Analysis and Discussion on in Investing with Buffett, with Featured Guest Mohnish Pabrai: Berkshire's Businesses, Investments Worth $5K/share; Delta Financial - Provides Fixed Rate Loans, Not Exposed to Resets, Would Be Little Impacted by Housing Correction

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>> in a few minutes, "in focus" with brian sullivan kicks off. he is here with a preview. >> today' s "in focus" is all about high-yield bonds. martin fridson -- we will ask you-we will ask him when and why he thinks it will hit. the atmosphere will be -- barry lucas says the atmosphere at an aa conference will be wait-like. -- and naa conference. >> mohnish, let' s continue with berkshire hathaway. you have also been a recent perjurer -- you have also been a ecent purchaser of berkshire hathaway stock. you had lunch with warren buffett. what did you learn from the meeting? >> i have not won the lunch yet. it has been about four years. >> i beg your pardon. >> the lunch option is coming up next week, and i hope to prevail this year. >> best of luck to do that, but what have you learned from warren buffett? why are you such an avid follower of warren buffett and his company? you have been buying the shares of berkshire hathaway. >> i think berkshire is a wonderful business, and it happens to be undervalued, actually significantly undervalued. besides being undervalued, you have the biggest capital allocator on the planet. if you look at berkshire, they are trading at about 3600 a piece. they are worth about 5000 apiece. if you bought them at $5,000, you would probably make about 15% a year oing forward. if you bought them at $3,600, you would make the 15% + that gap. >> that sounds like a pretty good return ticket why would anybody want mohnish pabrai to manage my money when i can give it to warren buffett and get these returns? >> i am just a humble disciple. for most investors, pabrai fund is appropriate. i strongly recommend berkshire hathaway has an investment. it is a great company to invest in long term. you can hold it for 20 or 30 years. >> then why has warren buffett not gone into the subprime market in the way you have with delta financial? >> buch that arren buffett cost disadvantage is size. -- warren buffett cost disadvantage is size. the market cap of the entire company is much smaller than what berkshire would want to put into a typical investment. when they look at the oil business, conocophillips, they can put some money there. they cannot go after really small companies. >> so what is it about the financial? we were talking about that in the first half of the program. this was a -- what about -- so what is it about delton financial? we were talking about that in the first half of the program. >> all of these subprime stocks got stressed. the baby got thrown out with the bathwater. if you carefully look at delta, their earnings became better as a result of having little competition. 0%, 95 percent of the -- even if you have -- and they are not subject to new construction. they are really a refinanced- type lender. even if you have significant drops in housing prices, i do not believe their portfolio get impacted. and so i believe it is a well protected franchise, and that is a very unique franchise. >> ok, hang on, mohnish. some final thoughts with the featured guest, mohnish pabrai of pabrai investment funds. you are watching bloomberg' "open exchange."