Berkshire Hathaway - Northeastern University College of Business Administration

Pearce, William2 William Pearce, Sector Manager
September 14, 2011

Purchase Price $68.71
Target Price $91.00

Berkshire Hathaway without the Warren Buffett premium…

Berkshire Hathaway is currently trading at historically low price to earnings and price to book multiples which provides a wide margin of safety on this value play.
At a P/E of 13.6 and P/B of 1 Berkshire is well below its ten year averages of 17.79 and 1.45 respectively.
Economic uncertainty will allow the greatest investor of our generation to take advantage of depressed stock prices and put Berkshire’s growing cash hoard to work by striking similar deals to its recent investment in Bank of America Corp.
If the economy picks up Berkshire Hathaway is positioned to outperform due to its underlying businesses tied to the financial and housing markets.
Recent catastrophic weather events have resulted in large payouts for Berkshire’s insurance business. While this may seem like a negative, BRK can now charge higher rates for its insurance products which should expand margins going forward.