Robinhood is not going to support fractional shares for Berkshire Hathaway Class A (BRK.A) on April 3, 2025.
My position was very tiny, and my original intent of buying Class A shares on 2023/12/22 was to hope that one day I could accumulate enough to own one large share of Berkshire Hathaway Class A by accumulating one tiny piece at a time. Now that cannot happen, so I decided to just dispose of it.
This will be a tax hit to me given the shares went up 45%. While I could simply use the sales proceeds to buy Class B shares, I decided to use this opportunity to add into a position that is more attractively priced today, Patria (PAX).
From the share price perspective, unlike Berkshire Hathaway shares, PAX went down 18% since 2023/12/22 even adjusted for dividends.
From the fundamental perspective, my buy below price calculated on 2024/12/14 was $16.18 for PAX, so the current share price of $11.85 is 27% discount to the buy below price, very attractive.
On the other hand, Whitney Tilson, a Berkshire Hathaway bull, estimated the intrinsic value of Berkshire Hathaway was $742,000 per A-share on March 3, 2025 (source):
I believe it's similar to the one CEO Warren Buffett uses: Take the cash and investments per share and add the value of the operating businesses.
At the end of the fourth quarter, cash and investments were about $454,000 per A-share. Since then, Berkshire's stock portfolio has increased by about $2,000 per share, so that's about $456,000 today.
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Berkshire's 2024 pretax operating earnings were about $26,000 per share. (I adjust for volatile insurance and investment income by subtracting it and then adding back half of the average over the past two years, which is $11.7 billion of pretax earnings. I think this is conservative, given that Berkshire's total insurance and investment income has averaged $9.7 billion annually over the past 10 years, and the company is much larger now.)"
I apply a conservative below-market multiple of 11 times to Berkshire's pretax operating EPS of about $26,000, to arrive at a value of around $286,000 per share.
Thus, my estimate of Berkshire's intrinsic value is about $456,000 (cash and investments) plus roughly $286,000 (operating businesses), for a total of around $742,000 per A-share, or $495 per B-share.
BRK class A traded at $792,880 today, so a 6.8% premium on Whitney's estimated intrinsic value.
PAX has a higher growth perspective (12+%) in earnings, higher dividend yield (5% compared to 0%), and lower P/E ratio. It is also a capital light business, unlike Berkshire Hathaway. The only edge that Berkshire has is its superb safety provided by its diversified revenue streams. With the much higher expected return from PAX, I believe the risk-reward ratio of trading BRK for PAX is very favorable.
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