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(Adds shareholder comments in the sixth paragraph.) By Andrew Frye Jan. 20 (Bloomberg) -- Warren Buffett, who usually refuses to give his opinion on the value of Berkshire Hathaway Inc. shares, said today the stock is undervalued and that he would have preferred to pay in discount ugg bootscash for his largest takeover. The stock jumped the most in five months. “We are paying a penalty issuing shares at this price” to raise about $10 billion for the purchase of railroad Burlington Northern Santa Fe Corp., Buffett said in an interview today in Omaha, Nebraska, where Berkshire is based. “If I could have done the deal for all cash, I would have done it.” Buffett, who is chairman and chief executive officer of Berkshire, is planning to fund the Burlington Northern deal with Berkshire stock that’s fallen by about than a third from its 2007 high. He has chastised Kraft Foods Inc. CEO Irene Rosenfeld for issuing shares of the foodmaker to help fund its purchase of Cadbury Plc. Berkshire is the largest stock investor in Kraft. “Both Kraft and Berkshire are undervalued,” he said. While he was reluctant to issue shares of his company at its current price, Buffett said “I’m still OK with it” based on his assessment of the railroad. “But it’s close.” Berkshire’s Class A shares rose $4,170, ugg boots on saleor 4.2 percent, to $104,200 in New York Stock Exchange composite trading today, its biggest increase since Aug. 5. The billionaire takeover expert said in an interview last year that questions about the value of Berkshire’s stock are the “one I never answer.” Investors Lawrence Oberman and Arthur Cohen, who attended a special shareholder meeting in Omaha today, said the pronouncement was out of character for Buffett. Advice to Shareholders “He never says ‘buy my stock,’” said Cohen, of Northbrook, Illinois-based Arthur M. Cohen & Associates LLC. Oberman, of Northbrook’s Trigran Investments Inc., characterized Buffett’s typical ugg boots for saleadvice to investors as, “I put out my annual report, you read it, and you figure out what’s best.” Still, Buffett did advise shareholders that he and Vice Chairman Charlie Munger felt the stock was fairly valued at least once, in the 1995 annual letter to shareholders as Berkshire prepared to sell a new class of shares. “The offering we propose will not diminish the per-share intrinsic value of our existing stock,” Buffett wrote. “Let me also put our thoughts about valuation more baldly: Berkshire is selling at a price at which Charlie and I would not consider buying it.” Berkshire is paying $26 UGG Australiabillion for the 77.4 percent of the Forth Worth, Texas-based railroad it doesn’t already own, the largest takeover in Buffett’s four decades at Berkshire. The company is tapping Wells Fargo & Co. and JPMorgan Chase & Co. for an $8 billion loan, with the remaining $8 billion coming from Berkshire’s cash hoard. True Value The railroad fell about 15 percent to $76.07 in the 12 months before Buffett agreed to pay $100 a share. Buffett said in a statement critiquing the Kraft deal earlier this month that, when evaluatinguggs.net acquisitions, “the true business value of what is given is as important as the true business value of what is received.” Buffett’s acquisitions and stock picks propelled Berkshire’s shares to an increase of more than 30 fold in 20 years. He’s said it has become harder to maintain that pace as his company expands from insurance to energy and manufacturing. Berkshire advanced 2.7 percent on the New York Stock Exchange last year, compared with the 23 percent rise in the Standard & Poor’s 500 Index, the company’s worst performance against the index in 10 years. Two analysts tracked by Bloomberg have price forecasts on Berkshire averaging $125,000. Book Value Investors who bought Berkshire stock at its closing price paid $1.28 for every $1 of net assets. That’s about 11 percent more than the figure for the financial companies in the S&P 500. Berkshire’s multipleugg boots to book value, or assets minus liabilities, has averaged about 1.76 over that past 15 years, compared with 2.17 for the S&P 500 financial firms. “Berkshire’s price is often related to book value in some way that makes a fair degree of sense,” Buffett said. “On a historical basis, Berkshire is selling quite low, relative to book value.” Buffett won the approval of investors at the meeting today for a 50-for-1 split of Berkshire’s Class B shares to reduce the number of partial shares Berkshire would need to issue to holders of Burlington stock. The B shares were the ones Buffett warned investors against buying in 1996. He created the stock to prevent fund managers from carving up the more valuable Class A shares in trusts and selling wholesale ugg bootslower-priced interests. The B shares have never traded below $990. Based on their $3,476 closing price today, they will be valued at $69.52 when the begin trading tomorrow. --Editors: Erik Holm, Dan Kraut

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