Back in 2003, Warren Buffett said that derivatives posed a "mega-catastrophic risk" to the economy. In a shareholder letter, he compared derivatives to "hell... easy to enter and almost impossible to exit." Buffett has also called derivatives a fool's game and, most famously, likened the contracts to "weapons of mass destruction."

All of this makes it all the more fascinating that Berkshire Hathaway's (NYSE: BRK.A) first-quarter profits plummeted due to $1.7 billion in losses on, you guessed it, derivatives. Peter Cohan wrote that "This proves that George W. Bush was right and so was Warren Buffett."

It would be like anti-prostitution zealot Elliot Spitzer getting caught with a call-girl. Oh wait ...

So what happened? Here's one possibility: Even after an $9 billion plunge in the company's cash position, Berkshire still had $35.57 billion in cash on its balance sheet. Warren Buffett is the greatest investor of all-time, but it's difficult to find enough undervalued stocks in sleepy industries to put that much money to use.

Given that Buffett may not be at the helm for too many more decades, even value investing disciples -- I consider myself one -- may want to look elsewhere for investors employing a similar style with more manageable assets to deploy. One possibility is Leucadia National (NYSE: LUK), which Aaron Katsman recently compared favorably to Berkshire Hathaway. A year ago, Jim Cramer named Brookfield Asset Management Inc. (NYSE: BAM) as the next Berkshire Hathaway.

MOST NOTEWORTHY: Chesapeake, Brookfield Asset Management and Nile Therapeutics were today's noteworthy initiations:

• Jefferies initiated Chesapeake Energy Corp. (NYSE: CHK) with a Buy rating and $54 target and thinks the company can post group-leading organic growth in production and reserves over the next several years.
  
• Thomas Weisel assumed Brookfield Asset Management (NYSE: BAM) with a Market Weight rating citing slowing cash flow growth.
  
• Rodman & Renshaw is positive on Nile Therapeutics' (OTC: NILT) lead compound, CD-NP, a chimeric natriuretic peptide with potential efficacy and safety enhancements that could permit broad use in acute heart failure setting. The firm started shares of Nile with a Market Outperform rating and $7 target.

OTHER INITIATIONS:

• Baird initiated Concur Tech (NASDAQ: CNQR) with a Neutral rating.
  
• RBC Capital initiated General Moly (AMEX: GMO) with a Sector Perform rating and $11 target.
  
• Wachovia (NYSE: WB) was reinstated at Goldman with a Neutral rating.

For 25 years, Steven Halpern, editor of TheStockAdvisors.com, has surveyed the leading financial newsletter advisors asking for their favorite stocks for the coming year. This article is one of 100+ ideas in the Best Stocks for 2008 report.

"My favorite conservative stock for 2008 is Brookfield Asset Management (NYSE: BAM)," says Peter Slatin, editor of the Forbes/Slatin Real Estate Report.

"Here's a company that has it all: energy, timber and, mostly through its 50% ownership of Brookfield Properties (NYSE: BPO), top-quality commercial real estate in highly desirable markets such as London and New York.

"It also holds assets in emerging markets like Brazil, where it just acquired a major retail portfolio; and stable, well-performing Canada, including Calgary.

"Along with its office buildings in that energy and mineral boom town, BAM, which is traded on the New York and Toronto exchanges, also has a hefty stake in the region's vast oil sands.

"The company, with a market cap of more than $22 billion, is currently trading toward the higher end of its 52-week range, and its extremely professional management and well-balanced exposure to some key markets and industries will continue to make it a rock-steady performer in a very shaky world."

MOST NOTEWORTHY: Toronto Dominion, Cytec Industries, Ceragon Networks, Micron and Navteq were today's noteworthy downgrades:

• CIBC downgraded shares of Toronto Dominion (NYSE: TD) to Sector Performer from Outperformer following the Commerce Bancorp (NYSE: CBH) acquisition, as they see integration risks and believes the deal will limit the company's ability to buyback stock.
  
• Cytec Industries (NYSE: CYT) was downgraded to Hold from Buy at Jefferies, as they believe near-term risks to demand and margins could bring a better entry point by 1H08. Target lowered to $75 from $79.
  
• Collins Stewart downgraded shares of Ceragon Networks (NASDAQ: CRNT) to Underperform from Buy on valuation and uncertainties surrounding the stock, which include the NEC infringement issue and increased competition.
  
• Micron Technology (NYSE: MU) was downgraded to Accumulate from Buy at ThinkEquity. The firm is cautious on the sustainability of PC related demand and questions component order levels relative to PC sell through.
  
• Banc of America downgraded shares of Navteq Corporation (NYSE: NVT) to Neutral from Buy following Nokia's (NOK) proposed buyout.

OTHER DOWNGRADES:

• JP Morgan downgraded Companhia Vale do Rio Doce (NYSE: RIO) to Neutral from Overweight.
  
• Goldman removed Johnson Controls (NYSE: JCI) from its Conviction Buy List.
  
• Citigroup downgraded GameStop Corp (NYSE: GME) to Hold from Buy.
  
• Friedman Billings downgraded Brookfield Asset Management (NYSE: BAM) to Neutral from Outperform.

MAJOR PAPERS:

• According to the Wall Street Journal's (subscription required) "Heard on the Street" column, some investors are speculating that Warren Buffett's Berkshire Hathaway Inc (NYSE: BRK.A) could buy struggling mortgage lender Countrywide Financial Corporation (NYSE: CFC).
• Five insiders bought $592.7K in Orbitz Worldwide Inc's (NYSE: OWW) stock at per-share prices ranging from $9.55 to $10.10, reported Barron's Online's (subscription required) "Inside Scoop" column.
• The Financial Times (subscription required) reported that General Electric Company (NYSE: GE) is believed to be considering the sale of Lake, its Japanese consumer finance subsidiary.

OTHER PAPERS:

• Lehman Brothers Holdings Inc (NYSE: LEH) has bought a 26% stake in ECL Finance, the non-banking finance company of India's Edelweiss Capital, for about $4.3M, reported the Business Standard.
• Brookfield Asset Management Inc (NYSE: BAM) has shelved its plan to buy Canadian Pacific Railway Limited (NYSE: CP) due to the global credit crunch and the current lack of funding for leveraged buyouts, reported the Globe and Mail.

WEBSITES:

• According to security company Symantec Corporation's (NASDAQ: SYMC) blog, there is a new Trojan called "infostealer.monstres" which is attacking online recruitment site Monster.com (NASDAQ: MNST).

Last December, over 100 stocks were featured in our Top Picks for 2007 report. Now, at mid-year, we turn to the 20 advisors whose picks showed the strongest gains to get an update on their previous picks, as well as a new favorite stock for the second half of the year.

Gordon Pape, editor of Internet Wealth Builder, chose Brookfield Asset Management (NYSE: BAM) as his top pick for 2007. The stock rose 31%, as of June 1, 2007. Here is Gordon's original recommendation on BAM and his current favorite stock for the rest of 2007.

Updating the stock, Pape now says, "Brookfield is the oldest recommendation still on our active list -- we've been recommending it since 1997 -- and it continues to churn out handsome gains for members. Maybe the company will stumble some day, but I wouldn't bet on it.

"The company holds $50 billion in assets and invests in the property, power, and infrastructure sectors. Its strong stock performance is the result of a combination of continued profit growth and a corporate commitment to enhance shareholder valuation in every possible way.

"For example, the company recently announced that it is spinning off its timber assets and much of its electrical generating business into an infrastructure partnership -- Brookfield Infrastructure Partnership LP -- which will be listed on the NYSE under the symbol BIP.

"It's expected the partnership will be very attractive to investors, and Brookfield could have chosen to bring it out through an IPO. Instead, a majority interest will be distributed to Brookfield shareholders in the form of a dividend and the parent company will retain a 40% interest.

"In addition, the board of directors has approved another share split, the fourth since I recommended the stock. This will be a three for two split, paid as a dividend, which will be effective on June 1 for shareholders of record as of May 24. We continue to rate BAM a buy."

See all 20 stocks the advisors picked for the second half of 2007.

Last December, over 100 stocks were featured in our Top Picks for 2007 report. Now, at mid-year, we turn to the 20 advisors whose picks showed the strongest gains to get an update on their previous picks, as well as a new favorite stock for the second half of the year.

Gordon Pape, editor of The Internet Wealth Builder, chose Brookfield Asset Management (NYSE: BAM) as his favorite stock for 2007, which rose 31% as of 6/1/07. Here is his original recommendation and his current opinion on Brookfield.

For his new favorite, the advisor looks to Precision Drilling (NYSE: PDS). He explains, "If you like to buy good companies at beaten-down prices, take a good look at this income trust.

"Precision Drilling, which provides services to the Canadian oil patch, has been battered and bruised by a decline in oil exploration activity, distribution cuts, and, of course, the proposed new tax on income trusts which is now working its way through the Parliament of Canada.

"Investors were hit with a second distribution cut in six months when the trust announced on May 18 that it is chopping another 32% off its monthly payment, slicing it to 13 cents. That reduces the annual payment to $1.56 a share, less than half last year's level of $3.24.

"There's no doubt this oilfields service provider is going through a tough period and management hasn't tried to sugar-coat the situation. Despite the gloomy outlook, RBC Capital Markets said in a research report that the firm's dividend cut probably represents the last one for the year.

"The trust's payout ratio should now be marginally below that of other oil service providers and it is generally expected that drilling activity will pick up later this year.

On tonight's MAD MONEY on CNBC, Jim Cramer gave the ultimate recommendation: he called Brookfield Asset Management Inc. (NYSE: BAM) the next Berkshire Hathaway (NYSE:BRK-A) but on more of an international basis. This stock has risen 744% since 1997 and 54% in the last 12 months. The company manages $70 Billion in property, infrastructure, land, and specialty funds. Cramer really likes the CEO J. Bruce Flatt.

This endorsement is sure to to generate some pretty favorable buzz. Brookfield's is based in Toronto, Canada and has a market cap is $22.25 Billion and its P/E ratio is 19.9. This company has been public since the mid-1980's and its largest run has come after a large drop in 2000. This is an aggressive conglomerate that operates in the US. and abroad. Since it has hardly seen any major pullbacks you could argue that it needs one, but the performance and management are hard to argue with. Shares rose 3% in after-hours trading to $39.41 and the 52-week trading range is $25.70 to $43.82.

Jon Ogg can be reached at jonogg@247wallst.com; he does not own securities in any of the companies he covers.

Take a look at the last few years of stock prices for Brookfield Asset Management Inc. (NYSE: BAM) and you can't help but be impressed. For more than three years, this company's shares have kept climbing steadily in value, and it's now trading near its all time high.

I love this company and think it's going to keep growing, especially when a 3:2 split scheduled for early June takes place and drives the price down a bit to attract more investors.

With nearly $50 billion in assets, Brookfield has been generating growing revenues for the past few years. It's involved in real estate (particularly high-end office markets), power companies, timber, mutual funds, private equity funds, and others. Much of its growth over the past few years has come from real estate, which makes some people worry given the recent drop in real estate values, but its holdings should be diversified enough to keep the company going if the real estate market continues to drop. The company continues to repurchase its stock, and it clearly believes it will continue to deliver value to shareholders.

BAM recently announced its first-quarter earnings, which looked strong, and I think this one has the potential to keep going. Some investors are going to rush to get in before the split, so the price might have some artificial boosting over the next month, but whether you buy now or wait for the split, I think this is a company that will keep growing for you. It also offers a very modest dividend that never hurts.

Type of stock: An asset management company with diverse holdings and an excellent record of growing share value. BAM is known as a "Buffett-copy-cat" stock.

Price target: BAM is trading just off its highest price ever, but I don't think that should scare you. If you want to wait for the price to come down a bit, the split will be in early June. But I think this will be a winner for you no matter when you buy.

Hilary Kramer is a financial editor and money coach for AOL and an authority on investing. Visit her at www.hilarykramer.com.

Each year Steven Halpern, editor of TheStockAdvisors.com, surveys the leading financial newsletter advisors asking for their favorite stocks for the coming year. This article is part of his 24th annual Top Picks Report.

Brookfield Asset Management Inc. (NYSE: BAM) is the favorite conservative stock from Gordon Pape, editor of Internet Wealth Builder. He explains, "Brookfield is an international conglomerate with interests in real estate, power generation, and infrastructure.

"Although its headquarters are in Toronto, its major holdings are in the U.S. and include such blue-ribbon office properties as the World Financial Center in New York and the Bank of America Plaza in Los Angeles. All told, the office portfolio holds 65 premier properties in North America and Europe. The company also owns some $1 billion in residential assets.

"On the power generation side, Brookfield has 137 hydro-electric stations in North America and Brazil with almost 3,700 megawatts of installed capacity. The company is also involved in the development of several wind power projects in Canada.

"I first recommended Brookfield's predecessor company, Brascan, back in 1997, and since the share price has increased more than five times. That's a great history, but there is much more to come from this well-managed company. Currently the stock pays a quarterly dividend of $0.16 a share. Buy this one for income and long-term growth."

To see Gordon's top speculative idea for 2007, click here.