An Outstanding Call on Berkshire Hathaway

Although Berkshire Hathaway's (NYSE: BRK-A) (NYSE: BRK-B) stock has slid a bit lately, it had a great year in 2007, while the rest of the stock market didn't do much at all. Plenty of Fools on our Motley Fool CAPS service have identified Berkshire as a great investment, but one Fool, TMFLucky11, has trumped them all to become the current Berkshire Hathaway score leader (see the box in the top right).

Back in August 2006, she gave the stock a thumbs-up, saying:

[Berkshire Hathaway is a] reliable, boring holding company -- my favorite kind! -- that maintains diversity and doesn't eschew long-term performance for a quick-and-dirty short-term gain. Sure, the issue of succession is a potential concern, but I have no reason to believe that current management will make a poor selection. Until any of the above variables change, I'll stick with this company.

TMFLucky11 is one of CAPS' top players, having racked up a total score of more than 1,000 points while maintaining accuracy of nearly 60%. Berkshire has certainly not been her only great call. Here's a look at a few of her other prescient picks:

So what is this outstanding investor looking at these days? Here are a few of her most recent calls on CAPS:

While not all of these picks may pan out, they could be a good place to start some further research. I decided to take a closer look at a crowd favorite and Rule Breakers recommendation: Huaneng Power.

Powering a powerhouse
Based in Beijing, China, Huaneng Power is one of China's largest independent producers of power. As of mid-2007, the company had controlling interests in 13 operating power companies and a minority interest in four others. All together, Huaneng's latest reported controllable capacity was 36,024 megawatts. For sake of comparison, the U.S.'s Duke Energy (NYSE: DUK) generates roughly 46,600 megawatts through its various business units.

The thesis for Huaneng is pretty straightforward -- China has been growing at a red-hot rate and needs more of ... well, just about everything. Huaneng is in a prime position to capitalize on the soaring demand for power generation. The company has fueled its growth with a combination of organic capacity expansion as well as opportunistic acquisitions, and between the growth expectations for China and Huaneng's resources, it should be able to continue to pursue both avenues.

In July, another one of CAPS' top players, mkeszler, called Huaneng's stock "cheap relative to its growth prospects" and summed up what I've said above as: "China + power generation = GROWTH."

Since peaking at nearly $60 earlier in the year, Huaneng's stock has come back significantly and now trades at just over 11 times its expected 2008 earnings and offers a fat 7.4% dividend. The primary reason is that the China story has tarnished a bit over the past few months as concerns that the faltering US economy will spill over to China have propagated. The US does seem to be entering -- if not already in -- a period of slower growth, but it's still unclear just how much the US economy will falter and whether a big China spillover is likely. For believers in the long term picture in China, this could present a great opportunity to start looking at high quality Chinese stocks like Huaneng while they're being put on sale.

You can see more of what CAPS players have had to say about Huaneng by visiting CAPS. Our absolutely free investing community already includes more than 82,000 stock pickers chipping in to find the best stocks out there.

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