We analyzed Berkshire Q1 report three months back. After looking at Q1 results, we estimated Berkshires stock to trade significantly north of $90,000=00. We also estimated the stock to be a strong buy below $89,400=00. Interestingly enough, the stock did drop below that price. William Scoular also did a scholarly analysis of Berkshires various businesses and estimated the fair value of Berkshire at the moment to be some where in the 102-124K range per A share.
Let us quickly take a look at Berkshires balance sheets at Q2 and see how the business is performing. The book value increased by 2.4% in the quarter compared to Q1. This compares to 4% increase in book value in Q1. This is a 6.4% increase in book value. The comparable increase in value in SP500 thus far this year is 2.67%. If things go as they have thus far for the rest of the year, one can expect BRKA to beat SP500 handily this year.
Net earnings for the first six months this year increased by 65% compared to the same period in the prior year. The second quarter book value took a slight hit as the investments registered unrealized losses of 572 million. Comprehensive income for the first six months in 2006 jumped to 5872 million dollars compared to 2114 million dollars in the same period last year.
What does this mean for the stock price? The stock price should rise 5-6% in the next few weeks. We are looking at price targets of 96-97 thousand dollars in the next few weeks. The hurricane season is going to be a wild card. Even with a hurricane as bad as last year, a price below 91,700=00 is a steal. This translates to a B share value of 3056=00. I will look to add to my position in Berkshire if the price remains at or below these levels in the next several weeks.