Industrials

Buffett & Berkshire Hathaway Earnings Watch (BRK.A, BRK.B, KFT, BUD)

Buffett_imageAfter the close of trading on Friday, we’ll get to see earnings out of Wall Street’s favorite idol as Warren Buffett and Berkshire Hathaway Inc. (NYSE: BRK.A, BRK.B) reports earnings.   

The first thing we ant to advise readers about is that there are very few estimates on Wall Street out of analysts, so the actual numbers are generally thought of as a hint or a nod rather than a formal bar.  Guidance is also not formally given so traders have to listen to the inferences made for internal projections.

The three estimates out of First Call show $1370.00 (rounded) as the EPS target and we only have one revenue target.

What is interesting about the report this time around is that the stockhas had a dismal performance compared to years of the past.  Its52-week trading range is $109,800.00 to $151,650.00.  With a$114,000-ish level today, you can see it has been dead money.  In fact,if you bought and have just held without any profit taking, then thishas actually been a dead money stock for over 18 months.  Even when wesaid Barron’s was being too critical, it turns out we should have beenjust as critical.

Unfortunately, we won’t get to see the Berkshire Hathaway holdings foranother week or so.  But here is a full link list of the most recent data on Buffett’s portfolio public stock holdings.

What will be interesting to see here inside the invidual holdings arethe stances on Kraft Foods Inc. (NYSE: KFT) and on Anheuser-BuschCompanies Inc. (NYSE: BUD).  There have been highly unusual optionstrading activity in Kraft options with August expirations and somechatting that his 9% stake may be added to or at least was part of thelogic behind that unusual trading.  The other issue is whether or nothe will still hold Anheuser-Busch Companies since the stock is so closeto the buyout price from InBev.

Regardless of the actions and regardless of the final holdings,Berkshire Hathaway has started changing its face.  At some point thecompany will have a new face man besides Warren Buffett.  He’s alsobeen financing mega-deals of late and has been doing more deals reminiscent of private equity investing than true public companybuyouts.

As insurance and reinsurance has been such a large portion of thecompany, the trend in storms will matter in Q2 and Q3 more than otherquarters.  We won’t make any predictions on that front.  Stay tuned.

Here was a 360-degree review of Berkshire Hathaway we gave going into the annual meeting.

Jon C. Ogg
August 7, 2008