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[LTCM]

Excerpted with permission from the monthly letter to investors in Mr. Tilson's T2 Partners Fund:

Berkshire Hathaway (BRK.A)

We’ve long felt that Berkshire Hathaway was beautifully positioned to take advantage of the distress in the financial markets, thanks to the combination of the world’s savviest investor and a Fort Knox balance sheet. Buffett has invested approximately $40 billion so far this year and the deals keep getting better and better.

This month, he absolutely stole Constellation Energy, after the company encountered a liquidity crisis, for $26.50/share ($4.7 billion in total). The stock had been above $60 only weeks earlier – and was likely cheap even at that price, so Buffett bought it for less than half of its intrinsic value. He then followed that coup with another: investing $5 billion in perpetual preferred stock -2- in Goldman Sachs, with a 10% yield plus $5 billion in warrants struck at $115. With the stock at $128 today, Berkshire is already $566 million in the money on the warrants, which are worth $2-3 billion.

We think Berkshire stock is 15-20% undervalued, before factoring in any gains from the equity portfolio (up roughly 7% in the third quarter vs. a decline of 8.3% for the S&P 500), recent investments or the possibility (likely, we think) of additional highly beneficial investments.