of 2/16/2021 indicates 2.297 billion B share equivalents outstanding. That accounts for some buybacks in the first half of 1Q but any activity since then is not reflected. We will see on the 10-K issued on May 1st if there have been further buybacks. The resulting valuation is $307.88 per B share or $461,816 per A share.\n\nConclusion\nThe livestream of Berkshire Hathaway's annual meeting on May 1st should see record views. It is the first time that Warren Buffett, Charlie Munger, Ajit Jain, and Greg Abel will all be on stage to take questions. This reflects the evolution of Berkshire from an investment business into a more operations-focused company. Although a lot of the Q&A will probably rehash old investing and life philosophies, it will still be worth watching to become familiar with the new generation of Berkshire leaders and hear their take on how the operating businesses are doing.\nBased on current peer multiples and forecasted earnings growth for 2021, Berkshire's fair value is about 13% above current market price. This valuation uses some conservative assumptions for the insurance business as both investment and underwriting income could be depressed this year. Using a longer term average for expected insurance income could boost the valuation by a couple percent. Berkshire is still worth owning based on steady post-pandemic improvement in the operating businesses with the added benefit of a fortress balance sheet and the capacity to make an accretive acquisition if one comes along.","news_type":1},"isVote":1,"tweetType":1,"viewCount":385,"commentLimit":10,"likeStatus":false,"favoriteStatus":false,"reportStatus":false,"symbols":[],"verified":2,"subType":0,"readableState":1,"langContent":"CN","currentLanguage":"CN","warmUpFlag":false,"orderFlag":false,"shareable":true,"causeOfNotShareable":"","featuresForAnalytics":[],"commentAndTweetFlag":false,"andRepostAutoSelectedFlag":false,"upFlag":false,"length":24,"xxTargetLangEnum":"ZH_CN"},"commentList":[],"isCommentEnd":true,"isTiger":false,"isWeiXinMini":false,"url":"/m/post/374907972"}
精彩评论