BRK-A
Berkshire Hathaway Inc.
$733,610.00
Banks, Insurers & Asset Managers
85%
P/Tangible Book × ROE Quality
Moderate
·
Conviction
Undervalued
Trading 27.5% below fair value
You pay
$733,610.00
Bear
$708,692.60
Fair
$1,012,418.00
Bull
$1,316,143.40
Bear
$708,692.60
-3.4%
ROTCE 8.4% → 1.19x TBV
Fair
$1,012,418.00
+38.0%
ROTCE 11.2% → 1.94x TBV
Bull
$1,316,143.40
+79.4%
ROTCE 12.8% → 2.40x TBV
Key Value Driver
ROTCE (11.2%) vs. cost of equity (7.7%)
Implied Market Multiple
1.76x
Summary
With ROTCE of 11.2% vs. 7.7% cost of equity, fair P/TBV is 1.94x on $416843.16 tangible book, implying $1012418.00 per share.
Warnings
Traditional cash flow models don't work well for banks — lending activity distorts how much cash the business actually generates.
Common valuation shortcuts don't apply here — for banks, interest payments are a core business cost, not overhead.
Key Risks
- Book value quality matters as much as level — check loan loss reserves
- Interest rate sensitivity creates non-linear earnings surprises
- Insurance reserving is actuarial, not financial — errors emerge slowly