Whitney Tilson’s Q3 Investor Letter: Two Short Bets and Three Favorite Long Picks

Berkshire Hathaway Inc. (NYSE:BRK.A) has been one of Tilson’s long-term favorite picks and in the letter, he reiterated his view on the stock, estimating an intrinsic value of close to $270,000, which suggests that the stock is currently trading at a 30% discount. Berkshire Hathaway Inc. (NYSE:BRK.A)’s investment in Heinz and Kraft is also bringing significant profits, which are currently not reflected in its financial results. “To my knowledge, this extra value hasn’t been noticed by any analysts, media or investors,” the investor added. Therefore, these investments could raise Berkshire’s intrinsic value even more. At the end of June, 71 funds from our database held shares of Berkshire Hathaway Inc. (NYSE:BRK.A)’s class B stock.

Platform Specialty Products Corp (NYSE:PAH)‘s stock has lost nearly 50% since the beginning of the year, significantly affecting the returns of Kase Capital. Tilson thinks that the decline of the stock is mainly due to external factors, such as weakness in emerging markets and commodities. However, he believes that the company is still doing well, and that its management is doing a good job of cutting costs and improving the business. The same bullish sentiment toward Platform Specialty Products Corp (NYSE:PAH) can be observed across the hedge fund industry, with 53 funds from our database holding over 53% of Platform Specialty Products Corp (NYSE:PAH)’s shares at the end of June, up from 38 funds with holdings a quarter earlier.

Micron Technology, Inc. (NASDAQ:MU)‘s stock is also 52% in the red year-to-date, amid a declining demand for DRAM chips. The company posted lower-than-expected results for its fourth quarter of fiscal year 2015, but the stock still gained ground because it was trading at a low price.

“The stock is stupidly cheap at ~4x the company’s potential earnings power in a good environment (which I estimate at $4/share), a 40% discount to the replacement value of its manufacturing facilities, and 24% below a lowball $21 bid by a Chinese state-owned chip design company, Tsinghua Unigroup Ltd.,” Tilson said

Therefore, Tilson remains bullish on Micron Technology, Inc. (NASDAQ:MU) because the company continues to carry a strong underlying growth in demand for the long-term and has a “rational industry behavior”.

Another investor who is also disappointed by the performance of Micron Technology, Inc. (NASDAQ:MU)’s stock is David Einhorn of Greenlight Capital. However, Einhorn cut his exposure to the stock, with the thought that it will stay low for a significant amount of time yet (see Einhorn’s take on the company in his latest investor letter).

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