FOR PROFESSIONAL RESEARCH WRITER ONLY

320

200 160 120 100 80 60

40

18 Percent shares traded

12 8 4

C

Target Price Range 2023 2024 2025

BERKSHIRE HATH. ‘B’ NYSE-BRKB 212.61 23.4 22.0NMF 1.08 Nil TIMELINESS 2 Lowered 9/4/20 SAFETY 1 New 6/18/10 TECHNICAL 5 Lowered 9/4/20 BETA .90 (1.00 = Market)

18-Month Target Price Range Low-High Midpoint (% to Mid)

$153-$269 $211 (0%)

2023-25 PROJECTIONS Ann’l Total

Price Gain Return High 265 (+25%) 6% Low 215 (Nil) Nil Institutional Decisions

3Q2019 4Q2019 1Q2020 to Buy 1082 1234 1324 to Sell 998 1038 1101 Hld’s(000) 932049 954299 955973

High: 71.4 85.9 87.6 90.9 119.3 152.9 151.7 167.3 200.5 224.1 228.2 231.6 Low: 44.8 64.7 65.4 75.9 91.3 108.1 125.5 123.6 158.6 184.7 191.0 159.5

% TOT. RETURN 7/20 THIS VL ARITH.*

STOCK INDEX 1 yr. -4.7 -1.7 3 yr. 11.9 9.9 5 yr. 37.2 31.7

Berkshire Hathaway ’B’ shares were intro- duced in May, 1996. At that time, each ’B’ was worth 1/30 of a Berkshire ‘A’ share. In February, 2010, the company acquired rail- road Burlington Northern Santa Fe. As part of that transaction, Berkshire split the ‘B’ shares 50-to-1. Now, each ‘B’ share is worth 1/1500 of an ‘A’.

EQUITY INVESTMENTS as of 6/30/20 Top 12 Positions By Market Cap.: Wells Fargo (237,582,705 shares) Coca Cola Co. (400,000,000 shares) Bank of New York Mellon (72,357,453 shares) American Express (151,610,700 shares) U.S. Bancorp (131,961,832 shares) Bank of America (925,008,600 shares) Kraft Heinz (325,634,818 shares) Apple (245,155,566 shares) Moody’s (24,669,778 shares) Verisign (12,815,613 shares) Davita Healthcare Partners (38,095,570 shares) Charter Communications (5,213,461 shares)

Common Stock 2,388,399,000 Class B shares Includes 657,906 Class A shares, as if converted. as of 7/30/20 MARKET CAP: $508 billion (Large Cap) FINANCIAL POSITION 2018 2019 6/30/20

($MILL.) Bonds 19898 18685 19210 Stocks 172757 248027 207454 Cash 109255 127997 142836 Other 405884 423020 418633 Total Assets 707794 817729 788133 Unearned Prems 18093 19782 20922 Reserves 110292 115460 117506 Other 226909 253924 252452 Total Liabilities 355294 389166 390880

ANNUAL RATES Past Past Est’d ’17-’19 of change (per sh) 10 Yrs. 5 Yrs. to ’23-’25 Earnings p sh 6.0% 12.0% 6.0% Dividends - - - - Nil Book Value 10.0% 11.0% 6.0%

Cal- Full endar Year

NET PREMIUMS EARNED($ mill.) Mar.31 Jun.30 Sep.30 Dec.31

2017 21753 12367 13349 13128 60597 2018 13373 14149 14333 15563 57418 2019 14319 14863 15323 16573 61078 2020 15748 15595 15800 16952 64095 2021 17200 17400 17750 18000 70350 Cal- Full

endar Year EARNINGS PER SHARE A

Mar.31 Jun.30 Sep.30 Dec.31 2017 1.65 1.73 1.65 1.40 6.43 2018 2.15 2.79 2.79 2.31 10.04 2019 2.26 2.50 3.21 1.79 9.76 2020 2.41 2.27 2.25 2.37 9.30 2021 2.20 2.40 2.55 2.65 9.80 Cal- Full

endar Year QUARTERLY DIVIDENDS PAID

Mar.31 Jun.30 Sep.30 Dec.31 2018 2019 NO DIVIDENDS 2020 BEING PAID

2010 2011 2012 2013 2014 2015 2016 2017 12.44 12.95 14.02 14.88 16.74 16.75 18.60 24.56 4.54 2.62 3.87 5.31 4.28 6.93 5.87 3.53

38.11 42.45 46.92 53.70 67.98 61.83 66.19 53.86 2.49 2.14 2.73 3.30 3.18 2.95 2.94 3.17 5.29 4.14 5.24 7.89 8.06 9.77 9.77 6.43

- - - - - - - - - - - - - - - - 65.90 68.23 77.73 91.05 98.62 104.91 116.11 141.16

2472.2 2476.2 2464.8 2454.4 2464.3 2465.2 2466.2 2467.4 119% 115% 93% 121% 132% 133% 124% 124%

14.8 19.0 15.9 14.0 16.2 14.3 14.7 27.2 .94 1.19 1.00 .79 .85 .73 .77 1.33 - - - - - - - - - - - - - - - -

30749 32075 34545 36684 41253 41294 45881 60597 11217 6488 9539 13081 10539 17092 14484 8710 94219 105125 115648 132385 142881 152435 163239 132887 58.8% 64.9% 58.2% 58.0% 64.0% 64.2% 67.4% 71.4% 20.0% 18.6% 22.3% 19.8% 17.0% 18.2% 16.8% 15.7% 21.2% 16.5% 19.5% 22.2% 19.0% 17.6% 15.8% 12.9% 29.4% 29.8% 31.1% 31.1% 28.2% 30.1% 27.4% 28.0% 12967 10254 12916 19476 19880 24083 24095 15865

162934 168961 191588 224485 243027 258627 286359 348296 8.0% 6.1% 6.7% 8.7% 8.2% 9.3% 8.4% 4.6%

- - - - - - - - - - - - - - - -

2018 2019 2020 2021 © VALUE LINE PUB. LLC 23-25 23.29 25.06 26.15 28.70 Premiums Earned p sh 31.65 3.11 3.79 4.50 5.10 Invest. Inc (loss) p sh 7.35

56.40 61.60 58.00 60.00 Other Income p sh 65.30 3.70 3.18 4.85 5.20 Underwriting Income p sh 6.00

10.04 9.76 9.30 9.80 Earnings p sh AC 12.00 - - - - Nil Nil Div’ds Decl’d p sh Nil

141.42 174.35 175.50 181.65 Book Value p sh B 204.10 2465.7 2436.6 2450.0 2450.0 Common Shs. Outst’g C 2450.0 144% 120% Price to Book Value 120%

20.3 21.3 Bold figures are Value Line estimates

Avg Ann’l P/E Ratio 20.0 1.10 1.17 Relative P/E Ratio 1.10

- - - - Avg Ann’l Div’d Yield Nil

57418 61078 64095 70350 Premiums Earned 77500 7678 9240 11000 12500 Investment Income (loss) 18000

139068 150085 145000 148000 Other Income 160000 69.5% 72.8% 66.0% 66.0% Loss to Prem. Earned 65.0% 14.6% 14.5% 15.0% 15.0% Expense to Prem Written 14.0% 15.9% 12.7% 19.0% 19.0% Underwriting Margin 21.0% 8.0% 20.4% 20.0% 20.0% Income Tax Rate 20.0%

24760 23780 22785 24010 Net Profit ($mill) 29400 348703 424791 430000 445000 Shr. Equity ($mill) B 500000

7.1% 5.6% 5.5% 5.5% Return on Shr. Equity 6.0% - - - - Nil Nil All Div’ds to Net Prof Nil

Company’s Financial Strength A++ Stock’s Price Stability 100 Price Growth Persistence 90 Earnings Predictability 65

(A) Based on diluted shares outstanding. Earn- ings include investment gains/(losses) and derivative gains and losses prior to 2018. Next earnings report due late Oct.

(B) Incl. goodwill and other intang. In 6/30/20, $101.6 billion; $42.53/share.

(C) In mill. Split B shares 50-to-1 in January 2010. Each B share is now worth 1/1500 of an A share.

BUSINESS: Berkshire Hathaway Inc. is a holding company owning subsidiaries engaged in property and casualty insurance on a direct and reinsurance basis through GEICO, General Re and Berkshire Reinsurance. Other business activities include electric utilities, rail- roads, flight training services, candy manufacturing, ice cream, building products, newspapers, retailing, fine jewelry, etc. Also,

fractional ownership programs for general aviation (NetJets), ener- gy (Mid-American Energy). Has approximately 391,500 employees. Officers & directors control 19.9% of voting power (3/20 proxy). Chrmn. & CEO: Warren E. Buffett. Vice Chrmn.: Charles T. Munger. Inc.: DE. Addr.: 3555 Farnam Street, Omaha, Nebraska 68131. Tel.: 402-346-1400. Internet: www.berkshirehathaway.com.

Berkshire Hathaway’s underlying in- surance operations are holding up pretty well in a difficult economic en- vironment. Though earnings from opera- tions (excludes capital gains and losses from the investment portfolio) declined during the June period, they remained quite decent on an absolute basis. We at- tribute this to management’s stringent un- derwriting standards, along with the com- pany’s overall broad diversification. To wit, during the June quarter, the Insur- ance division reported an increase in un- derwriting and investment income results on a year-over-year basis. The Utilities and Energy segment also contributed with a positive showing compared to 2019’s levels. This helped to counteract a sharp decline in the Manufacturing, Service, and Retailing division, along with a moderate decrease in the Railroad segment. The de- clines in the latter two segments largely reflected the COVID-19 pandemic and the resulting shelter-in-place mandates. The share price has bounced back considerably since the time of our June writing. However, prices still re- main more than a stone’s throw below

their 2020 high of $231.60 a share. We look for the company’s earnings to decline in the third quarter of 2020 against a very tough comparison, while the outlook for the fourth quarter and all of 2021 is generally positive. Our cautious optimism, is based on the COVID-19 pandemic being largely in the rearview mirror by next year. Even if it is not, the company’s diver- sification ought to enable it to weather the storm better than most. We wouldn’t be surprised to see the industry behemoth reenter the acqui- sition game once COVID-19 is under control. Despite low interest rates, mergers and acquisitions have become less common in 2020 as companies preserve cash in the wake of the pandemic. Acquisi- tions have been an integral part of Berk- shire’s long-term growth strategy. These shares are in the good graces of our Timeliness Ranking System. This largely reflects the stock’s recent strong price momentum. Though appreciation potential pales in comparison to the Value Line median, acquisitions could add mean- ingfully to our long-term projections. Alan G. House September 4, 2020

LEGENDS 1.5 x Book value p sh

. . . . Relative Price Strength 50-for-1 split 1/10 Options: Yes Shaded area indicates recession

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