Kass: Buffett Gets a Free Pass

Normalized for "non-recurring" derivative losses, Berkshire's recurring first-quarter 2008 earnings missed consensus forecasts. First-quarter Berkshire Hathaway earnings (taking out derivative losses) dropped to $1,247 per share as compared to the Street's forecast of $1,477 per share.

An earnings disappointment is one of the reasons I have shorted Berkshire Hathaway -- I shorted more stock on Friday at $134,810 a share -- and not one member of the adoring media pointed out this reasonably important miss, preferring, instead, to chronicle the quips from the Buffett during Berkshire's Annual Meeting.

Buffett is a great investor and an ultimate marketer. Though arguably the most brilliant investor in modern financial history, Buffett has also become a master marketer. By selling himself as a savior, or Investor of Last (or often First) Resort, Buffett has positioned himself to prosper in the form of getting beneficial terms in acquisitions -- a positive but still a "marketing" technique.

For example, Berkshire contributed over $4 billion of subordinated debt in the recent Mars deal. But what didn't get much press (and it should have!) was that on top of the debt, Berkshire invested over $2 billion of equity in the Wrigley/Mars transaction at a "discount" to the price that Mars eventually will pay for Wrigley's common shares.

On a less significant note, the weekend gala in Nebraska also serves to sell products sold by a number of Berkshire's subsidiaries. For example, Berkshire's Nebraska Furniture Mart sells about 10% of its total annual sales during the weekend of the company's Annual Meeting.

As I have mentioned in my original column on Berkshire, when Buffett finally steps down (and that will likely be sooner than later), the benefits of the Oracle's unique position will be less impactful to Berkshire.

Doug Kass is the author of The Edge, a blog on RealMoney Silver that features real-time shorting opportunities on the market.