Buying Berkshire Hathaway (BRK.B) always has seemed like a leap of faith–you either believed in Warren Buffett’s omnipotence or you didn’t–that having an analyst cover the company always seemed beside the point. But analysts do cover Berkshire Hathaway, and one of them even had something to say about the company today.
AFP That would Barclays’ Jay Gelb, who released a big report on Berkshire Hathaway today. And wouldn’t you know it, not only does he like Warren Buffett’s baby, he thinks now would be a good time to buy. Gelb explains why:
Berkshire's insurance businesses generates substantial no-cost float ($77bn at YE13) available for investing and will benefit from the Heinz acquisition. Importantly, Berkshire has significant cash available for additional acquisitions (we estimate ~$25bn) to supplement organic growth…
Berkshire Hathaway has substantial leverage to an improving economy including the housing market with its non-insurance business accounting for two-thirds of operating earnings. Overall, Berkshire should benefit from consistent earnings growth in the Burlington Northern railroad business (including oil-by-rail), as well as the Manufacturing, Service, and Retail, and the Utilities and Energy units…
[Berkshire Hathaway] shares are attractively valued currently at 1.41x book value, which is near the level (1.2x book value) at which the company will repurchase stock. The buyback plan provides a support level and signals how strongly Mr. Buffett believes Berkshire's intrinsic value exceeds its book value.
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Berkshire Hathaway’s B shares have dropped 0.7% to$126.33 at 1:37 p.m., while Berkshire Hathaway’s A shares (BRK.A) has fallen 0.7% to $189,400. It will report earnings on May 2.
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