This week's Barron's [subscription required] reverses itself -- after panning Berkshire Hathaway Inc (NYSE: BRK.A) in December 2007 it has now reversed course -- with a hedge from a short seller. Since panning Berkshire in December -- when it traded for $143,000 a share, the stock has lost 14% so Barron's was right then. Is it right to bet on a rise in Berkshire now? I really don't know because I don't find either the bear or the bull case persuasive.

Why did Barron's pan Berkshire back in December? As I posted, Barron's bear case on Berkshire was simply that it was overvalued on the basis of its book value and earnings growth. Berkshire's ratio of market value to book value was then at 1.8 times its September 30 book value, of $77,800 a share. That was above its average of 1.6 in the past five years.

It was also valued at 23 times estimated 2007 operating profits of $6,300 a share. 2008's profits were then expected to be similar to 2007's. If Berkshire were then valued at 1.7 times book value, a premium to its five-year average, Barron's estimated that stock would trade at $132,000.

But that December analysis is ancient history to Barron's. Now it's going with the bullish cash of hedge fund T2 Partners which concludes that Berkshire is 20% undervalued. Its argument relies on the notion that the past predicts the future. Here are the key past performance indicators it uses:

• Investments per share + 72%. Investments per share based on T2's highlighting its growth to $90,343 in 2007 from $52,507 in 2002.
• Pretax income + 300%. T2 also observes that Berkshire pretax earnings per share, excluding investment income, has quadrupled from the $1,479 posted in 2002.
• Intrinsic value + 100+%. Berkshire's intrinsic value -- which T2 calculates as investments per share, plus 12 times earnings per share excluding investment income -- at the end of 2007 ranged between $156,300 and $158,700 a share -- more than double 2002's $70,000.

T2 concludes Berkshire is 20% undervalued. Assuming 10% growth in the intrinsic value of the business and a cash buildup of $6,000 per share over the next 12 months, T2 expects total intrinsic value of $178,700 per share, or a 46% premium to today's price of the stock. And using the same assumptions, T2 thinks the number could rise to over $200,000.

But Barron's hedges itself by including the bearish case from short-seller Douglass Kass. Kass's bearish case is based on Buffett's exposure to risk in derivatives, insurance, housing, and consumer finance. He cites the following:

• Derivatives losses. Berkshire took an unrealized $1.6 billion pretax loss in the first quarter due to derivatives.
• Insurance in decline. Berkshire is heavily exposed to insurance, which Kass believes has seen its best days.
• Safe haven effect is over. Berkshire's premium valuation seemingly has been a byproduct of the credit crisis, and the perception of the company as a safe haven. As deflated financial companies regain their footing, Kass thinks people will sell Berkshire since they won't need a safe haven any longer.
• Substantial exposure to financials and housing. And Buffett is substantially exposed not only to financials -- he owns large positions in Wells Fargo (NYSE: WFC), Bank of America (NYSE: BAC) and American Express (NYSE: AXP) -- but also to a weakening housing market through his ownership of Clayton Homes.

I don't know why T2 assumed the 10% intrinsic value growth or why it thinks cash per share will rise to $6,000. Its calculations do not seem to be beyond the capability of most Wall Streeters so it would seem that a 46% gap between intrinsic value and current market value would not last long if it were real.

But Kass's argument for shorting does not make sense to me either. I would not short a stock unless I thought it had a good chance of going bankrupt. And he did not persuade me that Berkshire was going to have trouble meeting its debt obligations.

So I would avoid Berkshire altogether. What do you think?

Peter Cohan is president of Peter S. Cohan & Associates, a management consulting and venture capital firm. He also teaches management at Babson College and edits The Cohan Letter. He owns Wells Fargo shares and has no financial interest in the other securities mentioned.