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Gains Expected in Berkshire Hathaway Earnings Report for Third Quarter

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Look for gains when Warren Buffett's Berkshire Hathaway reports third quarter earnings after the bell rings on today's (Friday) Wall Street trading session.

Operating earnings should get a boost from profits generated by new Berkshire subsidiary Burlington Northern Santa Fe, just as they did during the second quarter.

The consensus forecast of the handful of analysts who follow Berkshire calls for operating profits of $1676.67 per Class A share.

That would be an increase of almost 27 percent from $1325 per share for last year's third quarter.

Net earnings will probably get some help from an increase in the carrying value of multi-billion dollar derivative contracts written by Berkshire that fluctuate along with the world's global equity markets. Most of them saw significant gains in July, August, and September.

Remember, however, that Buffett has said that "wild swings" in the carrying value of those contracts "neither cheer nor bother" him and his partner Charlie Munger.

(In the second quarter of this year Berkshire reported $1.41 billion in derivatives losses. In 2009's Q2, it was a $1.53 billion gain.)

The contracts are essentially insurance policies protecting their buyers from a catastrophic long-term collapse in stock prices around the world.

Their value goes up and down on paper along with market swings, and has to be included in net earnings, but none of those contracts can be cashed in until at least eight years from now.

In the meantime, Berkshire gets to invest the premiums it has collected in exchange for that insurance, and keep any profits.

Current Berkshire stock prices:

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Class B:

Class A:

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