Berkshire Hathaway Book Value and Intrinsic Value continue to grow slowly and steadily. At 4Q2017 Book Value per BRK.B share is $141 and Intrinsic Value projected stands at $200 per BRK.B share thanks to the reduced corporation tax rate in US.
Berkshire Hathaway value can be derived as a sum of parts based on Equity Investments per share + Cash and Fixed Income securities per share + Subsidiary company value per share. As of 2017 year end Equity Investments (Including Kraft Heinz) total $196B which equates to close to $80 per share. The cash position and fixed income securities at year end is $116B which equates to $47 per share. Berkshire private owned investments including Insurance, BNSF Railway, BH Energy, Manufacturing and Retailing companies continue to perform well. BRK Insurance float increased to $115B which is $46 per share in float although due to major events the insurance division generated a net loss for the year. Increased market share and premiums imply likely profits in next few years assuming no major catastrophe events. We can expect BRK to generate $30B in annualized cash earnings in 2018 and beyond with possible growth as the $116B net cash is invested productively.
We expect 2018 year end BRK.B Book Value to be $155 and Fair Value to be in the range of $215 to $225. We expect 2022 year end Fair Value per share to range between $275 to $350. This is a good return for a conservatively run company with businesses with moderate exposure to technology disruption.
Read Berkshire 2017 Annual Report for further details.
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