The impact of a $2B decline in its IBM
Summary
Berkshire's share price is 14% undervalued relative to its fair intrinsic value, even after including the impact of a $2B decline in its IBM shares.
Berkshire's revenue and profit grew by 8.5% in the first nine months of 2014 versus YTD 2013.
Berkshire rebranded its real estate brokerage brand in order to create a franchise network in order to generate strong potential organic growth in this segment through franchising fee revenues.
Berkshire generated a 9.29% ROE even though over 60% of its book value is comprised of non-earning assets and low-earning assets such as bonds, cash or goodwill.
Hedge fund manager and well-known value investor Whitney Tilson still sees value in Berkshire.
Investors should take advantage of the recent market weakness to accumulate a long position in Berkshire Hathaway (NYSE:BRK.B) (NYSE:BRK.A). Berkshire's share price is 14% undervalued relative to the fair intrinsic value of its shares. Although Berkshire's share price is well over the 1.2X book value that Buffett has targeted for share repurchases, we agree with hedge fund manager and Buffett disciple Whitney Tilson that there is still upside in Berkshire Hathaway's shares and we previously discussed Tilson's model in our previous reports on Berkshire Hathaway.