From 1996,
"I dwell on this rise in per-share book value because it roughly indicates our economic progress during the year."
"In last year's letter, with Berkshire shares selling at $36000, I told you: (1) Berkshire's gain in market value in recent years had outstripped its gain in intrinsic value, even though the latter gain had been highly satisfactory; (2) that kind of overperformance could not continue indefinitely; (3) Charlie and I did not at that moment consider Berkshire to be undervalued.
Since I set down those cautions, Berkshire's intrinsic value has increased very significantly - aided in a major way by a stunning performance at GEICO that I will tell you more about later - while the market price of our shares has changed little. This, of course, means that in 1996 Berkshire's stock underformed the business. Consequently, today's price/value relationship is both much different from what it was a year ago and, as Charlie and I see it, more appropriate."
From 1997:
"Gains in book value are, of course, not the bottom line at Berkshire. What truly counts are gains in per-share intrinsic value. Ordinarily, though, the two measures tend to move roughly in tandem, and in 1997 that was the case..."
($36,000 in 1996 X 34.1% book value increase in 1997 = $48,276)
From 1998:
"increased the per-share book value 48.3%"
"Though Berkshire's intrinsic value grew very substantially in 1998, the gain fell well short of the 48.3% recorded for book value. Nevertheless, intrinsic value still far ("far" was italicized) exceeds book value.
So there you have it folks, BRK is worth "very substantially" more than $48,276, but "well short" of $71,593 as of about March this year. This equates with $1609.20 to $2386.43 for the B's as of about March of this year (or whenever he writes these).
B's are currently 27% above the "very substantial" level and 14% below the "well short" level.
I think it is very same to assume that we can be comfortable here at these levels - especially on the B's as they are trading at a discount. |
