Q: Is it too late for me to invest in Berkshire Hathaway class B shares (BRKB) since they have run up so much already?

A: Warren Buffett is one of the most famous, and arguably most successful, investors over time. And that’s why investing in the seemingly sleepy Berkshire Hathaway (BRKB and BRKA ) is irresistible to some.

Buffett is chairman and CEO of Berkshire Hathaway, which is a diverse holding company. The company’s primary financial engine is a massive insurance arm, which generates cash by collecting premiums from policy holders. These premiums are then plowed back into Berkshire Hathaway’s other businesses, which include everything from See’s Candies to underwear maker Fruit of the Loom .

Cash from the insurance premiums is also used to create a portfolio of sizeable stakes in several publicly traded companies. For instance, at the end of 2008, Berkshire Hathaway owned 18.4% of The Washington Post, 13% of American Express and 8.9% of Kraft Foods.

You may already know all that. But what you might not know is while Berkshire Hathaway shares are up this year, they’re lagging the rest of the stock market by a wide margin. So far this year, Berkshire Hathaway’s B-class stock, selling for around $3,300 a share, is up around 3%, as you can see here. Meanwhile, the Standard & Poor’s 500 is up about 16%, as you can see here. Keep in mind, too, that the S&P 500 pays a roughly 2% dividend yield, while Berkshire Hathaway pays no dividend.

So, the first point I’d make is that owning Berkshire Hathaway doesn’t guarantee you’ll get a piece of the company’s world-famous returns. Again, Berkshire Hathaway is lagging the stock market this year and the gap will take quite a rally in Berkshire to close. Clearly, Buffett has a solid long-term record, and may come racing back, but assuming that he can always beat the market isn’t a safe assumption.

Should you buy Berkshire Hathaway class B stock now? To find out, I’ll put the stock through the four steps considered here at Ask Matt:

Step 1:   Risk vs. reward. When you take a risk on a stock, you want to make sure you’re properly rewarded. Downloading Berkshire Hathaway Class B’s trading history back to 1996, we see the company generated an average annual compound rate of return of 11.2%. That is an outstanding return if you consider the Standard & Poor’s 500’s comparable return was 5.5%, says IFA.com.

To get that return, which beat the S&P 500 by 104%, you accepted moderate risk standard deviation of 24 percentage points. That’s 48% greater than the S&P 500’s long-term risk. But Berkshire has been able to generate returns high enough to compensate you for the higher risk.

Berkshire is one of the few stocks to pass this tough test. In fact, Berkshire’s return since 1996 even tops the 8.3% average annual return of emerging markets stocks, measured by the IFA Emerging Markets Index, despite having nearly identical risk.

Step 2:   Measure the stock’s discounted cash flow. Some investors decide if a stock is pricey by comparing its current price to the present value of its expected cash flows. It’s a complicated analysis made simple with a system from NewConstructs. When we run Berkshire’s stock, we find it’s rated neutral. In other words, the current stock price is roughly equal to what the company is expected to generate in cash over it’s lifetime. Using this analysis, it would appear Berkshire’s stock is fairly priced: not cheap, but not expensive, either.

Step 3: Compare the stock’s current valuation to its historical range. BetterInvesting’s Stock Selection Guide can help. If the company delivers 5% annual growth, as analysts currently are forecasting, the stock is in the sell range according to the Stock Selection Guide. Even if Berkshire Hathaway grows at twice its estimated rate, it’ll still be in the sell range. This is a red light for investors who believe the stock’s valuation will remain close to historical averages.

Step 4: Check the company’s financial health. Before investing in any company, you want to make sure it’s in good financial shape. A quick way to check is to look at where it falls on the USA TODAY Stock Meter, which ranks stocks from conservative (1) to aggressive (5). Berkshire scores a middling 3.3 here. Credit rating agencies, meanwhile, continue to give Berkshire some of the highest ratings possible. You can get a Stock Meter score for almost any stock by going to money.usatoday.com and putting the stock’s ticker symbol or company name into the Get a Quote box.

The bottom line: No one gets criticized for investing with Warren Buffett. Berkshire’s long-term record is rock solid, and investors looking for a strong expected return relative to risk have been richly rewarded for betting with Buffett.

But the stock’s run this year, amid a powerful stock recovery, have been disappointing. Meanwhile, unless profit bounces back at the companies Berkshire owns, the valuation isn’t all that compelling. If you invest in Berkshire, you might want to heed the constant reminder issued by Buffett: Be patient. You might find yourself holding the stock for a while before you see why Buffett is so famous.

Matt Krantz is a financial markets reporter at USA TODAY and author of Investing Online for Dummies. He answers a different reader question every weekday in his Ask Matt column at money.usatoday.com. To submit a question, e-mail Matt at mkrantz@usatoday.com. Click here to see previous Ask Matt columns. Follow Matt on Twitter at: twitter.com/mattkrantz