The assets at Warren Buffett's Berkshire-Hathaway (BRK.B) include vast holdings of cash, stocks and bonds as well as 74 operating companies, some of which in turn have many subsidiaries, explains Shawn Allen, contributing editor to Internet Wealth Builder.

But Buffett advises focusing on the forest rather than these individual "trees," which he says range in size from "twigs to redwoods".

In order not to get lost in "mind-numbing" details, Buffett suggests that the Berkshire forest be thought of as consisting of five major "groves". These are:

1) Its non-insurance operating companies (railroad, utilities, and manufacturing, service & retailing)
2) Equity investments
3) Shared-control businesses — most notably Kraft-Heinz (KHC)
3) Cash and treasury bills
5) Insurance operations where a primary goal is to fund much of the other four with low- or cost-free funds.

The shares were up 3% in 2018 to $204.18 and are little changed in 2019 to date. The shares hit a 52-week high of $224.07 in October before pulling back with the December market declines.

Recent earnings: In 2018, operating earnings soared 71%. This was boosted substantially by Trump's reduction in the federal corporate income tax rate from 35% to 21%.

Pre-tax earnings in its non-insurance operating businesses were up 24% and its insurance operations returned to an underwriting profit from the rare loss that occurred in 2017.

GAAP earnings, however, were down 91% due to a huge income tax gain in 2017 and due to market value losses on investments in 2018 as well as a partial write-down on its Kraft-Heinz investment.

While the highly volatile GAAP earnings figures make for scary headlines, they are basically meaningless in evaluating Berkshire's underlying earnings and value.

The price to book value ratio seems reasonable at 1.43. For Berkshire's normalized adjusted earnings, I assume it will earn 10% of book value on the basis that book value per share has grown at an average of almost 12% in the past ten years after reflecting investment gains.

On this basis, the adjusted p/e is reasonably attractive at 14.3. However, the trailing p/e based on operating earnings (which excludes any gains or losses on investments) is not attractive, although lower than typical, at 20.1.

It seems likely that Berkshire will continue to grow its intrinsic value and earnings at an acceptable rate in the future. However, this would likely be in the range of perhaps 10% per year and not the huge growth of bygone years.

In conclusion, I believe Berkshire is trading at a sensible price given Buffett's recent comments on its valuation as well as his share buy backs and based on my analysis in the value ratios section above.

Ultimately, to buy Berkshire is to place trust in Buffett and to trust that he has built the company to thrive after he is no longer CEO. Building Berkshire to thrive for the long term has been Buffett's life work. I rate the stock a buy.

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