Tags: Brush | Berkshire | Buffett | book

MarketWatch's Brush: The Case for Buying Berkshire Hathaway Shares

By    |   Friday, 01 May 2015 10:59 AM

With mixed messages coursing through the stock market as the S&P 500 index hovers less than 2 percent below its record high, you could do a lot worse than snapping up some of Warren Buffett's Berkshire Hathaway.

"Class B shares of Berkshire Hathaway look downright cheap following a four-month retreat, at a time when it's hard to find any stock bargains," writes MarketWatch columnist Michael Brush. "And the shares offer an attractive risk-reward balance in a market that looks precarious."

Berkshire B shares have dropped 5.3 percent so far this year, compared with a 2 percent increase for the S&P 500. The stock traded at $142 Friday morning. Brush sees support at $140.

"Berkshire's shares trade for about 1.45 times book value. Buffett says he would be a buyer of the stock, with company money, if it were to trade below 1.2 times book," he writes

Stephen Shueh, a value manager at Roundview Capital in Princeton, N.J., tells Brush that the stock will probably trade in a range of 1.3 to 1.9 times book value. That's because " buyers will step in as the stock approaches Buffett’s 1.2-times-book limit and probably lighten up as it approaches the two times book cautionary zone," Brush notes.

"That implies 10 percent potential downside from here, and 30 percent upside. Not a bad skew," he adds.

"So pick up some Berkshire shares now, as long as you have the minimum five-year time horizon that Buffett prescribes," Brush writes.

Meanwhile, though Buffett occupies a place front and center in the public's consciousness now, that will eventually change, says Motley Fool writer John Maxfield.

"How will historians write about Warren Buffett 100 years from now? Will they treat him like the magnificent Commodore Cornelius Vanderbilt? Or will the 84-year-old multibillionaire play a more muted role in history books, akin to the venerated Gilded Age stock operator Henry Clews?" Maxfield asks.

"I believe it will be the latter."

Maxfield doesn't deny Buffett his due. "It would be silly to argue that Buffett isn't one of the most accomplished Americans alive today," he acknowledges.

"But unlike the great business moguls of America's past, Buffett didn't invent a product or process that will live on in perpetuity," Maxfield explains. Vanderbilt produced steamship lines.

And what of Buffett?

"His innovation consisted of using insurance float to fund a corporate conglomerate," Maxfield says. "Buffett's innovative use of float is difficult for the average person to grasp."

© 2019 Newsmax Finance. All rights reserved.

   
1Like our page
2Share
StreetTalk
With mixed messages coursing through the stock market as the S&P 500 index hovers less than 2 percent below its record high, you could do a lot worse than snapping up some of Warren Buffett's Berkshire Hathaway.
Brush, Berkshire, Buffett, book
407
2015-59-01
Friday, 01 May 2015 10:59 AM
Newsmax Media, Inc.
 

Newsmax, Moneynews, Newsmax Health, and Independent. American. are registered trademarks of Newsmax Media, Inc. Newsmax TV, and Newsmax World are trademarks of Newsmax Media, Inc.

NEWSMAX.COM
MONEYNEWS.COM
© Newsmax Media, Inc.
All Rights Reserved