Buddy Boy
Set 'em up, Warren

1. All You Can Drink

Let no one say Warren Buffett has lost his touch.

Recent months have been trying for the billionaire investor and Berkshire Hathaway (BRKA) chief. First he admitted in his annual shareholder letter that he had "found very few attractive securities to buy" last year, resulting in weak returns. Then he got dragged before regulators to discuss a questionable reinsurance deal between his General Re and Hank Greenberg's AIG (AIG) - Get Report. Finally, some gadfly types voted against him on the Coca-Cola (KO) - Get Report board, claiming conflicts of interest.

With headaches like this, we'd be reaching for a drink. And apparently we're not the only ones.

On Thursday, we learned that Berkshire had taken a big stake in giant brewer Anheuser-Busch (BUD) - Get Report.

"Anheuser-Busch welcomes Berkshire Hathaway as a shareholder," the company said in a midmorning press release, nodding toward Buffett's enviable record in buying stocks such as Coke and

Gillette

(G) - Get Report

. Anheuser's stock surged, and Berkshire's followed.

Yes, when things aren't going your way, it pays to nip it with a Bud.

2. Fizzy Tizzy

Speaking of drinks, Coke got itself out of a sticky situation this week.

The Atlanta-based sugar-water giant settled a long-running Securities and Exchange Commission probe of its sales and accounting practices Monday. The government accused Coke of making its distributors, particularly in Japan, buy soft-drink concentrate they didn't need just so Coke could hit its quarterly numbers.

The allegation, which Coke neither admitted nor denied in the settlement, is hardly unheard of. After Bristol-Myers Squibb (BMY) - Get Report restated earnings in late 2002, a number of class-action suits accused the drug company of doing the same thing with its pricey pills.

What's new here, though, is the name. In the case of Bristol-Myers and countless others, the game was called "channel stuffing."But Coke has now put its stamp on Wall Street's lexicon. In its complaint against the company, the SEC dubs Coke's act "gallon pushing."

For its part, Coke was pleased as punch about getting the whole mess cleared away, particularly because it managed to escape the multiyear probe without facing a fine or penalty.

"I am gratified that the SEC has acknowledged the fact that the company cooperated with its investigation, which was the primary directive provided by management and the board throughout this process," CEO Neville Isdell said.

Yes, sometimes a slap on the wrist can end up tasting pretty sweet.

3. Footloose

Big things are afoot with this

Martha Stewart Living

(MSO)

-

Sirius

(SIRI) - Get Report

deal.

Satellite Dishes
What's cooking, Martha?

The companies grabbed headlines Monday with a plan to create the first satellite radio channel for women. The Martha Stewart Living channel will offer tips on "cooking and entertaining and collecting, home-keeping, animal information ... child care, kids," Stewart said in Monday's press conference. "We think it's not shocking that Martha would be part of something so extraordinary and so new," Sirius chief Mel Karmazin added.

It's hard to argue against any plan to reach more listeners, particularly women. Sirius, after all, is better known for hiring Howard Stern, whose shtick usually steers clear of wedding-planning pointers. Yet we can see even bigger advantages for Sirius.

The New York-based company has been more aggressive than rival

XM Satellite

(XMSR)

in creating winning new content. It has signed up Stern and Stewart as well as landing a big contract with the National Football League. But it continues to lag on technology. XM recently hooked up with

AOL

for an online radio partnership, and, perhaps more important, it owns the portable satellite radio market with its

MyFi receiver.

This is where Stewart's expertise will be crucial. The self-proclaimed radio fan gushed at the press conference Monday about

Apple's

(AAPL) - Get Report

lightweight iPod and how it makes radio "accessible to so many people ... leading an active life."

Hmm. iPod, radio, active. What a combination. If you didn't know better, you'd swear the time was ripe for a Martha Stewart-brand portable satellite radio -- worn as an ankle bracelet.

4. Misplaced Modifier

It's starting to look like investors may have been on to something with

Doral

(DRL)

.

Shares of the Puerto Rico-based bank are off a staggering 70% this year. The slide steepened this week when the company

told Wall Street it would have to restate earnings for past years by as much as $435 million. The very next day, the SEC said it would look at the company's books.

At issue are the so-called derivative securities that the bank used to hedge its exposure to interest rate risk. Derivatives are notoriously difficult to handle and have already tripped up mortgage giants

Freddie Mac

(FRE)

and

Fannie Mae

(FNM)

.

So it was hardly shocking this week when we learned that Doral was up to its eyeballs in derivatives losses. But what's more interesting is all the effort Doral went to earlier this year to suggest that bearish investors were barking up the wrong tree.

Problems with Doral's derivatives portfolio surfaced in January, when the bank took a $97.5 million pretax impairment charge. Doral's management downplayed the charge on a subsequent conference call, though, denying that the bank had suffered any problem with its hedging strategy.

The company then unleashed a barrage of press releases defending itself against "unusual market activity." There were a number of statements to the effect that Doral's fundamentals remained healthy. Our favorite, though, was a Feb. 23 release bearing the headline "Doral Financial Addresses Misplaced Investor Concerns Relating to Investments in Corporate Bond and Loan Obligations by Another Local Institution."

At the time, Doral was trading at around $40, down some 20% in just two months. On the other hand, on Thursday it fetched $15.85.

One way or another, it sounds like investor concerns were pretty well placed.

5. Cherry Downhill

Another quarter, another

Commerce Bancorp

(CBH) - Get Report

earnings-call dustup.

In January, the Cherry Hill, N.J., bank raised some hackles on Wall Street by

not taking questions on a conference call from four analysts who had unfavorable ratings on the company.

Then, last week, the company did take a call from a South Jersey stockbroker. But you could hardly blame the broker, Scott Morrison, if he wished Commerce had ignored him too.

That's because Morgan Stanley fired Morrison shortly after he asked Commerce chief Vernon Hill on the call whether an exec had become "a liability." The exec in question was Commerce Vice Chairman George E. Norcross III, whose political activities have raised eyebrows with some of the bank's critics.

Morrison defends his as "a fair question" and says Morgan Stanley fired him because it wants to keep doing business with Commerce. "It is my understanding they were concerned the future relationship would be jeopardized," Morrison told

The Philadelphia Inquirer

. Morgan Stanley declined to comment.

The incident drew notice in the Philadelphia press in part because of politics. Norcross is a Democratic fund-raising juggernaut, and Morrison, a Republican, last year lost his bid to be elected as a Camden County freeholder.

But Morrison shrugs off the politics talk or any suggestion of animus toward Commerce, saying he listened to various companies' calls "from time to time." He was listening to the Commerce call because the bank is a big employer in Camden County, he says, adding that now he's considering his "legal options."

Gotta hand it to Morrison and Morgan Stanley -- they're managing to make crotchety old Commerce look pretty reasonable.

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