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Berkshire Hathaway still has a conservative price/book value [ClearOnMoney]
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Berkshire Hathaway still has a conservative price/book value

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Commentary

Berkshire Hathaway still has a conservative price/book value

4 May 2013 by Jim Fickett.

In 2011 there was an air of pessimism around Berkshire Hathaway, mostly for silly reasons, and the price was depressed. I bought on 28 Feb 2011, when the A-shares were priced at $131,300 (Buying Berkshire Hathaway as a better-than-index-fund), and again on 5 Aug 2011, when the A-shares were priced at $107,300 (Increased stake in Berkshire Hathaway). In both cases I bought B-shares, but statistics in the news are usually quoted in terms of A-shares, and everything is just proportional, so I will discuss the numbers for A-shares. On Friday the A-shares closed at $162,904, up 24% and 52% from my two entry points.

How much of this is just the general euphoria due to Helicopter Ben? Are the shares now expensive? At least in terms of book value, the answer is that the shares are still reasonably priced.

Book value is the primary measure Buffett uses to measure his own progress and, as detailed in earlier posts, Berkshire has a very solid record in growing book value over the years. I bought the first time at a price/book ratio of about 1.3, and the second time at a price/book of 1.1. With today's price and Q1 book, price/book is about 1.35. Below is a re-posting of the long-term history of price/book, suggesting that now is not an unreasonable entry point. Certainly it is not time to sell.