Shares of Warren Buffett’s Berkshire Hathaway are currently being sold at a significant discount to the conglomerate’s intrinsic value, which could prompt the “Oracle of Omaha” to buy back shares, according to UBS. “BRK shares are trading at a discount of more than 20% to their intrinsic value based on the methodology described in BRK’s 2018 Annual Letter to Shareholders,” UBS’ Berkshire analyst Brian Meredith said in a note. “This appears to be the level at which BRK has historically increased its share repurchase activity.” The conglomerate’s stock held up well in 2022 with a 4% gain as investors picked more stable pockets of the market. Still, Shares 14% from the all-time high of $544,389.25 hit in March 2022. BRK.A mountain 1Y Berkshire Hathaway In Buffett’s 2018 annual letter to shareholders, the legendary investor detailed how he believes the intrinsic value of the conglomerate should be calculated. – sum up the value of the four “groves” that contain the assets and then deduct the corresponding amount for the tax that must be paid for the sale of marketable securities. Buffett said that the four gardens of his assets are 1) Berkshire’s collection of non-insurance businesses (BNSF, Berkshire Hathaway Energy and others), 2) equity portfolio, 3) business holdings in various companies (Kraft Heinz, Pilot Flying J and others) as well as 4) cash and other cash equivalents. The fifth Grove of Berkshire’s independent insurance operation, which is not included in the calculation. “It is likely that – over time – Berkshire will become a significant repurchaser of its shares, transactions that will take place at prices above the book value but below our estimate of intrinsic value,” Buffett said in a letter in 2018. Berkshire spent $ 5.25 billion to buy back shares last year through the third quarter, lower than the previous year because Buffett used a significant amount of cash to buy other public stocks including Chevron, Occidental Petroleum and Taiwan Semiconductor in 2022. The conglomerate is accumulating a pile of cash. almost $109 billion at the end of September. Meanwhile, Berkshire suffered a $63.9 billion loss on investments last year through September amid a broader market sell-off. UBS estimated $7.7 billion in total buybacks in 2023 and said it sees a potential rise if there is no meaningful acquisition and thus a substantial amount of deployable capital. – CNBC’s Michael Bloom contributed to this story.