Berkshire Hathaway Inc. Annual General Meeting
Warren Buffett, chairman and chief executive officer of Berkshire Hathaway, laughs while playing cards at the Berkshire Hathaway annual shareholders meeting in Omaha, Nebraska on May 1, 2016.  Daniel Acker/Bloomberg via Getty Images

Donald Trump’s Tax Plan Could Boost Warren Buffett’s Company by $29 Billion

Dec 05, 2016

Berkshire Hathaway's CEO Warren Buffett already has President-elect Donald Trump to thank for both his bump to second-richest man in the world and the increase in his company's stock by 8.4%.

Now, the company headed by the vocal Hillary Clinton supporter could get a $29 billion boost to its book value as a result of the president-elect's plan to lower corporate taxes from an estimated 35% to around 15%, a team of Barclays analysts wrote in a Monday note.

"We would view this magnitude of increase as favorable for Berkshire Hathaway shares since it is generally valued based on price-to-book value," the team led by Jay Gelb wrote.

By the end of 2015, Berkshire recorded a deferred tax liability of $63 billion. Gelb's analysis covered about $50.5 billion of that that total, discounting the liabilities associated with Berkshire's regulated utility units, where the tax cuts are expected to benefit the utility customers rather than Berkshire Hathaway.

Even if Trump's administration managed to lower taxes by just 10 percentage points to 25%, Berkshire would still clock an increase in its book value by $14.4 billion.

Investors have already deemed Trump presidency as a business friendly one that is likely to benefit financial stocks—including one of Berkshire's major holdings, Wells Fargo. Shares of Berkshire have risen 8.4% since the real estate mogul won the elections.

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