Warren Buffett’s Berkshire Hathaway Inc. will get more than $2 billion in Goldman Sachs Group Inc. stock through warrants acquired during the depths of the 2008 financial crisis. Berkshire will receive about 13.1 million shares in Goldman Sachs, according to an agreement that uses the average closing price on the 10 trading days through today to calculate Buffett’s stake. [...] Goldman Sachs turned to Omaha, Nebraska-based Berkshire in 2008 to bolster capital and shore up market confidence when shares plunged following the collapse of Lehman Brothers Holdings Inc. Buffett, Berkshire’s chairman and chief executive officer, invested $5 billion for a preferred holding and got warrants to buy $5 billion of stock for $115 a share.
NV Energy approves sale to Buffet's MidAmerican Energy (Reno Gazette Journal)
The deal was announced over the summer, and now it's official.
Shareholders of NV Energy Inc. have approved selling the Nevada utility to Berkshire Hathaway’s MidAmerican Energy utility for $5.6 billion. NV Energy announced the shareholder vote on Wednesday, but the deal isn’t expected to close until sometime in the first quarter of next year because it still needs regulatory approval. The NV Energy deal will be one of MidAmerican’s biggest, and it will be a sizeable addition to Warren Buffett’s Omaha-based Berkshire conglomerate.
A stronger network, with more capacity (Railway Age)
This is a long article about BNSF's capital investments, if you're a fan of the railroad business.
BNSF's 2013 capex program is a whopping $4.3 billion, the industry's biggest, about a 16% increase from 2012's $3.6 billion. This year's program was initially set at $4.1 billion, but was increased by $200 million "due to more expansion-related spending," Rose said in the railroad's Form 10-Q for the period ended June 30, 2013. "We will spend $2.3 billion in capital in 2013 to maintain a strong core network and related assets. In addition, we will continue investing in our locomotive and railcar fleet and in projects that expand and improve the efficiency of our infrastructure, and continue installing Positive Train Control in response to a federal mandate." The program includes about $200 million for PTC and $800 million for terminal, line, and intermodal expansion and efficiency projects.
The Consequences of Poaching: Berkshire Edition (Daily Finance)
With Berkshire's entrance into the commercial property and casualty insurance market, it's stepped on some pretty big toes: AIG's. Trying to boost its measly 1.6% market share of the U.S. excess and surplus liability market, estimated to be around $25 billion annually, Berkshire's poaching may have cramped its other operations. After 20 AIG employees left the company for Berkshire's new division, the former decided to halt any future ties with the latter's reinsurance business. [...] Based on AIG's 2012 annual report, Berkshire was its top reinsurer with $2.19 billion in coverage, including a $1.6 billion policy from 2011 on AIG's outstanding asbestos claims. Berkshire's policies represented 8.5% of AIG's total reinsurance of $25.8 billion. In terms of Berkshire's total 2012 underwriting revenue from its reinsurance businesses, the $2.19 billion would equate to 14%.
Berkshire’s Benjamin Moore Seeks Third Chief in Two Years (Bloomberg)
Benjamin Moore, the paint maker owned by Warren Buffett’s Berkshire Hathaway Inc., said Chief Executive Officer Robert Merritt left the company. Benjamin Moore, which hired Merritt last year, is searching for a new leader and expects to name a replacement “in the coming week,” the Montvale, New Jersey-based company said yesterday in a statement on its website.
But on the plus side, in Benjamin Moore news...
Benjamin Moore Unveils 'Breath Of Fresh Air' As Its 2014 Color Of The Year (Sacramento Bee)
Benjamin Moore, a unit of Berkshire Hathaway and one of North America's most respected paint and coatings manufacturers, unveiled today its highly anticipated Color of the Year for 2014 to be "Breath of Fresh Air" (color number 806) as part of its Color Trends 2014 palette. Announced by newly appointed Benjamin Moore Creative Director Ellen O'Neill at the opening of the company's New York City showroom during Fall Market 2013 for architects and designers, Breath of Fresh Air is a gorgeous, ethereal blue serving as a "new neutral" that is livable and functional.
Buffett’s Alpha Paper Illustrates Buffett’s Achievements (Value Walk)
The paper finds that studying data of all listed US stocks from 1926 to 2011, Berkshire Hathaway Inc. has the highest Sharpe ratio of all. Moreover, Buffett also has the highest Sharpe ratio of all US mutual funds that have been around for more than 30 years. [...] The paper estimates that Buffett’s leverage ratio has averaged 1.6-to-1 during the past 30 years, boosting risk and excess return in that proportion. Sustaining a leverage ratio of 1.6:1 over several decades and through several significant periods of market turbulence has boosted Buffett’s returns when many other market participants have been forced into fire sales and write-downs.
Berkshire Hathaway launches business crisis event cost coverage insurance (Insurance Business Review)
Berkshire Hathaway Specialty Insurance has unveiled a new Business Crisis Event Cost Coverage policy, to cover costs incurred to manage a business crisis, including the fees of a crisis management consulting firm. The new policy offers up to $100,000 to hire a crisis management consulting firm to advise the policyholder in managing adverse media coverage and public perceptions, following a crisis. The events include a serious accident or explosion, an act of violence, or a contamination incident. Moreover, the coverage also provides expenses required extending immediate support to victims and their family members, including funeral expenses, psychological counseling, travel, and temporary living costs.
Nebraska Furniture Mart president recalls Kansas City store as lesson in patience (Omaha World Herald)
The Nebraska Furniture Mart's new store in Kansas City, Kan., was a disaster for nearly two years. It was overwhelmed with customers. Deliveries lagged purchases by 30 days or more. Problems began multiplying almost as soon as the store opened in 2003 and didn't let up. [...] As time went by, the Omaha retailer resolved its Kansas City store's problems and the company's managers learned from their mistakes, Blumkin said. The idea of expanding into another market gradually became a possibility, and Buffett's backing did not waver. Today, the Mart is halfway to opening its third and most ambitious mega-store, a $1.5 billion, 433-acre development in suburban Dallas that's due to open in 2015.
Berkshire Hathaway's manufactured home unit offers man cave inspired by Duck Dynasty star (The Republic)
Clayton Homes is offering a new house inspired by one of the stars of the Duck Dynasty reality show. Berkshire Hathaway's home builder says the limited edition design with camouflage wall panels, wood grain linoleum flooring and a built-in gun closet would make an ideal man cave. Clayton Homes says Si Robertson from the hit A&E show is endorsing the 1,280-square-foot, three-bedroom home as a good value. The company posted a series of videos of Robertson chatting with Clayton's CEO online at http://www.claytonhomes.com .
View the Si Pad here.
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