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Buffett Watch: Kass Buys Berkshire

My current estimate of Berkshire's investment portfolio value is now in the neighborhood of about $73,000 a share, so I am paying less than 3.5 times after-tax operating earnings for the non-investment assets of Berkshire Hathaway.

If we triangulate Buffett's own view of intrinsic value of Berkshire (in the letters to shareholders in the 1990s), the intrinsic value of today stands at about $115,000 a share , or nearly 30% higher than its share price. And, as I expect the world's stock markets to advance smartly from current levels (and for financial stocks like Wells Fargo to lead the way), the value of the company's investment portfolio and its intrinsic value will likely be much higher by midyear. (This morning's $3 premarket rise in Wells Fargo's shares equates to more than a $1 billion increase in value in Berkshire's investment portfolio.)

Moody's move yesterday was classic in it's timing; the horse has already left the barn.

Doug Kass writes daily for RealMoney Silver, a premium bundle service from TheStreet.com. For a free trial to RealMoney Silver and exclusive access to Mr. Kass's daily trading diary, please click here.


Know What You Own: Some of Berkshire Hathaway's largest holdings include Wesco Financial (WSC), Burlington Northern Santa Fe (BNI), Washington Post (WPO) and USG Corporation (USG). For more on the value of knowing what you own, visit TheStreet.com's Investing A-to-Z section.

Stock quotes in this article: BRK.A 
At the time of publication, Kass and/or his funds were long Berkshire Hathaway, although holdings can change at any time.

Doug Kass is founder and president of Seabreeze Partners Management, Inc., and the general partner and investment manager of Seabreeze Partners Short LP and Seabreeze Partners Long/Short LP.

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