If you can afford Berkshire Hathaway, buy it

Warren Buffett's conglomerate is a bargain, trading at a price-to-earnings ratio of 16.22. A $1.2 billion stock buyback announced Wednesday just sweetens the pot.

By Jonathan Berr Dec 12, 2012 1:53PM
File photo of Warren Buffett on the NBC News' 'Today' show on November 27, 2012 (Peter Kramer/NBC/NBC NewsWire via Getty Images)

Shares of Berkshire Hathaway (BRK.A), which trade for about $134,000, are a bargain for those who can afford it.

Warren Buffett's conglomerate, which Wednesday announced a $1.2 billion stock buyback, trades at a price-earnings ratio of 16.22, near its five-year low, according to Reuters. This was too sweet a deal for the Omaha, Neb., company to pass up.

Berkshire said Wednesday that it raised the price limit it had set for itself on share repurchases to 120% of book value (assets minus liabilities). The company also purchased 9,200 Class A shares from the estate of a longtime shareholder. As Bloomberg News noted, history's greatest investor began a buyback program in 2011 after taking a pass on them for four decades. News of the buyback helped push Berkshire shares, which have gained about 16% this year, up 2.43% in afternoon trading.

The Oracle of Omaha, who has advocated raising taxes on the wealthy so persuasively that President Obama created the "Buffett Rule" to do just that, didn't escape the Great Recession unscathed. Operating earnings in the last quarter at Berkshire Hathaway fell 11% to $3.4 billion, hurt by a decline in profits from insurance underwriting, as the Associated Press notes. The 82-year-old, though, continues to find value where others don't see it in beaten-down industries such as newspapers. Earlier this year, Buffett acquired most of Media General's papers for $163 million. He has even been quoted as saying that he expects print newspapers to survive for as long as 20 years.

Naysayers may scoff at Bufffett's views on papers and taxes but they can't dispute his track record. Shares of Berkshire Hathaway have soared more than 90% over the past 10 years, outperforming the S&P 500, which gained more than 52% during the same time.

Berkshire Hathaway's holdings include GEICO Auto insurance, the BNSF railroad, Fruit of the Loom Companies and the Pampered Chef.

--Jonathan Berr wishes he could afford the stock discussed in this story but alas he has to work for a living. Follow him on Twitter @jdberr.

Dec 12, 2012 3:48PM
If you can't afford BRK.A , why not buy BRK.B? 
Dec 12, 2012 2:29PM
Go Big Guy, go....Wish we could have a piece of that.
Dec 12, 2012 6:09PM

Dear Warren

Family Christmas time?

Love Sonya  

Dec 12, 2012 7:59PM

Yup, maybe it's all because of 12/12/12...??


But it's not the 21st......Yet.

Oct 26, 2013 3:25PM
You can buy shares in a mutual fund that mirrors the s&p 500.  Why not birkshire hathoway?   When do you think they will split the shares?  For a guy so brilliant, I really do not get this one.  Give the masses a chance to buy some shares.  
Dec 12, 2012 8:26PM
Warren Buffett is Obama's parrot now that the companies he holds stock in have been bailed out. Berkshire would have tanked without the stimulus and tarp money being thrown to the banks. All those statements about the Buffett rule and investors being willing to shrug off higher taxes is pay back for the favors and the immunity of the CEO's from prosecution.
Dec 12, 2012 4:17PM

GOOD POINT...But I kinda thought that Warren and Charlie, were somewhat losing their minds,,?

And haven't been very impressed by some of the Deals or Purchases they have made the last few years....

BUT, don't get me wrong? I've been a little student of theirs over the last several years...

And am impressed how they do most of the business...

But, they can make deals like none of us will ever have a chance to do...IMO.

But, I also hold them to the candle and strive to match or beat them in the investment game....

I invest in several of their(Berk's) picks and I have been beating them overall for about 5 years.

Not bragging, and SOME of it is luck.....I think they will clip me this year ??

But we have increased our share positions, significantly. If they"all went up"10-15%...We would blow BERK out of the water.

And yes I "almost" did buy a thousand shares of "Baby Berk"....But didn't....No REGRETS.

Remember Mr. Warren Buffet and Mr. Charlie Munger....Didn't do it overnight. 

Dec 12, 2012 7:28PM
Warren is a crook and he and his banking buddies should be in jail. Moody's, part of Berkshire's larger investments in their portfolio @ 28,415,250 shares, was putting AAA ratings on junk paper backed by sub-prime mortgages. Those investments were being sold to municipalities and pension funds as solid investments while the bankers were unloading them off their balance sheets knowing they were toxic and the whole scheme was about to unwind. I'm tired of the likes of Jamie Dimon and Warren Buffett being lifted up by the media and the investment world like some kind of financial geniuses.
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