Berkshire Hathaway Inc. is poised to report a huge increase in the yardstick that Warren Buffett uses to measure progress at his conglomerate, thanks to the recent changes in U.S. tax law.
Book value, a measure of assets minus liabilities, probably rose by 12 percent or $37 billion in the final three months of the year, analysts from Barclays Plc wrote in a note to clients on Monday. The one-time increase will result from Berkshire lowering its tax liability on appreciated investments.
Due to the tax cut, Berkshire’s operating earnings power — the money it makes at its dozens of subsidiaries like Geico and BNSF Railway — could rise by 12 percent on an ongoing basis, the Barclays analysts wrote. Last week, Morgan Stanley analysts put the increase at about 14 percent.
Berkshire has long been seen as a major beneficiary of a lower U.S. corporate tax rate, helping to drive the company’s Class A shares up 22 percent last year. They closed above $300,000 for the first time on Jan. 4.
The company is expected to report earnings at the end of next month.
