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Dear Mr. Berko:

Dear R.S.:

Berkshire Hathaway Inc. (BRK.A-$139,700) has three main businesses: insurance, non-insurance operations and investments.

This company owns tens of million of shares of American Express, Coca Cola, Procter & Gamble, Wells Fargo, Moody’s, the Washington Post, Anheuser Busch, Johnson & Johnson, Wal-Mart, ConocoPhillips, US Bancorp, Burlington Northern and a large number of smaller positions in publicly traded companies worth less than $1 billion. Berkshire’s portfolio of public companies had a market value as of Dec. 28 of $80 billion, give or take a few hundred nickels.

Berkshire also owns 100 percent of the following private corporations: Acme Brick, Benjamin Moore Paints, the Buffalo News, FlightSafety (largest aviation and maintenance training company in the world, except for the U.S. Army, Navy and Air Force), Fruit of the Loom, Justin Brands, GEICO Auto Insurance, General Re, Helzberg Diamonds, H.H. Brown Shoe, International Dairy Queen, MidAmerican Energy Co., Johns Manville, XTRA Corp (largest lessor of over-the-road trailers), Shaw Industries, The Pampered Chef, Scott Fetzer Cos., See’s Candies and a couple dozen other names that may not be as familiar to you. It’s estimated that the value of these private companies is about $165 billion, give or take a few hundred dimes.

And finally, BRK.A has about $40 billion in clean, cool, green cash. All those numbers added together total just about $285 billion, which is a nice round number for a 78-year-old recently married bridge enthusiast who is the richest alumnus of the University of Nebraska.

But this amazing stock trades for $139,700 a share, which is $50,700 or 57 percent over its book value of $89,000 a share. Perhaps your broker believes that number is too rich!

Berkshire also is valued at 19 times earnings, which is a mite higher than other insurers, which trade between nine and 11 times book value. So perhaps your broker believes a price-to-earnings multiple of 19 is also too rich.

Perhaps your broker might be influenced by Credit Suisse, Barron’s and Goldman Sachs, who collectively believe BRK.A’s target price for 2008 will be between $125,000 and $130,000 a share.

BRK.A at $139,700 a share may be richly priced, but the stock has also been richly rewarding for long-term investors. When you inherited BRK.A from your father, it was trading at $67,000. In the worst-case scenario, you’ve more than doubled your money in five years, which is a 16 percent compounded annual return. That’s not unimpressive and certainly better than those good no-load funds I recommended.

Some statistics might indicate that BRK.A is overpriced, but as long as Warren Buffett is at the helm you should keep the stock. Buffett’s persona and charisma are the reasons for Berkshire’s huge 57 percent premium.

The best time to sell BRK.A is nine months before Buffett ends his passage on Earth. So it might help to become very friendly with his personal physician.

Please address your financial questions to Malcolm Berko, P.O. Box 1416, Boca Raton, Fla. 33429 or e-mail him at malber@adelphia.net.© Copley News Service