Berkshire News Briefs - 6/30/13

Berkshire's Oriental Trading Co. acquires toy company (Omaha World-Herald)

Omaha's Oriental Trading Co. said Thursday it had acquired a “brainy” toy company, taking another step in expanding Warren Buffett’s presence in the business of selling goods to consumers through catalogs and online. The subsidiary of Buffett's Berkshire Hathaway Inc. said Thursday it has purchased MindWare Holdings Inc. of suburban Minneapolis for an undisclosed amount of cash, its first acquisition under Berkshire ownership. MindWare creates, wholesales and sells more than 1,000 educational games, toys and other products via catalogs and online sites. [...]

“Our expectation is that this is the first of many acquisitions to come down the road,” Taylor said.“It gives us a chance to leverage our world-class, high-tech platform that we've built to sell products direct to consumers and to organizations.” MindWare owner Martin Smith, who is retiring, said he wanted the company to have a permanent home.

Buffett had helping hand in Oriental Trading acquisition (Omaha World-Herald)

Last year, when Taylor approached Berkshire Chairman and CEO Warren Buffett about buying Oriental Trading, he asked how involved Buffett would be in the business. Buffett answered that his philosophy is autonomy for top managers but that he should be informed about acquisitions. So Taylor brought the MindWare proposal to Buffett. “I knew we'd have to run this by Warren and get his blessing,” Taylor said, “mostly to make sure not to overpay for acquisitions. He was very helpful in helping us size it, to come up with our value we were going to offer.”

Buffett Adds $1.75 Billion in Hartford Annuity Deal (Bloomberg)

Warren Buffett’s Berkshire Hathaway Inc.agreed to take on Hartford Financial Services Group Inc.’s U.K. variable-annuity business, adding $1.75 billion in assets under management. Berkshire will pay $285 million in cash for Hartford Life International Ltd., which sold the annuities from 2005 to 2009, according to a statement today from Hartford, which is based in the Connecticut city of the same name. The deal will cut second-quarter earnings by about $110 million, Hartford said. [...]

The $285 million price is about the same as the unit’s statutory surplus, a measure of assets minus liabilities, as calculated under Irish accounting standards, Hartford said. The Hartford Life Ltd. unit is based in Dublin.

Most Respected (Forbes) http://online.barrons.com/article/barrons_cover.html#article...

Apple's reign is over. Its remarkable three-year hold on the throne of Barron's annual ranking of the world's most respected companies is history. [...] And proving that comebacks are possible even for an 82-year-old CEO, Warren Buffett's Berkshire Hathaway came out on top this year, up from a No. 15 finish in 2012 -- the only time in this ranking's nine-year history that it finished out of the top five.

Berkshire, White Mountains Get Symetra Stock in Warrant Deal (Bloomberg)

Berkshire Hathaway Inc.’s General Re and a unit of White Mountains Insurance Group Ltd. will each get about $40 million of stock in life insurer Symetra Financial Corp. in a deal to retire warrants granted in 2004. [...] Berkshire and White Mountains led an investor group in 2004 that purchased Safeco Corp.’s life-insurance business, which was renamed Symetra after the deal was completed. They remain the company’s largest investors [...]

Mars Said Seeking to Pay Back 11.45% Notes Held by Berkshire (Bloomberg)

Mars Inc. is seeking financing to pay off the balance of $4.4 billion of bonds provided by Warren Buffett’s Berkshire Hathaway Inc. in 2008 to acquire Wm. Wrigley Jr. Co., two people with knowledge of the matter said. [...] Berkshire backed Mars’s $23 billion purchase in October 2008 with the debt financing and an agreement to take a $2.1 billion stake in the Wrigley division once the deal closed. Berkshire would still be left with its equity stake in Wrigley and the preferred shares can’t be sold for another year, one of the people said.

State approves tax breaks to Athenahealth and Buffett company (Boston-dot-com)

The state approved $11.9 million in economic development tax credits Wednesday to 10 companies that promised to create new jobs and invest in local communities, including Athenahealth Inc. and Richline Group Inc., a subsidiary of billionaire Warren Buffett’s Berkshire Hathaway, Inc. [...] The council also agreed to award Richline, a jewelry manufacturing company, $400,000 in tax credits to support its growth in Attleboro. Richline, which recently bought a plant in Attleboro, plans to invest $3.6 million in new manufacturing equipment and interior building improvements, along with adding 100 new jobs.

Call a spade a spade (Hindu Business Line)

Warren Buffett’s Berkshire Hathaway had recently indicated that it is winding up its online insurance operation in India that was started in 2011. The bad news is that the experiment probably didn’t produce the desired results, but the good news is that the company took the bold decision to pull the plug and move on — at least for now. Obviously, the decision need not imply that the company would not try again. It might try, probably at a later time, using a different entry strategy or business model.

Dairy Queen installs treadmills for employees (Yahoo)

Dairy Queen, best known for candy-infused ice cream Blizzards, has installed a bank of treadmill workstations at its Edina, Minn., corporate headquarters as part of a wellness program aimed to combat "sitting disease," the not-so-technical term for ailments associated with sitting at a computer all day. [...] According to Megan Weizel, manager of the wellness program, the company also is adding showers and locker rooms "so people can freshen up if they exercise on their lunch hour or bike into work"—in part to entice potential new employees. "We're looking at not just these, but our whole wellness program as a recruitment tool," she said.

Take This Online Philanthropy Course And You’ll Get To Give Away The Buffett Family’s Money (Fast Company)

Warren Buffett’s family has a lot of money, and they want your help giving it away. The only catch: you have to participate in the Learning By Giving Foundation’s massive open online course (MOOC). Only then will you have the power to decide where (a tiny piece of) the Berkshire Hathaway fortune should go.

Berkshire News Briefs - 6/23/13

Buffett Nets Cool $44 Million in Quiet Media General Deal (MoneyNews)

The merger of Media General and New Young Broadcasting led to a benefit for Warren Buffett's Berkshire Hathaway [...] the story begins with Buffett and Berkshire Hathaway purchasing all of Media General's newspapers, except the Tampa Tribune, in May 2012. Berkshire Hathaway loaned Media General $445 million "to refinance a crushing debt load coming due," Poynter stated. The initial interest rate was 10.5 percent. Berkshire Hathaway got penny-a-share warrants to acquire 19.9 percent of the company. A benefit of the merger: Media General said last week it will be able to refinance its debt "at a considerable savings of interest expense." Poynter reported that Berkshire Hathaway will reportedly be paid a $44 million premium as part of the refinancing. Media General’s shares skyrocketed more than 30 percent the day the merger with New Young Broadcasting was announced, and have roughly doubled in value since Buffett’s investment just over a year ago.

Buffett's Berkshire Hathaway Jumps Over Allstate as No. 2 Insurer (Property Casualty 360)

Warren Buffett’s Berkshire Hathaway, led by the group’s auto-insurance subsidiary Geico, leapt over Allstate in 2012 to become the second-largest P&C insurance group based on net premiums written [NPW], according to data from SNL Financial. [...] The Berkshire group saw a 2012 increase in NPW of 12.1 percent—the largest such growth in the Top 20 P&C insurance groups. Berkshire's NPW was about $27.25 billion. Allstate slipped to No. 3, with NPW of about $25.58 billion, which is still a 1.4 percent increase over 2011. State Farm by leaps and bounds retained its title as the largest P&C group in 2012, with nearly $53 billion in NPW.

MidAmerican to issue $700 million in bonds to fund Solar Star projects (Clean Energy Authority)

MidAmerican Solar, a subsidiary of Warren Buffet-controlled Berkshire Hathaway’s Mid-American Energy Holdings Co. is planning to issue $700 million in secured senior notes to support the $2.7 billion Solar Star project, which was formerly known as the Antelope Valley Solar Projects. The bonds, beings issued by Solar Star Funding, LLC, will support construction of the Solar Star projects, which MidAmerican bought from SunPower in January 2013. SunPower is currently building the Solar Star projects, which, when completed in October 2015, will consist of 597 megawatts of AC electric generation. Once complete SunPower will provide ongoing operations and maintenance of the projects, which are co-located in Kern and Los Angeles Counties, Calif.

An Interview with Whitney Tilson (Fool Video with Transcript)

[Whitney Tilson:] The way I value Berkshire is only secondarily as a multiple of book value, because book value is such an incorrect way to look at so many of Berkshire's holdings. Something like GEICO is being carried at book, but it's worth a significant premium to book. [...]

But again, this is a good example of the "I missed it" phenomenon. I think a lot of people look at Berkshire today and just say, "The A shares have run from closer to $100,000 a share to over $160,000 a share in not much more than a year. I've missed it." Well, people have been saying "I missed it" on Berkshire...When it ran from $100 to $1000, they said "I missed it," and then $1000 to $10,000, then $10,000 to $100,000. Each time, they didn't miss it. They just had to wash that thought from their brains, and evaluate it. I value Berkshire, just taking the cash and investments per share, as a little over $120,000 a share. Then I just put an eight multiple on the pre-tax earnings of the operating businesses, about $9000 a share. You take $9000 a share of earnings, times an eight multiple is $72,000 per A share. Add the cash bonds and investments of $120,000 per share, and you get a bit over $190,000 per share of intrinsic value.

Buffett: Tracy Britt isn't Berkshire CEO successor (Omaha World-Herald)

Last week's item following up on a Wall Street Journal profile of Warren Buffett's financial assistant Tracy Britt stretched toward the question of whether she might, someday, succeed him as CEO of Berkshire Hathaway Inc. Seemed like the logical question to explore, as others have done in print and online. But not exactly, Buffett said in an email (relayed from his computer-less office through his assistant, Debbie Bosanek). [...] Britt's office is a ways down the hall, not next to his, as the Journal article said. The office sequence, in footage away from Buffett's corner office, is Bosanek, Todd Combs, Britt and Ted Weschler. Combs and Weschler manage some of Berkshire's investments.

Berkshire’s Abel, Britt Join Heinz Board After Swann Leaves (Bloomberg Businesweek)

Gregory Abel and Tracy Britt, two of Warren Buffett’s deputies who have been adding responsibilities at Berkshire Hathaway Inc. (A), were selected by the billionaire to join him as directors of HJ Heinz Co. [...] They replaced directors including Lynn Swann, the former wide receiver for the National Football League’s Pittsburgh Steelers. [...] Britt is chairman of at least two Berkshire units that replaced their CEOs last year, and Abel has been building the company’s energy business through acquisitions.

iCORE Global Partners with CORT Business Services (National Real Estate Investor)

iCORE Global, a full-service commercial real estate provider, has formed a strategic partnership with CORT Business Services, a Berkshire Hathaway Company. iCORE has been providing commercial real estate services in over 267 major markets worldwide for the past 28 years. Now, iCORE will be able to provide clients with furniture solutions. [...] "With CORT currently servicing over 80 percent of the top Fortune 500 companies, there’s already a significant overlap in our customer base," iCORE Global CEO and Managing Director Samantha Mueting said in a statement.

Berkshire Hires CNA's Fortin for New Insurance Unit (WSJ)

Warren Buffett's Berkshire Hathaway Inc. said Wednesday it hired CNA Financial Corp. executive Dan Fortin to work for a new insurance unit the company launched in April. Mr. Fortin will serve as senior vice president for executive and professional lines, Berkshire said in a statement. He was previously senior vice president at CNA Specialty and served as interim CEO of CNA Europe in 2009. Mr. Fortin joins a growing group of underwriters moving to Berkshire after several top managers from American International Group Inc. (AIG) departed to set up the new unit in late April. The new unit, called Berkshire Hathaway Specialty Insurance, is based in Boston and headed by former AIG executive Peter Eastwood.

Berkshire Hathaway HomeServices gets social (Inman News)

The new Berkshire Hathaway HomeServices real estate franchise has rolled out Facebook, Twitter and Instagram accounts. The move comes in advance of broad adoption of the new brand by many Prudential Real Estate and Real Living brands beginning in the third and fourth quarters of this year.

Berkshire News Briefs - 6/14/13

Berkshire Hathaway Specialty Insurer Open for Business (Insurance Networking)

Berkshire Hathaway announced today that Berkshire Hathaway Specialty Insurance, its recently formed commercial P&C insurance group, has commenced operations, underwriting property, casualty, professional and executive liability insurance and programs for customers in the United States. [...] The new Berkshire venture is focused primarily on U.S. excess and surplus lines insurance, according to the insurer, due to the growing importance of this market segment in providing tailored solutions to customers.

Warren Buffett Embraces an Old Love (Fool)

It didn't take long after Warren Buffett's Berkshire Hathaway welcomed four former AIG executives into the fold that it introduced a new, specialty insurance arm to the world. Based in Boston, Mass., the new entity will sell commercial insurance products encompassing property & casualty, as well as professional liability insurance. [...]

Peter Eastwood, president of the new insurance arm, has hired 40 people in just six weeks, with staff housed not only in Boston, but also New York, Los Angeles, Chicago, and Atlanta. Some of those employees include former workers at both AIG and CNA Financial. Eastwood says the new company will focus first on areas of coverage that current providers aren't supplying, adding that much work has been done in writing property and casualty policies, and that the insurer will be wading into high-risk areas, as well.

Eastwood: Despite New Market Dynamics, More 'Float' for Buffett is Possible (Property Casualty 360)

Peter Eastwood, president of Berkshire Hathaway Specialty Insurance, says the influx of alternative capital in the form of catastrophe bonds and sidecars, as examples, has a “market cycle-dampening effect,” and he doesn’t expect the types of dips and spikes in rates associated with prior market cycles. [...]

Eastwood is part of the new capacity into the marketplace, having left AIG with executives David Bresnahan, Sanjay Godhwani and David Fields to join Berkshire. He says it was Godhwani who “convinced” Buffett’s insurance lieutenant, Ajit Jain, that despite the above dynamic, the executives could lead an operation to take advantage of Berkshire’s “tremendous balance sheet” in a more “permanent, long-term-focused way”—providing underwriting returns, and investment returns on what Buffett terms “float”—the pool of premiums held before paying claims.

Berkshire Disclose More Details On Insurance Losses After SEC Pressure (ValueWalk)

Warren Buffet’s Berkshire Hathaway Inc. said in its letter to the Securities and Exchange Commission that the insurance major agree to provide disclosures in future filings of the significant catastrophe losses for their insurance group as a whole. The company would also provide such disclosures for each of its underwriting units to the extent that such losses are significant. [...] Considering the magnitude of catastrophe losses to Berkshire Hathaway Inc.’s underwriting results, the Securities and Exchange Commission asked the company to provide additional information on the amount it spends on disaster claims.

A Rising Star Emerges at Berkshire (WSJ)

When Tracy Britt arrived in Omaha, Neb., in 2009 to meet with Warren Buffett, she brought a Harvard M.B.A., a glittering resume and a boatload of ambition. But she also brought the famed investor a gift to highlight their shared Midwestern roots: a bushel of corn and a batch of tomatoes. [...] The seed Ms. Britt planted that day yielded quick results: a job for Ms. Britt as Mr. Buffett's financial assistant at Berkshire Hathaway Inc. Almost four years later, it has blossomed further, with Ms. Britt emerging as one of Mr. Buffett's top lieutenants and even serving as chairman of four companies within his $284 billion conglomerate.

Charlie Munger's 18 Biases That Cause You to Fool Yourself and Make Bad Decisions (Fool)

Almost 20 years ago, Berkshire Hathaway vice-chairman Charlie Munger gave a talk called "The psychology of human misjudgment" at Harvard. He's given dozens of talks since, but I don't think any match its wisdom and usefulness. [...] For the impatient, the talk discusses about 18 separate biases that cause people to fool themselves make bad decisions. I've summarized them here, along with a few comments from Munger.

Ex-billionaire Charlie Munger on recent donations: 'I won't need it where I'm going' (Omaha World-Herald)

Charlie Munger has taken himself out of billionaire status. “I'm deliberately taking my net worth down,” the vice chairman of Berkshire Hathaway Inc. told The World-Herald. “If it's not below a billion, it soon will be.” Actually, his two latest donations, a total of 200 shares of Class A Berkshire stock worth $34.6 million, leave him with 5,674 shares worth about $980 million. [...] Last month, the Henry E. Huntington Library and Art Gallery in San Marino, Calif., received $32.7 million worth of his stock to help fund its new education and visitors center. Munger said the Huntington's goal is to build the best museum store in the world. He has been a supporter for several years and values the library's humanities collection and research. He also gave $1.9 million of his Berkshire stock to the Marlborough School, a college preparatory school for girls in Los Angeles.

Three Things I’ve Learned From Warren Buffett (LinkedIn)

The first thing people learn from Warren, of course, is how to think about investing. That’s natural, given his amazing track record. Unfortunately, that’s where a lot of people stop, and they miss out on the fact that he has a whole framework for business thinking that is very powerful. For example, he talks about looking for a company’s moat—its competitive advantage—and whether the moat is shrinking or growing. He says a shareholder has to act as if he owns the entire business, looking at the future profit stream and deciding what it’s worth. And you have to be willing to ignore the market rather than follow it, because you want to take advantage of the market’s mistakes—the companies that have been underpriced.

Berkshire News Briefs - 6/8/13

$28 billion sale of Heinz to Berkshire Hathaway, 3G Capital closes (Pittsburgh Post-Gazette)

The H.J. Heinz Co. says the $28 billion sale of the historic Pittsburgh ketchup maker has closed. Bernardo Hees, formerly the head of Burger King Worldwide, has become the new CEO of Heinz, effective immediately, and begun making management changes, the company said. [...] He has named Paulo Basilio to serve as chief financial officer, replacing longtime CFO Art Winkleblack, also effective immediately. [...] Both Mr. Hees and Mr. Basilio are partners in 3G Capital, which partnered in the acquisition with Warren Buffett's Berkshire Hathaway. Mr. Basilio has been CEO of America Latina Logistica from 2010 to September 2012. Mr. Hees previously held that job.

Heinz completes acquisition by Berkshire, 3G; Brazilian firms shifts around CEOs (Washington Post)

With the completion of the deal, 3G is shifting one of its partners from the helm of Burger King to head Heinz. Bernardo Hees, 43, is taking the reins from William Johnson, who was the seventh CEO of the 144-year-old company for the past 15 years. Johnson walks away with a golden parachute of $56 million, in addition to the $156.7 million in vested stock and deferred compensation he accrued over his career. [...] 3G is known for its aggressive cost-cutting at the companies it takes over, suggesting Heinz could be in store for big changes. At Burger King, for example, Hees did away with executive offices at the corporate headquarters in favor of open spaces. He sat at a desk right outside the elevators on the seventh floor, in front of big board that was updated with daily sales reports from around the world.

Berkshire Directors Lowest-Paid of S&P Firms (ABC News)

They attend at least four meetings and work about 300 hours a year, but the people who sit on the boards of S&P 500 companies received an average of $251,000 last year. Financial and technology company Fidelity National Information Services Inc. paid the highest compensation due to a $9.5 million retention bonus, while directors of Warren Buffett’s Berkshire Hathaway received the lowest, according to data compiled by Bloomberg. Berkshire Hathaway directors received $3,800.

Berkshire Hathaway's MidAmerican to hold off on new Iowa nuclear plants (Reuters)

Berkshire Hathaway Inc's MidAmerican Energy Co has decided against building any new nuclear reactors in Iowa in the near future because of regulatory hurdles. [...] Many utilities have put plans for costly new nuclear reactors on hold due to cheap natural gas prices, the much lower cost to build gas-fired generators, and the lack of federal restrictions on carbon emissions. [...] Separately, MidAmerican said its recently announced plan to build additional wind generation would help keep customers' costs down.

Berkshire’s Witmer Buys Shares After Joining Buffett’s Board (Bloomberg)

Meryl Witmer, the newest director at Warren Buffett’s Berkshire Hathaway Inc., acquired more than $1 million in the company’s stock after joining the board this month. Witmer, a general partner at Eagle Capital, added seven Class A shares of Omaha, Nebraska-based Berkshire today and yesterday for prices from $165,173 to $165,262.65, she said in a regulatory filing.

Berkshire’s Richline to Buy Honora to Expand Sales of Pearls (Bloomberg)

Richline Group Inc., the jewelry manufacturer owned by Warren Buffett’s Berkshire Hathaway Inc. (A), agreed to acquire the Honora brand to expand sales of pearls. The purchase of Honora, which has been family owned and operated for more than 60 years, is expected to be completed in July [...] Richline has been striking deals to expand sales through U.S. retailers. The unit, which has manufacturing facilities in nations including Bolivia, China, India and Israel, announced a licensing agreement in March to market and distribute jewelry in the U.S. and Canada under the Marie Claire brand. Richline said Honora Chief Executive Officer Joel Schechter will remain with the company and run it as a standalone brand.

Warren Buffett's Berkshire eyeing Unipol insurance assets: report (Reuters)

Warren Buffett's Berkshire Hathaway Inc is interested in buying assets that Italian insurer Unipol must sell as part of a merger with peer Fondiaria-SAI, business daily Il Sole 24 Ore said on Saturday. The paper said Berkshire was eying commercial assets belonging to Milano Assicurazioni, a unit controlled by Fondiaria. Unipol has been forced by Italy's anti-trust authority to sell portfolio assets with premiums totaling around 1.7 billion euros ($2.2 billion) as part of its rescue of the Fondiaria-SAI group.

Berkshire’s BNSF Violated Water Act, Sierra Club Says (Bloomberg)

Berkshire Hathaway Inc.’s BNSF Railway Co. and five other coal shippers were sued by the Sierra Club over claims they discharge coal into Puget Sound and other waterways in violation of the U.S. Clean Water Act. [...] “Sierra Club’s lawsuit is meritless and nothing more than a publicity stunt meant to stop the permitting of multicommodity export terminals in the Pacific Northwest,” Suann Lundsberg, a BNSF spokeswoman, said in an e-mail. “BNSF has safely hauled coal in Washington for decades and is committed to preventing coal dust from escaping while in transit.” The groups seek a court order prohibiting the company from using uncovered rail cars to carry coal and asked that it pay civil penalties and remediation costs and other damages.

Warren Buffet's Charity Lunch Date Sells at a Bargain Price (Daily Finance)

The annual charity auction of a private lunch with billionaire investor Warren Buffett went for just more than $1 million Friday night - a bargain price compared to past years [...] An anonymous donor had the high bid of $1,000,100 when the bidding ended Friday night on eBay. The private audience with investor drew bids of more than $2 million in each of the past five years, including last year's record-setting winning bid of $3,456,789. All proceeds go to the Glide Foundation, which helps the poor and homeless in San Francisco. The nonprofit relies on the auction to provide a significant chunk of its $17 million annual budget.

Bono Sings to Warren Buffett (CNBC)

Warren Buffett was given the inaugural Forbes 400 Lifetime Achievement Award for Philanthropy, but got more than just that honor.

As Randall Lane tells us on Forbes.com, on Wednesday night in New York Buffett got a song from U2's Bono, also a prominent philanthropist, who sang his own Buffettized version of "Home on the Range."