I once read somewhere that if you don’t understand the business, you can’t value it. And if you can’t value it, you have no business investing in it.

Berkshire Hathaway is a company that can be understood and pretty accurately valued.

Investors start with a leg up when the CEO writes to shareholders and basically walks them through how to come up with the company’s intrinsic value.

Over the weekend, Berkshire Hathaway (BRK-B) released their 2015 annual report and letter to shareholders.

On the first page, Warren Buffett told shareholders where he would be a buyer of the stock. Due to accounting rules, Buffett said that intrinsic value of Berkshire far exceeds its book value. He further wrote that he would be “delighted to repurchase” shares if they should sell as low as 120% of book value.

Let’s figure out what that stock price would be.

Berkshire’s book value as of Dec. 31, 2015 was $155,501…making Buffett’s buy target (120% of book value) $186,601. Translating that to class B shares, which are 1/1500th of class A shares, it would come out to $103.67 book value and $124.40 for Buffett’s buy target.

By establishing a low ball price, Buffett basically put a floor under Berkshire’s stock price. Keep in mind that Buffett is the ultimate value investor, and he only wants to pay a dirt cheap price. So his valuation of 120% of book value, I would be dollars to donuts, would be a bargain price.

Now that everyone knows Buffett’s buy price, I highly doubt we will trade at or below that price unless we have a full blown market panic.

However, by doing a little math, we too can come up with another very simple valuation for Berkshire.

On page 9 of the letter to shareholders, Buffett spells out two key numbers that investors need in order to calculate intrinsic value. While this is only an estimate, it pays to recall that, “it is better to be roughly right than precisely wrong.”