[Lalwendë]

Very wise move to use the 'divide and conquer' technique with this one as the meaning is in the clauses which themselves divide and conquer - the line is very much a linguist's joke. It's how I approach it and people usually understand it after I've explained it this way. Try my simple explanation:

I don't know half of you - Bilbo divides the group into two halves

half as well as I should like - For this half, Bilbo doesn't feel he knows them well enough; this is something he regrets.

and I like less than half of you - Bilbo divides the group into a majority and minority

half as well as you deserve - Bilbo feels he doesn't give the minority group enough credit and they are in fact admirable Hobbits and deserved more of him.

Break it up like a Times crossword clue and there you have it.