Bear Stearns is in talks with outside investors to sell a 20% stake in the firm, according to the New York Times. The list of investors rumored to be involved includes Warren Buffet, Bank of America, Wachovia, and the Chinese companies Citic Group and China Construction Bank. Bear Stearns has been severely hit by the credit crisis in the last two months; it reported a 61% decrease in third-quarter profits last week. NY Times’ sources say that Bear’s CEO, James Cayne, is looking to sell the stake for a premium close to 20%. Investors are always interested in Warren Buffet’s latest investments, as he has come to be known as an elite value investor. There are still questions about the strength of Bear’s balance sheet, but an investment from Buffet would definitely boost people’s views of Bear’s financial credibility. Bear Stearns’ shares surged on the news closing up 7.4% to 122.66 on Wednesday.

Sources: New York Times, Reuters

Commentary: Why Goldman Underperformed Bear Bear Earnings Bad, But Market Response Good

Stocks/ETFs to watch: BSC, BAC, WB. ETFs: IAI

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