Look-through Earnings
Buffett's view of Look-through Earnings from the "Owner's Manual" in the Berkshire's Annual Report. (Emphasis added)
"Accounting consequences do not influence our operating or capital-allocation decisions. When acquisition costs are similar, we much prefer to purchase $2 of earnings that is not reportable by us under standard accounting principles than to purchase $1 of earnings that is reportable. This is precisely the choice that often faces us since entire businesses (whose earnings will be fully reportable) frequently sell for double the pro-rata price of small portions (whose earnings will be largely unreportable). In aggregate and over time, we expect the unreported earnings to be fully reflected in our intrinsic business value through capital gains.
We have found over time that the undistributed earnings of our investees, in aggregate, have been fully as beneficial to
Berkshire as if they had been distributed to us (and therefore had been included in the earnings we officially report). This
pleasant result has occurred because most of our investees are engaged in truly outstanding businesses that can often employ
incremental capital to great advantage, either by putting it to work in their businesses or by repurchasing their shares.
Obviously, every capital decision that our investees have made has not benefitted us as shareholders, but overall we have
garnered far more than a dollar of value for each dollar they have retained. We consequently regard look-through earnings as
realistically portraying our yearly gain from operations"
In 1997 look-through earnings were $743 million, but in that year they would have represented 38% of the total of earnings from operations. The total remained flat from 1997 to 2003 as Buffet was selling on balance, but recently has been increasing rapidly as Buffett has been adding to his equity position.
In the tables attached shares held is the number of shares held by Berkshire as reported on form 13F for the period Indicated. This means that there some positions missing. Foreign securities not traded in this country are not registered with SEC and so will not appear of the 13F. Where a position in a foreign security has been revealed we will it include it in our list. This is, of course, based on the assumption that the stock has not been sold which could be incorrect. There is current several billion in equities that are not listed on the 13F so the figures listed below are most likely less that the actual figures.
Undistributed (look-through) earnings equal reported earnings for the year minus any dividends that were actually paid. This is because dividend income received by Berkshire Hathaway during the year is reported as investment income. For a detailed list of investees, distributed; and undistributed earnings for the last seven years, click on the year in the table below
These Tables for look-through earnings, dividend income, and earnings yield are based on estimated shares held on December 31. Because positions are bought and sold on many different days, and because purchases and sale dates are not announced the figures listed for dividends and undistributed earnings are estimates.
Look-through Earnings
(Click on Year to see PDF list)
| Year | Total Undistributed Investee Earnings | Undistributed Earnings Per "A" Share |
| 1997 | $743,000,000 | $517 |
| 1999 | $707,000,000 | $400 |
| 2000 | $740,000,000 | $417 |
| 2002 | $929,411,330 | $606 |
| 2003 | $868,090,499 | $565 |
| 2004 | $1,061,080,987 | $690 |
| 2005 | $1,415,294,000 | $918 |
| 2006 | $1,884,423,456 | $1,222 |
| 2007 | $2,603,217,000 | $1,507 |
| 2008 | ($17,352,000) | ($11.21) |
| 2009 | $1,953,788,000 | $1,127 |
| 2010 | $2,767,568,051 | $1,679.35 |
Below is a look-through PE table. It shoes Berkshires after tax operating earnings plus look-through earnings for investees.
I found in the Chairman’s Letters Buffett’s figure for 1997, 1999 and 2000 look-through so I added those to my figures, together with a figure for 3-1-00 when Buffett made his offer to buy at $45,000. The Table indicates that Berkshire is a good deal cheaper now than it was when Buffett made his bid (although this method probably exaggerates the extent of this undervaluation. At the same time the stock probably deserves to be cheaper today because of it much larger size, and the fact that it keeps getting harder and harder to move the needle.
As far buying back stock I think that it is possible that Buffett is saving that bullet for the envelope in his desk. His gift to a successor, in the form of a quick opportunity to look like a hero.
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| Year | Look-through | Per Share | Per Share | Per Share + | Price 12/31 | PE |
| Earnings | Earnings | Investment | Look-through | |||
| Gains | Minus Gains | |||||
| 1997 | $517 | $1,542 | $570 | $1,489 | $46,000 | 30.9 |
| 1999 | $608 | $1,025 | $583 | $1,050 | $52,300 | 49.8 |
| 3/1/2000 | $1,050 | $45,000 | 42.9 | |||
| 2000 | $636 | $2,185 | $1,571 | $1,250 | $71,000 | 56.8 |
| 2002 | $606 | $2,795 | $369 | $3,032 | $72,750 | 24.0 |
| 2003 | $565 | $5,309 | $1,777 | $4,097 | $84,250 | 20.6 |
| 2004 | $690 | $4,753 | $1,469 | $3,974 | $87,900 | 22.1 |
| 2005 | $918 | $5,538 | $2,293 | $4,163 | $88,620 | 21.3 |
| 2006 | $1,222 | $7,144 | $1,108 | $7,258 | $109,900 | 15.1 |
| 2007 | $1,507 | $8,548 | $2,315 | $7,740 | $141,600 | 18.3 |
| 2008 | $11 | $3,224 | $2,999 | $6,212 | $96,600 | 15.6 |
| 2009 | $1,127 | $5,193 | $313 | $6,007 | $99,200 | 16.5 |
| 2010 | $1,679 | $7,928 | $1,146 | $8,461 | $119,500 | 14.1 |
| 6/15/2011 | $8,461 | $110,700 | 13.1 | |||
Dividend Income
(Click on Year to see Details)
| Year | Total Dividend Income |
$480,491,899 |
|
$877,803,748 |
|
$1,235,575,957 |
|
$1,672,989,000 |
|
$1,837,754,000 |
Investee Earnings Yield