Pershing Square Activist Presentation Deck
Berkshire Hathaway ("BRK")
HATHAWAY
BERKSHIRE Warren Buffett's iconic holding company has significant excess
cash and is trading at a cheap valuation
Collection of world-class insurance businesses
✓ Robust growth in insurance "float" balance over the past decade
✓ Attractive long-term returns on invested float balances
Consistently profitable insurance underwriting (i.e. negative cost of float)
Potential for margin expansion in Berkshire's largest businesses
► GEICO's loss ratio is >800 basis points higher and its underwriting profit margin
-400 basis points lower than its closest competitor
► Despite scale advantages, Burlington Northern's operating profit margin trails
best-in-class peer by nearly 800 basis points
Excess cash (~20% of market cap) provides financial optionality
Likely to be deployed in share repurchases and/or attractive business acquisitions
Cheap relative to intrinsic value and history
Trading at 14x earnings¹, or 1.3x book value per share
(1) Based on economic earnings assuming a "normalized" 7% rate of return on BRK's insurance investment portfolio.
Source: Company filings
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