Berkshire Hathaway (BRK-A) Still Trading at a Discount to the Fair Value of the Business: An Expert Portfolio Manager Discusses a Top Pick with The Wall Street Transcript

Wall Street Transcript

67 WALL STREET, New York - April 2, 2013 - The Wall Street Transcript has just published its Investing in Gold and Value for Downside Protection Report offering a timely review of the sector to serious investors and industry executives. This special feature contains expert industry commentary through in-depth interviews with Money Managers. The full issue is available by calling (212) 952-7433 or via The Wall Street Transcript Online.

Topics covered: Value Investing - Long-Term Investing - High Quality Companies - Global Investing - Investment Strategies - Large Cap Investing - Longer-Term Investing - High Quality Companies - Investing in Gold - Long-Term Value Conservation - Precious Metals

Companies include: Berkshire Hathaway Inc. (BRK-A), Newmont Mining Corp. (NEM), Barrick Gold Corporation (ABX), Kinross Gold Corporation (KGC), Mercury General Corp. (MCY), Pepsico, Inc. (PEP), Johnson & Johnson (JNJ), General Electric Co. (GE), Microsoft Corporation (MSFT), The Coca-Cola Company (KO), Citigroup, Inc. (C), Leucadia National Corp. (LUK), Exxon Mobil Corp. (XOM) and many more.

In the following excerpt from the Investing in Gold and Value for Downside Protection Report, an expert portfolio manager discusses his investment philosophy and his portfolio-construction strategy:

TWST: You mentioned Berkshire Hathaway a couple of times. It is a company that some investors certainly love to hate, despite the fact that it continues to perform well. What do you like about it?

Mr. Bloomstran: Berkshire Hathaway is a collection of outstanding businesses that are largely unleveraged that are trading far below replacement or intrinsic value. The sum total of Berkshire's holdings we think are worth over $300 billion, and you've got a market cap today of little over $250 billion. Despite being up 15% last year and over 15% this year, it is still trading at a big discount to what we think the fair value of the business is. It's a collection of businesses that generate substantial amounts of free cash.

TWST: Is management change a concern at all for you?

Mr. Bloomstran: No, everybody wants to know what happens in the event that Warren kicks the proverbial bucket or gets hit by the proverbial bus. I think Mr. Buffett and the board have done a lot of thinking on that front. There are effectively over 70 operating companies, each run by independent CEOs and management teams. Matt Rose and his team, for instance, very independently run the Burlington Northern Railroad, and that's worth $50 billion out of the $300 billion that Berkshire is worth.

MidAmerican has their own management in place, and that's a $20 billion-plus asset. Lehmann and his 3G team are going to run Hershey, once they consummate the most recent transaction, which is going to be an interesting thing. Mr. Buffett has a hands-off reputation, which Mr. Lehmann does not, well known for his cost conscious approach. Within Berkshire, they have hired two money managers to help run the investment portfolio of the insurance companies, in the event Warren disappears...

For more of this interview and many others visit the Wall Street Transcript - a unique service for investors and industry researchers - providing fresh commentary and insight through verbatim interviews with CEOs, portfolio managers and research analysts. This special issue is available by calling (212) 952-7433 or via The Wall Street Transcript Online.

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