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Buffett's Berkshire Feels the Bear's Bite
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Wall Street's generally accepted definition of a 'bear market' involves a 20 percent drop from a recent high.
Yesterday, Berkshire shares dipped into bear territory on an intraday basis, before recovering to close at $120,100 .. a 19.5 percent drop from its all-time closing high of $149,200, set on December 10.
That's the lowest close for Berkshire since October 4.
Current Berkshire price: [US;BRK.A
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Bloomberg points out that Berkshire shares fell 14.7 percent during the first six months of the year, its worst first half in 18 years. It blames lower revenues for Berkshire's insurance companies and weakness for several stocks in Buffett's stock portfolio, including Wells Fargo [WFC
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], American Express [AXP
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], and U.S. Bancorp [USB
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]. (The stock market's overall weakness during the first half of the year hasn't helped either.)
Buffett himself has said he doesn't get upset when a stock he's buying goes down in price, just as he doesn't get upset when he buys a hamburger one day and it's cheaper the next. Just an opportunity to pick up a bargain.
So, is Berkshire a bargain?
Bloomberg quotes Charles Hamilton of FTN Midwest Securities as saying it is "close to getting more fairly priced. I wouldn't say it presents a buying opportunity right now."
Frank Betz at Carret Zane Capital Management disagrees. "I'd put a new client in Berkshire right biw. It's probably the highest-quality collection of individual companies that's ever been assembled. Long slides are not in the Berkshire Hathaway lexicon."
And faithful Buffett bull Whitney Tilson sees Berkshire's "intrinsic value" around $157,000 a share .. and he argues that the shares reached that intrinsic value in 11 of the past 12 years. "I sleep well. It's not going to double overnight, but we we think it will in five years ... It's the stock you want to own," he tells Bloomberg. Especially if Buffett uses the current market weakness to find some solid bargains of his own.
See Warren Buffett Watch on CNBC's The Call, most weekday mornings at 11:50a ET
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Data is a real-time snapshot *Data is delayed at least 15 minutes
