Berkshire Hathaway Earnings Could Set Next Week's Trends (BRK-A, BRK-B, GS, GE, BNI)

After today’s close, we’ll get to see earnings out of conglomerate, insurance giant, and recent bailout investor Berkshire Hathaway Inc. (NYSE: BRK-A) NYSE: BRK-B).  Warren Buffett and friends do not get many analysts covering the stock, so using "estimates" is not really a norm here.  Earnings estimates are not as important as what he is doing longer-term and which issues he discusses.

There are technically two estimates from Thomson Reuters (First Call)with one at $1,425.00 and one at $1,433.38.  Where this number reallycomes into play, well that is an entirely different topic. BerkshireHathaway typically trades around the feel of the company’s commentary more than on any single number.  You also can’t really use year-over-year comparisons because Mr. Buffett and friends had twohurricanes hit this year, and they did not have them in 2007 or 2006.  As Mr. Buffett joked, the company was smart enough to not havehurricanes for two years running.

What is different this time around is that Mr. Buffett has mademany key investments.  We will not likely get to see which companies hedecided to invest in or which he decided to change his positions in.But we do know that billions have been invested into the following:

• Goldman Sachs Group (NYSE: GS)  SEE DETAILS
• General Electric Co. (NYSE: GE)  SEE DETAILS
• Burlington Northern Santa Fe (NYSE: BNI) was increased.

As a result of his comments on the bailout plan and his call to buymore stocks, we think he increased his equity holdings and this may bereflected in the net cash positions.  Unfortunately, many of theseinvestments were after the cut off date for the quarter so it will behard to tell today.  Here are his last formal holdings and here is a list of which stocks we think he increased his holdings in.

We have also said that as part of the Obama transition team, Buffettand Berkshire Hathaway may be the biggest winner of the 2008presidential election.

Based upon all of the recent activities, we think today’s BerkshireHathaway numbers will be more important than in past quarters for theentire market.

Imagine how bad financials would get treated if Mr. Buffett signalsthat he’s getting slapped in the credit markets too….. That isn’tlikely, but anything seems possible now.

Jon C. Ogg
November 7, 2008