Company Reports

We continue to believe that Berkshire, owing to its diversification and its lower overall risk profile, offers one of the better risk-adjusted return profiles in the financial-services sector (and remains a generally solid candidate for downside protection during market selloffs). We remain impressed by Berkshire's ability in most years to generate high-single- to double-digit growth in book value per share, comfortably above our estimate of its cost of capital.

Wide-moat Berkshire Hathaway reported fourth-quarter results that were slightly better than our expectations. We expect to increase our Class A $600,000 and Class B $400 per-share fair value estimates once we have incorporated the results into our valuation models.

Wide-moat-rated Berkshire Hathaway reported a quieter fourth quarter for its equity investment portfolio, with net sales, exclusive of purchases, coming in at an estimated $1.8 billion based on the insurer's recent 13F filing.

We knew Berkshire Hathaway Vice Chairman Charlie Munger's passing was imminent, as he was nearly 100 years old and not in the best of health the past few years. It is certainly a spiritual loss for Berkshire Hathaway and for Munger's investing partner of the past 60-plus years, Chairman and CEO Warren Buffett. In accordance with contemporary corporate operations, we don't expect the event to have too significant of an impact on Berkshire's wide economic moat or our $600,000 ($400) per Class A (B) share fair value estimate.

Wide-moat-rated Berkshire Hathaway reported a relatively busy third quarter for its equity investment portfolio, with net sales (exclusive of purchases) coming in at an estimated $5.7 billion based on the insurer's recent 13F filing.

With wide-moat Berkshire Hathaway reporting third-quarter results that were in line with our expectations, we expect to leave our $600,000 ($400) per Class A (B) share fair value estimate in place.

We continue to believe that Berkshire, owing to its diversification and its lower overall risk profile, offers one of the better risk-adjusted return profiles in the financial-services sector (and remains a generally solid candidate for downside protection during market selloffs). We remain impressed by Berkshire's ability in most years to generate high-single- to double-digit growth in book value per share, comfortably above our estimate of its cost of capital. We also believe it will take some time before the firm finally succumbs to the impediments created by the sheer size and scale of its operations, and that the ultimate departure of Warren Buffett and Charles Munger will have less of an impact on future operating results than many investors believe. We view Berkshire's decentralized business model, broad business diversification, high cash-generation capabilities, and unmatched balance sheet strength as true differentiators for the firm.

Wide-moat-rated Berkshire Hathaway reported a relatively busy second quarter for its equity investment portfolio, with net sales (exclusive of purchases) coming in at an estimated $5.1 billion based on the insurer's recent 13F filing.

With wide-moat Berkshire Hathaway reporting second-quarter results that were in line with our expectations, we expect to leave our $555,000 ($370) per Class A (B) share fair value estimate in place.

We see no reason to alter our fair value estimate for wide-moat-rated Berkshire Hathaway following news that the company has agreed to acquire narrow-moat Dominion Energy's 50% stake in Cove Point, a U.S.-based export, import, and storage facility for liquefied natural gas. For those who may not recall, the insurer's utilities and energy segment, Berkshire Hathaway Energy, acquired nearly all of Dominion's natural gas transmission and storage operations for around $4.0 billion ($9.6 billion when including assumed debt) in July 2020. That deal included BHE's assumption of a 25% economic stake in Cove Point, with Dominion retaining its 50% stake and the other 25% held by Brookfield Infrastructure Partners.

Having had a chance to sift through the changes in wide-moat-rated Berkshire Hathaway's first-quarter 13F filing now that the company has segregated its holdings at New England Asset Management (a wholly owned subsidiary of the firm's General Re insurance subsidiary) from those that will continue to be managed as separate client holdings (amounting to $645 million at the end of March 2023), we are updating our comments about the company's equity investment portfolio for the most recent quarter.

Wide-moat-rated Berkshire Hathaway reported a relatively busy first quarter for its equity investment portfolio, with net sales (exclusive of purchases) coming in at an estimated $10.4 billion based on the insurer's 13-F filing (as well as a similar filing for New England Asset Management, a wholly-owned subsidiary of the firm's Gen Re insurance subsidiary).

While wide-moat Berkshire Hathaway's annual meeting has always been entertaining, it has generally not been a huge source of meaningful insight into the firm's operations. This year's event had the feel of past meetings, with Warren Buffett and Charlie Munger joined by Ajit Jain and Greg Abel on stage taking questions from CNBC's Becky Quick and shareholders during a live event in Omaha.

Having dug deeper into wide-moat Berkshire Hathaway's first-quarter results, we expect to leave our $555,000 ($370) per Class A (B) share fair value estimate in place. Operating subsidiary top-line growth of 20.5% (which excludes the impact of investment and derivative gains/losses and other adjustments), was in line with our expectations, which had envisioned the contributions from both Alleghany's operations (folded in during the fourth quarter of 2022) and the onboarding of Pilot Travel Centers (at the end of January 2023).

With wide-moat Berkshire Hathaway reporting first-quarter results that were about in line with our expectations, we are leaving our $555,000 ($370) per Class A (B) share fair value estimate in place. First-quarter reported revenue, which includes unrealized and realized gains/losses from Berkshire's investments and derivatives portfolios, increased 74.5% year over year to $120.2 billion. Excluding the impact of investment and derivative gains/losses and other adjustments, first-quarter operating revenue increased 20.5% to $85.4 billion (with most of that gain coming from the Alleghany acquisition and the onboarding of operating results from Pilot Travel Centers after Berkshire raised its stake in the firm to 80% at the end of January 2023).

With wide-moat Berkshire Hathaway's annual meeting taking place this weekend, we've put together a list of 10 questions we'd like to ask management if we could do so directly. At this year's event, CEO Warren Buffett, Charlie Munger, Ajit Jain, and Greg Abel will take questions (forwarded on by shareholders and other interested participants) directly from CNBC's Becky Quick, as well as from shareholders in attendance at the live event in Omaha, Nebraska. Although the analyst panel has been set aside, we continue to believe it served as an effective means of eliciting details about Berkshire's operations. We feel that as the firm moves closer to the day when Buffett is no longer running the show, Berkshire should face tough questions about its operations, capital allocation priorities, and succession planning.

We continue to believe that Berkshire, owing to its diversification and its lower overall risk profile, offers one of the better risk-adjusted return profiles in the financial-services sector (and remains a generally solid candidate for downside protection during market selloffs). We continue to be impressed by Berkshire's ability in most years to generate high-single- to double-digit growth in book value per share, comfortably above our estimate of its cost of capital. We also believe that it will take some time before the firm finally succumbs to the impediments created by the sheer size and scale of its operations, and that the ultimate departure of Warren Buffett and Charles Munger will have less of an impact on future operating results than many investors believe. We view Berkshire's decentralized business model, broad business diversification, high cash-generation capabilities, and unmatched balance sheet strength as true differentiators for the firm.

We were not too surprised to see stories pop up over the weekend about Warren Buffett, CEO of wide-moat Berkshire Hathaway, being in conversations with the Biden administration about the banking crisis, as well as reports from the major news outlets that a large number of private jets have made their way to Omaha this weekend. In just the past 10 days, we've seen the U.S. regulators step in and backstop depositors at two failing banks, Silicon Valley Bank and Signature Bank. The Swiss government stepped in to shore up Credit Suisse, and the U.S. regulators are working with 11 banks (including wide-moat JPMorgan Chase) to shore up First Republic Bank by placing $30 billion of their own funds in deposits at the struggling institution.

Wide-moat-rated Berkshire Hathaway reported fourth-quarter and full-year results that were basically in line with our expectations, so we don't expect to alter our fair value estimate of $555,000 for the A shares and $370 for the B shares. We view the shares as being moderately undervalued.

Wide-moat Berkshire Hathaway reported a relatively busy fourth quarter for its equity investment portfolio, with net sales (exclusive of purchases) coming in at an estimated $9.7 billion based on the insurer's 13-F filing (as well as a similar filing for New England Asset Management, which managed $5.4 billion of equities for Berkshire at the end of December).