Warren Buffett has made a lot of money buying stocks of companies that the market masses have undervalued. Is his own holding company Berkshire Hathaway now a value play itself?
One well-known money manager who subscribes to the "Buffett Way" says yes. Whitney Tilson tells TheStreet.com's Gregg Greenberg that he "conservatively" sees Berkshire's fair value at around $150,000 a share. That's almost 33% above Berkshire's closing price today (August 8) of $112,995. (Current price: )
Tilson is the manager of the "value-oriented" Tilson Focus mutual fund. Berkshire shares made up about 13% of the fund's holdings as of the end of April, according to its latest semi-annual report. So far this year, it's trailing the S&P 500 with a decline of 4.4%.
Despite Berkshire's own failure to keep up with the S&P so far this year, Tilson is optimistic about the future, noting that "Berkshire's intrinsic value has grown at least 10% in the first seven months of 2007." Another positive for Tilson: Berkshire is buying equities at an increasing rate in recent months. (Just today we learned of Buffett's increased stake in Burlington Northern.)
Tilson argues that even though Berkshire's portfolio was hurt in the second quarter by its exposure to the nation's weakening housing market, it's "so large and diversified that the other business more than offset the losses."
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