Tags: buffett | berkshire | buy

Buffett Watch: How to Tell if Berkshire is a Buy

By    |   Thursday, 12 Mar 2009 09:12 AM

Billionaire investor Warren Buffett makes it look pretty easy.

Find a company that’s got a decent business and a strong brand, then buy it in massive quantities when the stock has fallen out of favor.

But how would you know if Buffett’s own stock — shares in his holding company, the insurer Berkshire Hathaway — is undervalued?

It seems a no-brainer: Berkshire has plummeted along with the market, down 38 percent over the past 12 months for his “B” shares, to $2,667.

Watch Buffet’s moves now, say experts. If he buys with cash, it means that in his estimation his own stock is undervalued, that is, he expects it to rise in price.

Likewise, if he uses stock instead, it’s because he believes Berkshire is overvalued and likely to decline. As Business Week points out, Buffett used stock to buy General Re in 1998. In the two years that followed, Berkshire fell by nearly half.

Buffet has plenty of cash, and he is shopping, so investors will have a chance to test that theory soon enough.

"The way things are going, there's a lot of things that may be happening in the United States," Buffett told Bloomberg Television.

"I'm open for business, but it's got to be the best business in town," Buffett said.

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Billionaire investor Warren Buffett makes it look pretty easy. Find a company that’s got a decent business and a strong brand, then buy it in massive quantities when the stock has fallen out of favor.But how would you know if Buffett’s own stock — shares in his holding...
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2009-12-12
Thursday, 12 Mar 2009 09:12 AM
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