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Whitney Tilson -- submitted photo
Investors who have pushed down Berkshire Hathaway's stock price about 7 percent since Friday's second-quarter earnings report are getting it wrong, one of the managing partners of the Tilson Mutual Funds said on a conference call with investors today.
"The results were spectacular," said Glenn Tongue, whose partner is Whitney Tilson. "The stock price movement (since then) has been the inverse of spectacular."
Berkshire comprises a little less than 10 percent of the firm's Tilson Focus Fund, Whitney Tilson said today on the call. The fund has nearly doubled since its lows in March and is up 43.8 percent year-to-date.
Tongue noted that Berkshire rallied strongly in the weeks leading up to the earnings report but has now given up a chunk of those gains.
Tongue said Berkshire's 11.4 percent increase in book value between the first and second quarters was the company's largest quarterly gain in history, yet investors have been focusing on the relatively weak operating earnings. He said the operating earnings are doing what you'd expect in a weak economy.
Tongue pegged the value of Berkshire's A shares at the end of the second quarter at about $133,000 and said it's probably since grown to about $138,000. Shares are now trading for about $101,000. Tongue said Berkshire has "the best balance sheet of any company of its scale" and a "value that keeps growing."
"We're delighted to keep holding it," Tongue said.
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Comments
I agree. I think very few investors actually read the report.
I look for unusual items to exclude in predicting the future. There were over half a billion expenses in a foreign currency issue, and downsizing, (somewhat offset by a gain related to Constellation Energy). Take these away, and Berkshire would have easily beaten the estimates with operating earning north of $1300/share. That combined with its investments makes Berkshire a solid long term buy IMO. Disclosure - I am a holder of Berkshire.
We pray BRK falls to 1.3 X book value
We pray that a GREAT hurricane will cost BRK $8B
We pray there will be "blood" in the streets
We will buy - WB & CM taught this in class each May
We listen when in class
We buy and NEVER SELL
Read the owner's manual STUDENTS (Berkshire Hathaway website)
Whitney Tilson's COMMENTS ARE SPOT ON
We pay attention when Whitney speaks - HE IS RIGHT.
Trade stocks - OWN BRK and NEVER SELL
Leroy Eide
Pragmatic Real Estate Advice Since 1977
10612 Georgian Drive
Austin TX 78753
512-425-0570 OOMA International Phone
Good comments. I am not sure what people expect from Berskshire but book value is the key to the stock as they dont pay dividends.
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