Weitz Funds Third Quarter 2005 Report

“For over two years, we have been writing about owning ‘good’ companies at ‘reasonable’ prices and saying that we were ‘comfortable but not excited’ about our stocks. Well, now we are getting excited. For the most part, our companies have grown in value but their stock prices have not kept pace. This means that our stocks are cheaper than they have been in quite a while … these are the times that set up the portfolios for superior long-term performance.”

Weitz goes on to detail the business value of various holdings versus their current price:

• Berkshire Hathaway (BRK.A): $110,000 (value) | $85,200 (price)
• Liberty Media (L): $12 | $7.83
• Comcast (CMCSA): $38-$40 | $27.57
• Tyco (TYC): $36 | $26.75
• Countrywide Financial (CFC): $50+ | $32.03
• Fannie Mae (FNM): $65-$70 | $48.04

Weitz also owns AIG, Anheuser Busch, News Corp., UnitedHealthcare, Wal-Mart, and WellPoint. He doesn’t reveal what he believes their “intrinsic business value” is, but he does say: “… the common denominator for all of our valuations is that we are estimating the price an informed, rational buyer might pay for the business if he were planning to hold it forever and wanted to earn a 12% rate of return.”