Berkshire has been lately trading close to 1x book value. However, it has to be also taken into account that majority of Berkshire's common stocks have been beaten badly and the insurance industry is expected to take quite a hit.
Still, I felt comfortable raising Berkshire from zero allocation to pole position (largest holding). In my eyes there are few stocks better than that to own at times like these. I really like the management / investing style of Warren Buffett. It has taken Berkshire where it is today. I also like the fact that they had insane amount of cash available when the stock market tanked.
As Sean Weston wrote in his recent article about Berkshire in Seeking Alpha "shares trading this close to book value is a truly rare event, taking place only on two other brief occasions this century".
Sven Carlin examines in his recent article this attractive opportunity from the viewpoint of P/E when the Berkshire’s $124 billion cash pilecash have been backed out from the price of the company. The result of his analysis: Based on 2019 earnings and deducting the cash, the price to earnings ratio is ~10.
A word of warning: Berkshire earnings (and thus P/E) is very volatile as they use mark-to-market for their stock portfolio. Also, both of the above analysis have to be taken from the view point of long term (i.e. where the profitability / book value will likely return in 3-5 years).
Yet, we like.
Disclosure: Author is Long Berkshire Hathaway.
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