Berkshire News Briefs - 2/28/14

Berkshire Seen Reporting Record Profit as U.S. Rebounds (Bloomberg) http://www.bloomberg.com/news/2014-02-27/berkshire-seen-repo...

If you're reading this after Saturday, note that this was a pre-earnings prediction...

Berkshire Hathaway Inc. will probably post record full-year profit showing how Chairman Warren Buffett’s five decades of acquisitions positioned his company to benefit from a rebounding U.S. economy. Net income was at least $18 billion in 2013, according to analysts at Nomura Holdings Inc. and Keefe Bruyette & Woods. That compares with $14.8 billion in 2012, the previous record. Omaha, Nebraska-based Berkshire said it will release its annual report March 1 at about 8 a.m. New York time.

Warren Buffett Just Bought Another Million Shares of This Company (Fool)

Twelve months ago, Berkshire held zero shares of Exxonmobil. Phillips 66 and ConocoPhillips -- at about $1.4 billion each -- were Berkshire's largest energy holdings. After last year's spending spree, ExxonMobil now stands as Berkshires sixth-largest stock position, in a statistical tie with long-held Procter and Gamble as 4% of Berkshire's stock portfolio. During the same period, Buffett largely sold out of ConocoPhillips, with Berkshire now holding 11 million shares versus more than 80 million held in 2008. Most of the remaining stake in Phillips 66 -- largely received when the company was spun out of ConocoPhillips in 2012 -- will also disappear from Berkshire's portfolio this year, when they're traded back to Phillips 66 in exchange for the company's flow enhancer business.

BNSF to move into tank car ownership with safer oil fleet (Reuters)

BNSF Railway Co plans to move into tank car ownership and buy its own fleet of up to 5,000 new crude oil tank cars with safety features that exceed the latest industry standards, the unit of investor Warren Buffett's Berkshire Hathaway Inc. said on Thursday. The unusual step by one of the largest U.S. railroads aims to reduce the risks of moving crude by rail after several recent accidents, including one involving a BNSF train in North Dakota in December.

Berkshire Investors Lacking Data Take Buffett on Faith (Bloomberg)

For years, chemical maker Lubrizol filed annual reports with securities regulators that ran 80 pages or more, detailing everything from its inventory to pension obligations. Today, investors would have to do math to figure out the company’s earnings in public filings. The difference is that Warren Buffett’s Berkshire Hathaway Inc. bought Lubrizol in 2011 for about $9 billion and now lumps together the results with those of several other manufacturing businesses. [...] The disclosure is “sufficient for his shareholder base at the moment,” said Jeff Matthews, a Berkshire investor and author of books about the company. “Once he’s gone, people are going to say, ‘What’s here? What do I really own?’”

Business Wire Halts Direct Feeds to High-Speed Traders (Bloomberg)

Business Wire, the distributor of press releases owned by Warren Buffett’s Berkshire Hathaway Inc., will stop letting high-speed trading firms purchase direct access to its service. After consulting with Buffett, a billionaire known for holding onto investments for decades, Business Wire decided to avoid the reputational hit from an association with high-frequency traders, who often enter and exit positions in less than a second.

Buffett Toy Bet Expands to Dentists With SmileMakers Deal (Bloomberg)

Warren Buffett’s Berkshire Hathaway Inc. agreed to buy SmileMakers from Staples Inc., adding a provider of toys to dentists, doctors and teachers. SmileMakers will be acquired by Omaha, Nebraska-based Berkshire’s Oriental Trading Co. unit, which sells party and craft supplies, the business said today in a statement. [...] Taylor said Spartanburg, South Carolina-based SmileMakers will offer products from Oriental Trading. The target firm is credited with creating the “treasure box” concept to reward children for enduring dental procedures, according to the statement, which didn’t disclose terms. Oriental Trading said the deal is expected to be completed by the middle of April.

Oriental Trading's offer for SmileMakers wins out in the end (Omaha World-Herald)

Same story, interesting take (as always) from the Omaha World-Herald...

When Staples Inc. put SmileMakers up for sale last October, Oriental Trading CEO Sam Taylor told The World-Herald, he put together a presentation, including a price range, for Oriental Trading Chairwoman Tracy Britt Cool to discuss with Buffett, CEO of Berkshire, Oriental Trading’s parent company. Buffett quickly OK’d a price toward the low end of the range, and Taylor made the offer, which has not been disclosed. The investment banker who was brokering the deal soon called to say that several private equity funds had bid significantly higher. Taylor’s group was out of the deal even before he got to meet SmileMakers’ managers. [...] But a few days after Thanksgiving, the banker called again. Seems some of the private equity investors had dropped out and the others had lowered their bids to Berkshire’s level or below. Was Oriental Trading still interested? “Absolutely,” Taylor told him, at the original Buffett-approved price.

Shaw departing area rug business (Home Accents Today)

Shaw Industries is exiting the area rug business, the company announced in early January. In conjunction with the announcement, the Dalton, Ga.-based company, which is wholly owned by Berkshire Hathaway Inc., revealed plans to convert its Ringgold, Ga., rug facility into a state-of-the-art luxury vinyl tile manufacturing facility. "The economics of the rug business today simply do not allow for future growth or encourage further investment," said Vance Bell, chairman and CEO in a statement. [...] Shaw plans to invest more than $100 million in its new luxury vinyl tile manufacturing facility and when complete, the investment is expected to generate 200 new jobs in the Ringgold area. This investment follows $250 million in other recent expansion announcements by Shaw in carpet tile, hardwood flooring, yarn extrusion, and distribution.

Heinz to close two plants (Just Food)

Heinz has announced plans to close two plants in Europe as the US food giant continues to restructure its business after last year's sale to 3G Capital and Berkshire Hathaway. The ketchup manufacturer has set out proposals to shut a factory in Turnhout in Belgium and a site in Seesen in Germany. [...] The company, which said the closures would lead to the loss of around 350 jobs, would "consolidate manufacturing and eliminate excess capacity".

Pampered Chef restructures, lays off workers (Daily Herald)

Addison [Illinois]-based The Pampered Chef, which sells kitchenware, said Monday it has laid off workers and restructured its office and distribution center. A spokeswoman at the company, owned by Warren Buffett’s Berkshire Hathaway Inc., did not provide layoff numbers or when the restructuring occurred. [...] It is one of the largest branded kitchenware companies and direct sellers of housewares nationwide, according to Omaha, Neb.-based Berkshire Hathaway, which acquired the company in 2002.

BofA Reaches Deal With Buffett on Preferred Stake (Bloomberg)

Bank of America Corp., the lender that turned to Warren Buffett in 2011 for a capital injection, reached a deal with the billionaire’s company to change terms so the investment is treated more favorably by regulators. The amendment would allow the bank to count preferred shares with a $2.9 billion carrying value as Tier 1 capital [...] The amendment would force Bank of America to wait at least five years from its approval to redeem the preferred stock. Under the 2011 deal, the bank was able to redeem the preferred stake at any time as long as it paid a 5 percent premium. Berkshire gets 6 percent annual interest on the securities. Under the revised deal, Buffett agreed to give up a dividend provision that gave him the right to recover missed payments.

RSA’s Hester Taps Buffett, Unveils Share Sale to Rebuild (Bloomberg)

After less than a month on the job, RSA Insurance Group Plc Chief Executive Officer Stephen Hester announced a stock sale and tapped Warren Buffett for reinsurance to help strengthen the insurer after its scandal in Ireland. [...] RSA also bought a 550 million-pound reinsurance policy from Buffett’s Berkshire Hathaway Inc. It’s now “very hard for them to downgrade us,” Hester said on a conference call today. [...] Buffett, 83, and his reinsurance chief Ajit Jain have assumed obligations from other insurers including CNA Financial Corp. and American International Group Inc. seeking to cut risk or narrow their focus. The contracts give Berkshire more funds to invest and make acquisitions.

Allstate Fights Back Against Geico With Esurance and Clever Marketing (The Street)

Allstate has seen customers come and go over the years to rivals like Geico, a unit of Berkshire Hathaway. Geico, known for its clever commercials, is now seeing competition for online customers from its competitor Allstate. [...] Geico has long been known for its catchphrase: "15 minutes could save you 15% or more on car insurance." This motto and an aggressive advertising campaign powered Geico to be one of the leaders in online care insurance. Berkshire Hathaway bought Geico in 1996 and has controlled it ever since. To compete in the same online market, Allstate decided to also go the acquisition route. In 2011, Allstate bought Esurance for $1 billion. The largest publicly traded U.S. home and auto insurer, Allstate is now using Esurance to take on Geico directly.

Berkshire News Briefs - 2/18/14

Berkshire Hathaway released its quarterly stock holdings report (the 13F filing with the SEC). No huge surprises this time around. Here's the list of BRK's holdings showing summary of the changes (green for additions, red for subtractions).

If you have some sort of fetish for page after page of tables of raw numbers, here's the actual SEC filing. Buffett's Berkshire trims some stock stakes (CNBC)

Warren Buffett's Berkshire Hathaway eliminated its holdings of Dish Network and GlaxoSmithKline during the fourth quarter of 2013 and pared its holdings of several other companies. The moves are all relatively small, however, especially by Berkshire standards. The Dish shares were worth about $31 million at the current price, and the Glaxo stake totaled only $19.3 million, indicating that they were handled by one of Berkshire's portfolio managers rather than by Buffett himself. Another move appears to be the work of a portfolio manager. Berkshire added 2,948,285 shares of Liberty Global, John Malone's London-based international cable company. That stake was worth about $245 million as of Friday's close. There were no other major additions to the portfolio, other than previously disclosed new or additional shares of Goldman Sachs, General Electric, USG and DaVita Healthcare Partners.

Warren Buffett Portfolio Grows By $12 Billion as He Makes 3 Big Buys (Fool)

Once again, Berkshire held the public stock of 43 companies, but the total value of the holdings grew from $92 billion at the end of September to $104 billion at the end of 2013. The top of the portfolio stayed relatively unchanged, but thanks to the growth in price the stock at American Express, it and IBM swapped places, with American Express now being the third largest holding of Buffett at $13.8 billion, and IBM coming in fourth at $12.7 billion. Wells Fargo still remained at the top of the portfolio, with a value eclipsing $21 billion, and Berkshire still owned 400 million shares of Coca-Cola, now worth more than $16.5 billion.

Warren Buffett's Latest Moves to Invade Your Living Room (Fool)

Yet as it turns out, although most people do not think of Buffett as being active in the media industry, the ninth largest holding of Berkshire Hathaway is DirecTV, which is valued at $2.5 billion. In September of 2011, Buffett and team "only" had a $200 million position of the popular satellite company, but over the course of the next year, his position grew by $1.5 billion and was worth more than $1.7 billion by the end of 2012. Berkshire also has a $775 million stake in Liberty Media, which itself is a media company with equity interests in a variety of other entertainment firms, including a 53% stake in SiriusXM and even the Atlanta Braves. Buffett first amassed the position in Liberty Media in the first quarter of 2013 and has held onto it ever since. Berkshire also has a $660 million stake in cable giant Viacom.

Berkshire Hathaway also added to its position in Liberty Global, and sold part of its stake in Starz and all of its stake in Dish Network.

Warren Buffett's annual letter to Berkshire Hathaway shareholders to be released on March 1 (AP)

Billionaire Warren Buffett's annual letter to Berkshire Hathaway shareholders will be released on March 1. Buffett will again be able to release his letter on a Saturday this year, as he prefers. Buffett's shareholder letter is one of the most-quoted and best-read business documents because of skill at explaining complicated subjects and sense of humor. Buffett, who is Berkshire's chairman and chief executive, also addresses other topics besides the company's financial results.

Buffett in Talks to Exit Stake in Ex-Washington Post Owner (SF Gate / Bloomberg)

Warren Buffett is in talks to exit his $1.1 billion investment in Graham Holdings Co., the former publisher of the Washington Post, after owning the stock for more than four decades. Graham may swap assets including a business, and possibly shares it holds in Buffett’s Berkshire Hathaway Inc., according to a regulatory filing today. Omaha, Nebraska-based Berkshire would turn over its Graham stake, if a deal is signed. [...] Buffett’s company owns 1.73 million shares of Graham, a stake of about 28 percent. The stock closed today $654.90. Graham’s businesses include the Kaplan education unit as well as television stations and a cable network.

ConAgra, Berkshire – some of Uncle Sam's biggest clients – have their own IRS teams (Omaha World-Herald)

It's a nondescript door on the second floor of a downtown Omaha office building, but the work that goes on there is worth billions to the federal government. The office houses Internal Revenue Service agents charged with monitoring taxes owed by Berkshire Hathaway Inc., the Midlands' largest business and one of the IRS's biggest clients. [...] The IRS audits Berkshire's annual tax returns, working out settlements and adjustments years after they are filed — the standard auditing system used for nearly all corporate taxpayers. [...] In Berkshire's case, the nearby IRS agents reflect the company's size and the amount of work it takes to determine the federal taxes that the Omaha-­based conglomerate owes from its estimated $30 billion in pre-tax profit in 2013, plus audits for past tax years. Last year Berkshire reported that the IRS had settled audits of its pre-2005 returns, had tentatively resolved “proposed adjustments” to its 2005-2009 returns and, in 2012, began auditing its 2010 and 2011 tax returns.

Why Warren Buffett Changed His Big Oil Bet (24/7 Wall St.)

Friday’s SEC filings showed investors which stocks Warren Buffett and his portfolio managers have been buying and selling. [...] Perhaps the most unusual and surprising change seen was Buffett’s smaller stake in Suncor Energy Inc. Perhaps the huge stake in Exxon Mobil Corp. is the blame here. It was only in August 2013 that it became known that Berkshire Hathaway had invested in Suncor Energy. What was so unusual about this position is that Suncor is a Canadian oil giant. Suncor is big into Canadian oil sands.

Say “I Do” at DQ® (Business Wire / Marketwatch)

Sorry I'm late with this news. Hope nobody here had to hold their wedding at an inferior establishment last week...

In celebration of Valentine’s Day and the launch of the new Red Velvet Blizzard® Treat, the featured Blizzard of the month, the Dairy Queen system, part of Berkshire Hathaway , is inviting all fans to get married and celebrate with a reception at their local DQ® restaurant on Friday, February 14. [...] “Not only are participating locations offering the venue where the happy couple can say their vows, but we’ll also provide the food for the reception and a signature Red Velvet Blizzard Cake at the restaurant. What better way to start off a sweet marriage than then to do it at a DQ restaurant?”

Berkshire News Briefs - 2/7/14

Buffett Railroad’s $5 Billion Investment Plan Tops Union Pacific (Bloomberg Businessweek)

Warren Buffett’s Berkshire Hathaway Inc. plans $5 billion in capital investment at BNSF Railway Co. this year, positioning the carrier to extend a lead in spending over its biggest rival. The budget marks an increase of about 25 percent from the target set a year earlier, Fort Worth, Texas-based BNSF said yesterday in a statement. BNSF’s program includes $2.3 billion for its rail network and $1.6 billion for equipment, including locomotives and railcars.

You've Got It All Wrong. Here's the Real Story Behind Warren Buffett's Favorite Stock (Fool)

The seemingly obvious story around Berkshire Hathaway's outsized ownership stake in Wells Fargo is that Warren Buffett opportunistically sank a huge amount of Berkshire's capital into Wells as prices for bank stocks plunged. Like I said, it seems obvious. It fits well with the view on how Buffett invests. It's also wrong.

Big Corps. Don't All Play at Money-in-Politics (Open Secrets)

Pick a large American company, and it's a pretty safe bet that you've just named a firm that's well-represented in Washington. Virtually every industry leader has a political action committee and a few of the best lobbyists money can buy. [...] Technically, the largest firm without a PAC in its own name is Warren Buffett's Berkshire Hathaway. This may sound surprising, given that Buffett, who hails from Nebraska, is hardly an unfamiliar face in Washington. However, several of Berkshire Hathaway's subsidiaries have PACs of their own, which in combination are large enough that Berkshire Hathaway is actually one of the 20 biggest sources of PAC funds to Republican candidates this cycle.

NetJets Maintains Flight Path in the Face of Fractional Turbulence (AIN online)

A busy year for upheaval in the fractional ownership and closed-fleet private aviation sectors reached a crescendo in December when Flight Options parent company Directional Aviation Capital completed its $185 million acquisition of Bombardier’s Flexjet program. Last year also saw the collapse of Avantair, the return of Marquis Jet card founder Kenny Dichter with his new Wheels Up membership program and a move by VistaJet to enter the U.S. market. None of these events, or yet another year of fluctuating market conditions, appears to have ruffled the feathers of fractional ownership pioneer NetJets. In an interview with AIN, NetJets chairman and CEO Jordan Hansell characterized the changes as a cleansing wave of consolidation that ultimately validates his company’s business model and its plans for a $17.6 billion fleet renewal program over the next 10 years.

NetJets sees Super Bowl flights as chance to gain customers (Columbus Dispatch)

The biggest football game annually is also prime time for NetJets, which offers fractional ownership of business jets. The company has bounced back from some difficult times during the recession. Not only is its Super Bowl business brisk, but the game is providing the company a key marketing opportunity to sell the NetJets experience. “One of the benefits of the Super Bowl they get is a growth in their business,” said Scott Liston, executive vice president of the consulting firm Argus International Inc. and a former NetJets employee. “When NetJets owners fly their friends into the game with them, that experience has resulted in numerous leads,” he said.

Buffett widens lead in $1 million hedge fund bet (Fortune)

Results are in for the sixth year of the competition sometimes called the $1 million bet, and Warren Buffett -- once a piteous straggler in this 10-year wager on stock market performance -- has opened up a sizable lead over his opponent, New York asset manager Protégé Partners. Buffett's horse in the bet is a low-cost S&P index fund, and Protégé's is the averaged returns to investors (after all fees) of five hedge funds of funds that the firm carefully picked for the contest.

Berkshire Hathaway Mill Demolition (South Coast Business Bulletin)

It's just a paragraph at the bottom of a round-up of local construction news, but they do have a picture of an excavator tearing down the original Berkshire Hathaway textile mill in New Bedford, MA.

Berkshire Hathaway Mill: Demolition on the New Bedford textile mill once run by a billionaire Warren Buffet began in January after a five-year attempt to sell the building failed. The mill had been on the market for $500,000 but the building needed another $1 million in repairs, owner Roland Letendre told the Standard-Times. Letendre said he has people who are interested in the land but that he had no plans to develop the property himself. Buffet gained control of the textile mill in 1965, closing it in 1985 and selling it to Letendre for $215,000.