Thread: PG holding cost basis and unrealized loss?

As of Sep 30, 2009, BRK's PG holding has a cost basis of 5,484 m and a net unrealized loss of $159 m. This is surprising considering the bulk of PG holding, is for the Gillette shares. In 1989, Buffett paid $600m for Gillette cumulative preferred shares which converted to 93.6 m PG shares, In Jan 2005, Buffett bought another 6.4 m shares in PG to boost BRK holding to 100m shares. PG was then trading around $52-$55, so thecost basis of...

>Has this something to do with the accounting treatment of the PG acquisition of G?< Yes.. When PG acquired Gillette, Berkshire's unrealized gain on Gillette moved to retained earnings. Appliable taxes remained so there was no change in book value.

<<Why does the BRK report show a cost basis of $5,484m.? Has this something to do with the accounting treatment of the PG acquisition of G?>> Yes. My understanding is that when PG bought G, BRK had to mark up its basis in the G position to the then market value of the PG shares.

OK, that's interesting, I remember a discussion last year when we were saying that the cost basis of Berkshire's public equity holdings was actually MORE than their current value, after the steep market downturn, meaning Berkshire had no gain on its then current holdings. That would not have been true, based on this accounting treatment of the PG shares. I don't think there is any other equity holding, at least no major one,...