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Wedgewood Partners Comments on Berkshire Hathaway

August 31, 2012 | About:
Holly LaFon

Holly LaFon

258 followers
Berkshire Hathaway (BRK.A)(BRK.B) five key non-insurance businesses are all operating at record levels. Housing related business continue to grow, albeit at a snails pace. Warren Buffett continues to report that Berkshire's top-five business units alone are on pace to each set an earnings record in 2012. These fab-five businesses alone will generate +$9 billion, pre-tax. Also, float is set to exceed $70 billion by year-end. We calculate Berkshire's weighted average cost of capital at just 3.25%. The advantages of this cost of capital – at rates lower than most of the world's central banks - accrues enormous structural advantages to Buffett, whom continues to methodically grow Berkshire. Lastly, Buffett's September 2011 announcement of a formal stock buy back policy – Buffett's first ever – ratified our view that the shares of Berkshire were then (and are today) unduly cheap.

From Tony Guerrerio's second quarter letter.


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