Though unconfirmed, the New York Times is reporting that famous investor Warren Buffett of Berkshire Hathaway Inc. (NYSE: BRK.A) is considering buying as much as 20% of the troubled financial firm Bear Sterns Companies Inc. (NYSE: BSC).

Bear Sterns recently reported a 60% drop in third-quarter profit due to terrible loses from its mortgage trading department. The collapse of two of Bear Sterns hedge funds also cost the firm more than $200 million as well as seriously tarnished its reputation.

Bear Sterns has been attracting a good deal of outside interest recently as its shares were trading near book value. The article reported that:

"Mr. Buffett, in particular, reached out to [Bear Sterns CEO] Mr. Cayne about a month ago...when the stock was approaching its one-year low of $100. While he is not known to be close friends with Mr. Cayne, Mr. Buffett might find more in common with the Bear Stearns boss than other Wall Street chief executives. Both in their mid-70s, they hail from the Midwest and are passionate bridge players."

Bank of America (NYSE: BAC) and Wachovia (NYSE: WB) are also supposedly interested in pursuing a possible deal with Bear Sterns, though CEO James Cayne has been known to demand a premium of as much as 40% from outside investors.

Regardless of what happens, with Warren Buffett's name in the mix, BSC is definitely as stock worth watching!

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