CNBC news anchor Becky Quick interviews Warren Buffett in early-2019.

James Campbell

2019-04-07 13:39:00 Sun ET

CNBC news anchor Becky Quick interviews Warren Buffett in early-2019. Buffett explains the fact that book value fluctuations are a metric that has lost relevance for Berkshire Hathaway over time. At least 3 circumstances lead to this outcome. First, Berkshire has gradually morphed from a company whose assets concentrate in marketable stocks into a unique public corporation whose major value resides in operating businesses. From a fundamental viewpoint, equity stakes represent key parts of corporate stock ownership and control as investors favor liquidity over managerial rent protection.

Second, the new U.S. accounting rules require the current collection of operating companies to be part of book value at a dollar sum far below their current market value. This gross undervaluation may mislead the typical retail investor.

Third, it is likely for Berkshire to reconsider significant share repurchases that take place at share prices above book value (but below the Buffett estimate of intrinsic value). Each share buyback boosts intrinsic value and also constrains the potential uptick of book value.

This combination of circumstances causes the book-value scorecard to become out of touch with economic reality. Buffett hence focuses on the Berkshire market capitalization, and this alternative better reflects business performance in practice.

 


If any of our AYA Analytica financial health memos (FHM), blog posts, ebooks, newsletters, and notifications etc, or any other form of online content curation, involves potential copyright concerns, please feel free to contact us at service@ayafintech.network so that we can remove relevant content in response to any such request within a reasonable time frame.

Blog+More

Sino-American trade talks make positive progress over 3 consecutive days.

Joseph Corr

2019-01-17 10:41:00 Thursday ET

Sino-American trade talks make positive progress over 3 consecutive days.

Sino-American trade talks make positive progress over 3 consecutive days as S&P 500 and global stock market indices post 3-day win streaks. Asian and Eu

+See More

Central bank independence remains important for core inflation containment in the current age of political populism.

Jonah Whanau

2019-04-21 10:07:54 Sunday ET

Central bank independence remains important for core inflation containment in the current age of political populism.

Central bank independence remains important for core inflation containment in the current age of political populism. In accordance with the dual mandate of

+See More

America expects to impose punitive tariffs on $7.5 billion European exports due to the recent WTO rule violation of illegal plane subsidies.

Apple Boston

2019-11-07 14:36:00 Thursday ET

America expects to impose punitive tariffs on $7.5 billion European exports due to the recent WTO rule violation of illegal plane subsidies.

America expects to impose punitive tariffs on $7.5 billion European exports due to the recent WTO rule violation of illegal plane subsidies. World Trade Org

+See More

San Francisco Fed CEO Mary Daly suggests that trade escalation is not the only risk in the global economy.

Rose Prince

2019-06-19 09:27:00 Wednesday ET

San Francisco Fed CEO Mary Daly suggests that trade escalation is not the only risk in the global economy.

San Francisco Fed CEO Mary Daly suggests that trade escalation is not the only risk in the global economy. Due to the current Sino-U.S. trade tension, the g

+See More

China allows its renminbi currency to slide below the psychologically important threshold of 7-yuan per U.S. dollar.

Charlene Vos

2019-09-13 10:37:00 Friday ET

China allows its renminbi currency to slide below the psychologically important threshold of 7-yuan per U.S. dollar.

China allows its renminbi currency to slide below the key psychologically important threshold of 7-yuan per U.S. dollar. A currency dispute between the U.S.

+See More

Our proprietary alpha investment model outperforms most stock market indices from 2017 to 2020.

Andy Yeh Alpha

2020-02-02 10:31:00 Sunday ET

Our proprietary alpha investment model outperforms most stock market indices from 2017 to 2020.

Our proprietary alpha investment model outperforms the major stock market benchmarks such as S&P 500, MSCI, Dow Jones, and Nasdaq. We implement

+See More