Munger's Berkshire Move: A Sign That the Stock is Dirt Cheap

Berkshire's No. 2 sells 2,000 shares. Why that's a good thing.

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In his latest email dispatch, hedge fund manager Whitney Tilson says Charlie Munger's sale Friday of 2,000 Berkshire Hathaway shares--or 13 percent of his stake in the company--is a major indicator that the stock is dirt cheap. Say what?

Munger sold Class A shares of Berkshire--which happens to be the country's most pricey stock--in exchange for a promissory note for $77,500 a share for family members. The stock closed at $90,000 on Friday (it closed Thursday at $77,500, and I got a few heated responses to this post as it was trading around $77,000.)

Says Tilson:

"In other words, he found the stock so cheap that he decided to pass the stock along this way--and pay taxes on the gains this year!--rather than through his will. It would be harder to find a stronger statement of how cheap he thinks the stock is--he must believe $77,500 is the lowest basis he will ever see again."

Here's Tilson's reasoning on why Berkshire is a steal, even at $84,000.