July 11, 2:54 PM
Warren Buffett's Berkshire Hathaway is a bargain at current prices, writes Andrew Bary (you need a subscription to Barrons to read the full article) in this week's edition of Barron's.
Bary has written several articles about Berkshire in the past few years. In late 2007, when the company's "A" shares were trading near $150,000, Bary penned a front-page cover story saying Berkshire was overpriced (Looks like he was right, at least in the short-term, but it's worth noting that Bary argued in that piece that AIG was a better bet -- oops).
Last year Bary wrote another cover story making the case that MidAmerican Energy Chairman David Sokol is the most-likely candidate to succeed Buffett.
Bary wrote a more bullish piece on Berkshire last year and another one in the July 13 edition arguing that the company is worth more than the roughly $85,000 price tag that the market is putting on its "A" shares. Bary notes that the company is trading at just 1.2 times his estimation of book value, well off the 1.65 average over the past 10 years.
Berkshire has been weighed down of late by weakness in insurance pricing, an investment portfolio that has fallen in value and investor concern about Buffett's advancing age. Yet Bary argues that Buffett has made nearly $22 billion worth of savvy investments in the past year -- including multi-billion-dollar stakes in General Electric, Goldman Sachs, Swiss Re, Dow Chemical and Wrigley. He writes that the performance of Berkshire's "top-flight" operating businesses and investment portfolio should improve as the economy recovers.
Bary concludes by arguing that "the company looks stronger than ever" and that Buffett "continues to demonstrate his incomparable investment skills."
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