Having said this, for many years we have held Berkshire Hathaway in our Capital Builder style of management because we have found that BRK's price is highly correlated to changes in its book value and interest rates. Periodically, we update our valuation model on BRK using a multiple regression of its book value and interest rates relative to its stock price. Below is a chart of our valuation model going back 15 years. You will see that the fit is very tight and, based on the just-released data, BRK class A is selling just about at fair value of $109,500.
Using our internal estimates of the growth of BRK's book value and the changes in 10-year Treasury bond rates, we arrive at a year-end value for BRK class A of $119,800.
We think that is as good a guess as we can make, and in light of the slowing economy, we still believe BRK class A is a good hold for the year ahead.
BRK class B is 1/30 of class A, therefore its current projected year-end value is near $4,000 per share.
