In the August issue of Kiplinger’s, Tilson lays out a case for why Berkshire is for sale right now:

1. Estimate of Berkshire’s operating company profits will be in 2008: $5,600 per share

2. reasonable pre-tax multiple: 12

3. Value of operating businesses = $67,200

4. Value of Berkshire’s investments in companies (as of 3/31/07): $87,632—Tilson used 12/31/07 numbers, so I looked at filings and the investments were down about 3% in the first quarter.

5. Total Intrinsic Value: $154,837

Current Share Price: $122,000

Amount of discount to Intrinsic Value: 27%

By the way, when Tilson wrote the article, the share price was $129,400.  The investment values are clear based upon the filing, but it is not easy figuring out the income to be generated by his private operating companies; and, given Buffett’s lecture about the high inflation hitting the U.S on CNBC today, I think he is signaling that his companies won’t do as well as Tilson thinks.

Track Tilson’s stock picks (which have not done well this year, including his worst buy, Ambassadors International) at:

http://www.trackthepros.com/categories.php?category_id=507