About a year ago, I commented on an article that appeared in Barron's which argued that Warren Buffett's Berkshire Hathaway (BRKA) was overvalued. In my post, entitled Barron's Pans Buffett's Berkshire, I agreed with the article that Berkshire Hathaway stock looked overvalued. A lot has changed since then. Berkshire shares have fallen 45% from their high and hit a fresh yearly low on Wednesday at $84,000 per share. At that price, the stock looks cheap.

As I discussed in my 2007 post, the best way to value Berkshire Hathaway looks to be on a price-to-book basis. Berkshire's core business is insurance (which is valued with price-to-book) and the company's assets are largely in publicly traded securities, whether it be common stocks or various types of debt instruments. Going a bit further, I would use tangible book value, rather than total shareholder's equity, because Berkshire has more than $30 billion of goodwill on its books.

The essential question is, at what price would Berkshire Hathaway be cheap? I would love to purchase the stock at tangible book value of $56,000 per share, but that appears to be a long shot, as one might expect given Buffett's track record and the strong management team he has assembled there.

Accordingly, wouldn't you agree that even 1.5 times tangible book would be a solid entry point for a long term investment in Berkshire Hathaway? I certainly think so. Well, guess what? Today the stock closed at $84,000 per share, which just happens to be both a new 52-week low and exactly 1.5 times tangible book value of $86.6 billion. Not only does that look cheap, but all of us non-billionaires can buy the class "B" shares for only $2,783 each.

Full Disclosure: No position in Berkshire Hathaway at the time of writing, but positions may change at any time