Off Year for Berkshire Doesn't Cow Buffett Buff

One renowned value investor not cowed by Buffett's recent relative underperformance is Whitney Tilson, portfolio manager of the $23 million (TILFX Quote)Tilson Focus fund. The fund, which is down 3.5% year to date, has 15% of its assets in Berkshire stock.

"According to our conservative estimates, Berkshire's intrinsic value has grown at least 10% in the first seven months of 2007," says Tilson in an Aug. 7 interview on TheStreet.com TV. "So if the stock stays flat, that's an even greater margin of safety for shareholders. Or, in other words, it's more upside with less risk."

Tilson, who is rumored to be one of the candidates to replace Buffett upon his retirement, conservatively places fair value for Berkshire around $150,000 a share. Moreover, for those desiring proof that Buffett is doing something more than trading on his reputation, Tilson urges them to look at how much money he is throwing around this year.

"He's putting cash to work at a rate of more than $1 billion a month, but he is buying stock instead of companies," says Tilson. "He spent $5.1 billion in the first quarter, with approximately $3 billion going to railroad shares like Burlington Northern Santa Fe(BNI Quote). And in the second quarter, he spent $6 billion in equities, so the rate which they are deploying capital is increasing."

In a Securities and Exchange Commission filing on Tuesday, Berkshire upped its stake in Burlington to 11.5%, or 40.6 million shares. Berkshire purchased the shares at different prices between Aug. 3 and 7. Where that $6 billion in second-quarter equity investments was spent will be revealed in the next few weeks.