Financial Tables
The data in these tables is taken from our collection of Berkshire Hathaway's annual reports which dates back to 1989. The data comes from the Balance Sheets, Cash Flow Statements, and from the Tables in the Business Segments.
1 Equity Purchases and Sales
This Table compares Berkshire's purchases and sales of equity securities and shows the annual balance of purchases or sales. These figures are taken from the Cash Flow Statements. It also lists realized capital gains for each year covered. What is interesting about this table is what it shows us about Buffett's buying and selling patterns. From 1995 through 2004 Buffett was consistently selling equities on balance. From 2005 to present Buffett has been buying heavily on balance. While this does not demonstrate great skill in market timing, it probably has something important to say about the relative value of large cap American Equities
In 2008 Buffett cut way back on Equity Purchases and switched to preferred stocks with and equity kickers where he was able to get very high yields that are almost tax free because dividends are taxed at a 7% when paid to a corporation. Berkshire has also increased its purchases of corporate debt as the credit crisis raised interest rates to levels where they offered a better return that could be expected from high quality equities.
2. Earnings from Operations and Capital Gains
This Table compares after tax income from operations each year, adds after-tax realized capital gains and shows that while Buffett says that that realized gains have no predictive value as to future earnings, they are never-the-less important to Berkshire as a source of cash which can be used for investments. For the twenty-two years covered by this table after-tax gains on equity investments have totaled $22.9 billion or 29% of Bershire's total after tax earnings. They have generated enough cash to pay for 62% of Berkshire's acquisitions or all of the company's net equity purchases with a few billion left over..
This table is a 22 year history of pre-tax earnings for Berkshire' operating businesses With Underwriting Gain and Investment Income listed for the Insurance Business, and compared to the pre-tax Income of Berkshire's other operating businesses.
This is an attempt to estimate an intrinsic growth rate for Berkshire by looking at the individual pieces. Total pre-tax operating income has grown by 13.4% annually for the last five years, and 21.6% annually for the last 10 years. We cannot expect the company to match this 21% growth rate in the future because a lot of past growth has come through acquisitions. Berkshire’s size means that it will be difficult to add businesses that are big enough to move the needle that far. However, the five year figure of 13% may not be out of reach since the last two years have included the longest recession since the 1930’s and an economic recovery will add to earnings growth at the subsidiaries.
It is interesting to note that there has been an underwriting profit of $10 billion in the last three years which means that the $58 billion in float is not only free, but that Berkshire is being paid very well to hold it. From this free float in the last three years Berkshire has earned $13.8 billion in investment income and $7.5 billion realized gains from its investments. Buffett has got his business plan working quite nicely.
This is a list of companies that Berkshire has purchased since 1986. The total cash spent on purchases of in the last 22 years is $36.9 billion.
This $1.3 billion together with the $6.1 billion in Cap Ex spending in 2008 would lead us to the conclusion that internal growth will become more important for Berkshire in the future
There is nothing much new here. If there was a disappointment for me in 2008 it was that Buffett was not able to bag any new wholly owned operating companies. The most interesting thing for 2008 from this table is the $1.3 billion in Bolt-on acquisitions. This is quite a large number for bolt-ons, and is to some extent a change in philosophy because Berkshire is not necessarily leaving the old company intact but is merging the acquisition into an existing subsidiary. We do not get any detailed information on these purchases, but I would assume that a lot of it is going on at ISCAR.
There is more to Berkshire Hathaway than after tax Earnings. For the purpose of this table cash flow is defined as after-tax earnings plus the increase in float.
6. Capital Expenditures of Operating Businesses
This table lists the Capital Expenditures of Berkshire's operating businesses, and shows these expenses as a percentage of pre-tax income. It is interesting that Berkshire has spent more money on this internal expansion in the last two years ($6.76 billion) than it did in the previous 18 years ($6.23 billion). The $4.6 billion spent last year is more than Berkshire has spent on acquisitions in any year except 2006.
This table is an attemp to track Berkshires total spending on Investments. It is interesting that in the last four years Berkshire has invested $68 billion. This out the total of $97.6 billion invested in 22 years. Capital spending is up sharply. To $6.1 Billion from 1.2 Billion five years ago. It is likely that most of this is spending for Mid-America and ISCAR. Also Berkshire spent $1.2 billion in 2008 for bolt on acquisiyions for its existing subsideraries, this is a huge increase over the total in any prevoius year
8. Two Column Valuation Method
This table calculates Berkshire's Intrinsic value by using the "Two Column" approach as mentioned by Buffett in the 1999 Annual Report