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Berkshire Is Undervalued, Says JPMorgan

Daniel Liberto

Berkshire Hathaway Inc.'s ( BRK.B) Class B shares are cheap if you apply the same metrics that its CEO Warren Buffett does to value companies, according to JPMorgan. In a research note, reported on by CNBC, analyst Sarah DeWitt said Berkshire, a company that investors have historically struggled to value properly because of its many moving parts, suddenly appears to be attractively priced when factoring in all the profits made by the stocks held in its $200 billion equity portfolio into its earnings. “Look-through earnings” take into account current period earnings that show up in financial statements, together with other sources of earnings expected in the long run. This method is used by Buffett as a way to appreciate that companies sometimes retain earnings after paying dividends and later invest them at a higher rate of return.