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Berkshire Hathaway's Warren Buffett says BRK is Cheap!!!

February 28, 2009 | About:

Today, the Berkshire Hathaway 2008 Annual report came out. According to the Annual Report, the current book-value of Berkshire is $70,530.00 (BRK closed at $78,600). I found the most interesting item in the annual report to be on page 93. I believe Buffett in his own way is telling everyone that Berkshire Hathaway is cheap!!!! You be the judge.

Starting with the last sentence in the third paragraph down from the top on page 93:

"Now, our book value far understates Berkshire's intrinsic value, a point true because many of the businesses we control are worth much more than their carrying value.

Inadequate though they are in telling the story, we give you Berkshire's book-value figures because they today serve as a rough, albeit significantly understated, tracking measure for Berkshire's intrinsic value. In other words, the percentage change in book value in any given year is likely to be reasonably close to that year's change in intrinsic value."

Well, I believe this is as close as Buffett is ever going to come to telling investors that his company's stock is cheap!!!! Berkshire Hathaway trading at a 10% premium to book-value suggests that Buffett sees its "intrinsic value" or true value as he says "far" higher than its current level for it is "significantly understated". I believe it there is one thing Buffett can do it is calculate the intrinsic value of companies and I would bet he is the best at calculating it for his own company.

What do the other Gurufocus All-Stars think?

By the way, Buffett put the emphasis on the word- far, not me. Look it up. The report is here: www.berkshirehathaway.com

Happy investing to all.


Rating: 4.9/5 (9 votes)


Gangstarr - 8 years ago    Report SPAM
Cheap for sure. Problem is long run the asset base is so large. Easy and safe double in my opinion. LUK may be a better long term option. Thoughts?
Max7777 premium member - 8 years ago
Great point crafool.

It seems from the annual letter that WEB believes the book-value of BRK does not reflect it's real intrinsic value, and since BRK is now trading at only 10% above book-value, the stock is now also not reflecting its real intrisic value and therefore should be a buy.
AlbertaSunwapta - 8 years ago    Report SPAM
Yes, Isn't that the case with many businesses right now. (I'd be wary though of business that built their book value through acquisitions or growth, that in hindsight was 'inflated', possibly leaving them with unrealistic book values.)

Warren Buffett once noted how many of the Dow stocks could be had for well below book value and intrinsic for many years on end.
AlbertaSunwapta - 8 years ago    Report SPAM
Sorry - I meant 'recent' acquisitions or 'recent' growth.

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