Buy Berkshire instead of Vanguard S&P (BRKA) Message Board

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Strategies & Market Trends : Buy Berkshire instead of Vanguard S&P (BRKA)

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To: Patsy Collins who wrote (273)	5/28/2007 3:44:11 PM
From: matherandlowell	Read Replies (2) of 313

"At a PE 16.5 currently" This may be the published PE but wouldn't security analysis argue for a lower PE? Let's say Berkshire sells for $110,000 per share. In the most recent annual report, Warren says that he has $80,000/share in cash and cash equivalents. He also has operating businesses which generate about $50,000 per share in revenues and $3500 per share in earnings. If we deduct the cash per share from the share price, $110 - $80, each share of Berkshire is valued by the market at $30,000 a share. But that share has $50,000 of revenues pouring in and earns $3500. Those numbers argue for a price to sales ratio of about 0.6 and a price to earnings ratio of less than 10. Deduct the cash and do the metrics on what is left and you find that the stock is unbelievable cheap. This seems like an odd situation: Buffet is the prototypic value guy. He always wants to buy a dollar's worth of value for fifty cents. So here we have his own stock selling for very low metrics. Berkshire is a great buy at $110,000 a share. j.

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