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

November 20, 2008 RSS Feed Print

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Got $75,000 lying around? Shares of Warren Buffett's Berkshire Hathaway are currently trading in that range. You might ask, "How is that a deal?"

By late morning today, the stock was trading around $77,000, down 8 percent from yesterday's close of $84,000. Wednesday, it fell $11,550, or more than 12 percent--its biggest one-day percentage drop since 1987's Black Monday. And get this: Since the stock's all-time closing high of $149,200 on December 10, 2007, Berkshire's shares are down roughly 50 percent.

For the thrifty, Berkshire's B shares are currently trading around $2,500. They're down about 8 percent so far today, and 45 percent from $4,550 a year ago.

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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

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

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