After some feared Warren Buffett had succumbed to the effects of old age and lost his touch -- if not his mind -- Berkshire Hathaway (NYSE:BRK-A) (NYSE: BRK-B) is back in the game.

Net income for the second quarter came in at $3.3 billion, up from $2.9 billion in the same period last year.

As discussed last week, a set of derivative contracts that scared investors witless over the past year were recently renegotiated with counterparties. That renegotiation, along with a 50% surge in the S&P 500 since March, added some nice padding to Berkshire's bottom line. Broken out by segment, here's how things fared:

Segment

Q2 2009

Q2 2008

Operating earnings

$1.8 billion

$2.3 billion

Sales of investments

$2.0 million 

$437 million

Writedowns

($19.0 million)

($280 million)

Derivatives gains

$1.5 billion

$453 million

Total

$3.3 billion

$2.9 billion

Per class A share

$2,123

$1,859

So the derivatives gains indeed buttered results up. Some might say these are simply one-time gains that should be ignored -- which is probably true -- but you could say the same about derivatives losses that made people squeal in previous quarters. Buffett explained how investors should respond to such volatility in this year's annual report, writing:

We have told you before that our derivative contracts, subject as they are to mark-to-market accounting, will produce wild swings in the earnings we report. The ups and downs neither cheer nor bother Charlie [Munger] and me. Indeed, the "downs" can be helpful in that they give us an opportunity to expand a position on favorable terms. I hope this explanation of our dealings will lead you to think similarly.

And those "downs" were indeed helpful, as expensive hedges held by Berkshire's counterparties allowed Buffett to renegotiate the contracts earlier this year at more favorable terms.

Nonetheless, operating earnings are down. Per-share operating earnings came to $1,147 per class A share, down from $1,465 in the same quarter last year. This is nothing to be proud of, but should be expected during a recession, especially with big holdings in things like jewelry and paint. Buffett's a smart investor, not a god.

One popular way to measure Berkshire's appeal is its price-to-book multiple. In fact, the first page of Berkshire's annual reports always gives a comparison to how book value -- not share price or earnings -- performed against the S&P 500 average.

Here, things look great. After big rebounds in holdings like Goldman Sachs (NYSE:GS), General Electric (NYSE:GE), and Wells Fargo (NYSE:WFC), Berkshire's book value gained over 11% in the quarter, coming to $73,806 per share. Compare that to the price-to-book multiple commanded in the past, and shares might look quite cheap:

Year

Price-to-Book Multiple

2008

1.58

2007

1.61

2006

1.53

2005

1.54

2004

1.74

2003

1.68

2002

1.84

2001

1.78

2000

1.53

1999

1.99

1998

2.47

1997

2.18

1996

2.50

Current

1.30*

*Barrons estimate, as of Aug. 10, 2009.

So while operating earnings have been compressed by the recession, the pain seems to be priced into shares -- and then some. Weigh this against the billions of dollars Buffett has plowed into promising new investments over the past year, and some might say shares look like nothing less than a screaming buy. If you're willing to wait -- and most Berkshire investors are -- the past year could end up looking like the opportunity of a lifetime.

What do you think? Are shares a buy? Feel free to chime in in the comments section below.

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Fool contributor Morgan Housel owns shares of Berkshire Hathaway. Berkshire Hathaway is a Motley Fool Stock Advisor and a Motley Fool Inside Value selection. The Fool owns shares of Berkshire Hathaway, and has a disclosure policy.