Berkshire Hathaway is still cheap

Everyone in the investment world knows Warren Buffett, the most successful investor of all time. His company, Berkshire Hathaway (BRK-A & BRK-B), is traded at $134,000 per its A share and its B share is 1/1500 of it at $89 per share. Do you believe if I say BRK is still very much undervalued at this huge unit price? Indeed, it is still very cheap, believe or not. It is estimated that BRK is roughly 25-30% discounted against its intrinsic value. No one knows its value better than Buffett. He certainly sees the great value of his own company at this cheap price, so he is aggressively buying his own company stocks. In 2011, Buffett announced that he would buy BRK up to 110% of its book value. Just a couple days ago, he raised his buying price to 120% of its book value. This basically puts a floor for the BRK price, since Buffett will buy and therefore support the stock price if it drops below its book value. At the moment, BRK's book value is $112,000 for A shares, or $74for B shares. So its share price is right at around 1.2 times its book value. So you should expect that BRK share price would not drop too much below this level with Buffett's buyback power behind the curtain.

Examining the BRK long term chart suggests some pattern of its price movement. Excluding the exceptional turmoil times of the past 15 years (2000 & 2009), BRK has been quite stable: it is generally around certain level for a few years and then this level is broken through and raised. BRK-B was narrowly traded at around $50 roughly in 2001-2003, then at $60 between 2004-2006, and recently at $80 in 2009 till early 2012. This reflects its increasing book value translated into its increasing share price. Looks like at the moment BRK is again breaking through its range now, which should mean a higher price of Berkshire Hathaway in the next few years.