Berkshire Hathaway Inc. is set to post and report its largest year over year increase in book value per share since the year 2010. This happened because of gains in equity derivative bets that Warren Buffett made, operating business earnings and other investments.
Book value is a measure of assets minus liabilities, and in regards to Berkshire Hathaway, it has risen at least 15% to the amount of $111,546 per share as of September 30 of this year. We learn this estimation from Jay Gelb, one of the analysts at Barclays PLC.
Cliff Gallant of KBW Inc. puts his estimation in at $110,701 per share as of the end of the third quarter. Berkshire Hathaway, based out of Omaha Nebraska, will report the overall book value numbers when it releases its earnings report at the close of the market on Thursday, November 1, 2012.
“This year, this quarter, the equity portfolio has done pretty well, and that’s helped,” said Gallant during a phone interview. It’s also expected that Berkshire Hathaway’s derivatives book will report gains during this period, as well as steady operating businesses, according to Gallant.
The 82 year old Warren Buffett regularly highlights this metric on the first page inside of the Berkshire Hathaway annual report. He tells us that book value is the best available proxy to determine intrinsic value. It also reflects any changes made in the company’s investment portfolio, plus it reflects earnings of the more than 80 businesses that Berkshire Hathaway personally operates, including electricity companies, hauling freight and selling products from candy to underwear.
“Book value is a number you can hold on to,” we learned from Meyer Shields, a Stifel Nicolaus & Co. analyst who estimates the Berkshire Hathaway book value to reach $110,490 within the quarter. “It’s a reasonable – ish depiction of what the market thinks Berkshire is worth.”
Berkshire Hathaway Class A shares have gone up 13% this year to $129,505, which we compare to the 12% gain of the Standard & Poor’s 500 index.