Berkshire Hathaway's Stock: A $77,000 Steal

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there was never a public announcement about a share buyback .He mentioned in his annual report that if you were concerned about the price at 40 or so thousand , you should call him and he would be more than happy at that price to take you out , but no corporate buyback was ever put in place.Warren has publicly stated that he has never done a stock buyback in the past as he did not believe in taking his fellow partner shareholders out of an asset he felt was worth more. this year was the first time he has stated that corporate boards should not rule out stock buybacks as a course of business if they believe their stock price to be significantly undervalued. i would venture to say that if you tried to build the various businesses that berkshire holds, it was cost substantially more than the stock price , hence the intrinsic value over a long period of earnings is substantially higher.

brad michelson of IL 8:06AM January 31, 2009

I fully agree with you that BRK.A was a steal at below $80,000. My own intrinsic value estimation is similar to that of Tilson. The price to book value ratio going back to 1983 showed that there were two prior periods where the P/B ration was below 1.1, in 1983 and again in 2000. At $78,000, P/B ratio is about 1.1 based on the third quarter reported numbers, taking into account the decline in the market value of the equity portfolio and "loss" of derivative mark-to-market value, as provided in that report. Such extremee undervaluations for BRK have been rare and short-lived. Basically, it priced the company at less than the sum of its shareholder equity + float, ignoring the future earning power of the excellent operating companies such as GEICO, MidAmerican, Clayton Homes, or Shaw. I congratulate those who were able to become shareholders at those prices and hope those selling the stock at such prices were hedge fund speculators.
I like how you think about BRK and would like to be on your email list, if you have one.

Andrew Hwang of NV 10:34AM November 26, 2008

Let say Bershire company are organizing Gold Unlimited Inc. to undertake a high-risk gold-mining venture in Canada. The company tentatively plan to request authorization for 75,000,000 shares of common stock to be sold to the general public. And they decided to establish par of $1 per share in order to appeal to a wide variety of potential investors. Berkshire feel that investors would be more willing to invest in the company if they received a large quantity of shares for what might appear to be a "bargain" price.
Would this be acceptable,

Maria Hernandez of TN 1:01PM November 21, 2008

Right on, in 2000 he didn't have anything cheap to invest in except himself. That isn't the case now. I missed the boat back then, I didn't repeat that mistake this time. He is also getting better deals than you or I could get on what he buys on the cheap. So not only does it not make sense to try and out invest him now, you are also fighting an uphill battle. He is like Mr. Potter in It's a Wonderful Life only he seems to be a much nicer guy.

A.J. of NY 11:55AM November 21, 2008

if you knew better, youd do better GE ARMSTRONG

ginggary @ gmail.com of WI 10:42PM November 20, 2008

I agree with Dan ( a fellow New Yorker!). Buffet has significant exposure to the financial markets & insurance companies, and so the comparison to 2000 is NOT valid. Having said that, considering the sweet deals he could get with GS & GE (preferred shares with significant dividend), would make one think that investing in BRK.A or .B would be worthwhile, if you have loads of cash lying around.
With the way things are going currently though, I would suggest a wait & watch for the short term, and then jumping into the market...
As regards the valuation in the accompanying article, it bases it on projected earnings, and we all know that is a BIG guesstimate, likely to be substantially off, hence throwing off the conventional calculation of 'value'...

Harmeet Singh of NY 6:13PM November 20, 2008

Yes, its kind of a bad article for not providing reasons its a steal.
Yes, it is a good deal. The Oracle of Omaha has taken a hit due to his stakes in things like American Express and in the derivatives market. I would have predicted a decline but I think this is emotionally fueled and under $100k its a good value.

Dude Ranchero of WI 3:09PM November 20, 2008

Good for you Larry. You know what I noticed? Many journalists in the finacial industry are now throwing the word Buffet(meaning even the food terminology) or anything related to Warren or Berkshire Hathaway because they know people browsing the internet will at least click on it which must look good to the bosses. Nothing of value was stated here but it got people like us to look at it. Meanwhile, Katy is telling her bosses, I can't believe my article is getting so many hits? Am I really that good? Maybe I should buy too??
Mr Simpson? Do you have any proof about the share repurchase? I believe Buffet(Warren) was just quoted as saying that that was the first time he was considering buying shares in the open market because they were so cheap.

Johnny Rocket 2:41PM November 20, 2008

Any one who is reasonable--should not let
this stock go. -you are missing the boat.One should be buying. ------

clinton warner of GA 2:06PM November 20, 2008

Larry is even more clueless than the author of the article- he has no idea how to correctly value Berkshire, and is trying to argue with the master of Value Investing, Warren Buffett. Larry - enjoy your miserable life of poverty in that Mexican state of Arizona.

Joe of OH 1:51PM November 20, 2008