Berkshire Subsidiary Briefs - 4/29/14

How Brooks Reinvented Its Brand (Inc.)

It is hard to believe that Brooks, known for is brand ethos 'Run Happy,' was on the brink of bankruptcy in 2001. A white-hot brand in the '70s and '80s, Brooks made shoes and apparel for a variety of sports including basketball, tennis, and football, until 2001 when Jim Weber came on as CEO. With the company losing money on many of its product lines, Weber decided to undertake a massive strategy change. He narrowed Brooks's focus to running, cutting products that produced $30 million in annual revenue. The move paid off. According to Weber, in the last 13 years the Seattle-based company has grown 18 percent compound, and is expected to crack $500 million in revenue this year.

NetJets Nearing Official Launch in China (Business Wire)

NetJets Inc., a Berkshire Hathaway company and the worldwide leader in private aviation, announced today that it is hiring employees in China, partnering with vendors and positioning aircraft in the market so it can quickly begin operating its NetJets China business once government approval for the operating certificate is finalized – expected mid-year in 2014. [...] The company is also expanding relationships with key vendors, such as Savoya, one of the world’s finest chauffeured ground transportation service providers and the industry leader in applying technology to deliver precise and reliable service to every passenger.

New Heinz Co. owners offer buyouts to all HQ workers (Dallas News / AP)

The new owners of H.J. Heinz Co. have offered buyouts to all workers in Pittsburgh, where the ketchup-and-food giant has been based for decades, but insist the offer doesn’t signal a plan to move the company’s headquarters. Instead, Heinz officials said the buyout is being offered because the new owners Berkshire Hathaway and Brazilian investment firm 3G Capital recognize the company’s new culture might not be “the perfect fit” for longtime Pittsburgh-based employees. Heinz officials said any workers who quit will be replaced, leaving the company with the same number of workers in Pittsburgh. The buyout offers, which begin at six months’ severance pay and increase depending on years of service, were sent out last week to all 775 Pittsburgh employees.

Google Signs Renewable Energy Deal With MidAmerican Energy (RTT News)

Google Inc. has signed a renewable energy deal with MidAmerican Energy Holdings Co., the two companies said Tuesday. Under the deal, MidAmerican Energy, a unit of billionaire Warren Buffett's Berkshire Hathaway Inc. will supply up to 407 megawatts of wind-sourced energy to Google's data center in Council Bluffs, Iowa. The deal with MidAmerican represents Google's seventh and largest renewable energy purchase to date, bringing the total amount of renewable energy that the company has contracted for to over one gigawatt, or 1,000 megawatts. The wind power for the Iowa data center will come from several wind projects that are part of MidAmerican Energy's Wind VIII program, an initiative under which that company will bring 1,050 megawatts of new Iowa wind power online by the end of 2015.

Warren Buffett Thinks This is The Most Important Business in Our Economy (Fool)

BNSF carries about 15% (measured by ton-miles) of all inter-city freight, whether it is transported by truck, rail, water, air, or pipeline. Indeed, we move more ton-miles of goods than anyone else, a fact establishing BNSF as the most important artery in our economy's circulatory system. Its hold on the number-one position strengthened in 2013.

N2Power Announces Agreement with TTI Europe, Inc. to Partner as N2Power’s Master Distributor for Europe(BusinessWire / MarketWatch)

N2Power, a division of Qualstar Corporation, is pleased to announce its distributor agreement with TTI Europe, Inc. (TTI). TTI will handle all coordination of orders, shipments, and inventory of all N2Power products throughout Europe to better serve our European distributor and customer base, as well as promoting the adoption of N2Power products in new designs. [...] TTI, Inc., a Berkshire Hathaway company, is the world’s leading specialist distributor of passive, connector, electromechanical, discrete and power components.

Johns Manville Announces Expanded Mineral Wool Availability in Canada (BusinessWire / MarketWatch)

Johns Manville (JM), a Berkshire Hathaway company and leading building products manufacturer, has added commercial and residential mineral wool to its full spectrum of insulation products, giving Canadian customers more options, security and flexibility when sourcing mineral wool to meet project demands. JM mineral wool insulation offers a variety of performance benefits in both commercial and residential construction. With a high melting point in excess of 109C, mineral wool can help delay fire spread, create quieter buildings and homes, increase privacy between rooms and reduce heating and cooling costs by keeping structures warm in winter and cool in summer.

R.C. Willey opens largest store in Draper (Furniture Today)

Even before today’s grand opening, R.C. Willey’s new and largest store here got off to a quick start. The Salt Lake City-based Top 100 retailer, part of Berkshire Hathaway’s furniture division, soft-opened the 160,000-square-foot store a couple of weeks early “to make sure we get all the bugs worked out,” said President Jeff Child, and it immediately exceeded expectations. Sales over the first four days of the soft opening approached $1.5 million, he said, adding that R.C. Willey is hoping the store will do $65 million to $70 million in annual sales. That would be more than double the volume of its nearby Taylorsville location, which closed with the Draper opening.

Future Metals Opens Dayton, Ohio Service Center (BusinessWire / Yahoo) Thanks to writing these news posts for over two years, I can now spot a Berkshire Hathaway subsidiary from 500 yards away. But even I can't begin to keep track of every sub-subsidiary that Marmon owns. This one is new to me.

Future Metals, a worldwide specialty metals distributor to the aerospace manufacturing and maintenance industry, recently opened its ninth metals service center. [...] The new Dayton facility, which officially opened its doors in January 2014, provides aerospace manufacturing and aftermarket customers in the Midwestern United States with localized inventory and just-in-time deliveries. Products being carried include stainless, nickel, titanium and aluminum tubing as well as extrusions, sheet and bar products. [...] Future Metals and its affiliate companies, including Marmon/Keystone LLC, are Marmon Distribution Services/Berkshire Hathaway companies and members of The Marmon Group [...]

Berkshire News Briefs - 4/29/14

Also coming up, a second post of Berkshire Subsidiary Briefs with all the subsidiary news that would have made this post even longer!

Nuggets of Corporate Governance Wisdom From Charlie Munger (WSJ)

In the continuing Age of Activism, corporate advisers and theorists spend much time talking about corporate governance best-practices. They’d all be out of a job if Charlie Munger had his way. That’s the premise of a recent paper from the Rock Center for Corporate Governance at Stanford University. The paper highlights several nuggets of corporate-governance wisdom from the famed right-hand man of Warren Buffett. Something like a folksy book of quips, advice and motivational coffee mugs, it boils down to simplicity and trust.

Buffett Can’t Find Bear for Berkshire Annual Meeting (WSJ)

It’s hard to find someone who wants to go on record betting against Warren Buffett. Despite a very public cattle call for people who are short on his Berkshire Hathaway Inc.BRKB +0.62%, Mr. Buffett was unable to find a bearish analyst or investor to invite to his company’s annual meeting on May 3. Instead, Berkshire has invited Morningstar analyst Greggory Warren to be the third questioner on a panel of analysts, along with Jay Gelb of BarclaysBARC.LN +0.50% and Jonathan Brandt of Ruane, Cunniff & Goldfarb.

7 Things We Can Learn From Warren Buffett’s Biggest Money Mistakes (Fool)

The Motley Fool is counting down the days until the annual meeting with a story a day. This entry for day 7 of the countdown was the best of the lot so far:

As chairman of Berkshire Hathaway, Warren Buffett has an excellent investing record. But his record isn't without imperfection. Mistakes happen, even when you're the best at what you do. Fortunately, these mistakes, and Buffett's commentary about his investment decisions, provide us with valuable study materials in the school of investing. Here are seven of Buffett's biggest blunders, and the lessons that we can learn from his mistakes: [...]

Warren Buffett: Stocks aren't 'too frothy' now (CNBC)

A summary of some of the important points from Buffett's interview on CNBC last week, including his abstention from voting on Coca Cola's compensation plan, whether or not we're in a new tech bubble, and how he feels about IBM these days.

Warren Buffett rejected the suggestion the U.S. stock market is "too frothy" right now as the major indexes re-approach their all-time highs. "I think we're in a range, and it's a big zone always, of reasonableness. But stocks ought to be higher every 10 years.There's a plow back of earnings that goes back year after year. Stocks will become worth more decade after decade, not in any precise manner, not in an even manner or anything of the sort. But 10 years, 20 years, 30 years, stocks will be worth more than they are today."

Buffett: Coke exec compensation plan was excessive (Fortune/CNN)

Warren Buffett called Coca-Cola's controversial compensation plan excessive, but said he declined to vote against it. The plan -- which will pay Coke managers generously with shares of the company if they achieve specific performance goals -- passed on Wednesday at Coke's annual meeting, but without Buffett's help. Buffett said he abstained in the vote. Berkshire Hathaway, Buffett's insurance conglomerate, is one of the largest owners of Coke's stock, with a little over 9% of the company's shares. The fact that Buffett didn't vote against Coke's plan, though, is noteworthy.

Buffett: moving oil by rail safely major industry concern (Reuters)

Warren Buffett, chairman of conglomerate Berkshire Hathaway, said on Wednesday that safety is a major priority for the rail industry, after a recent spate of accidents raised concerns about how to transport oil safely. "I can tell you that's all they're thinking about," the investor said in an interview with Reuters. "We're going to move a lot of crude in this country, and we have to learn how to do it very safely," he added. He added that the delay in the construction of the Keystone pipeline was unlikely to prompt additional purchases of tank cars at Berkshire railroad unit BNSF.

Christian Brothers doesn't want Buffett on Berkshire Hathaway's board (Pensions & Investments)

Good luck with that...

Christian Brothers Investment Services is opposing the election of all Berkshire Hathaway Inc. directors, including Warren E. Buffett, chairman and CEO, according to the proxy-voting disclosure of the manager of managers whose clients are Catholic institutions. CBIS is withholding its votes for the directors “due to a lack of information on diversity of the composition of the board” and insufficient background about the directors, even lacking photographs of them, said Marietta L. Parenti, CBIS spokeswoman.

Berkshire News Briefs - 4/14/14

A group of MBA students from Western University of Canada's Ivey Business School recently traveled to Omaha to meet Warren Buffett, and were nice enough to publish their notes on-line. There are many interesting business and non-business questions and answers. Here's an excerpt of one of the non-business ones:

Question # 8: How would you rate your own success on a scale of 1-10? Answer # 8: I don't believe I'm very different from others. I still eat the same food, have a good time when I go out with friends, just like others, the only difference is I travel a little better now. I take my jet when I travel. Success for me is doing what you love and are passionate about and as long as you are doing what you like you'll stand out and outperform. If I have to rate myself I'll always believe I'm a 10. I feel that the way the rich often show off their wealth as a form of "elephant bumping". Buying another house would only be an inconvenience, I’d feel obligated to stay in it instead of my current home which is quite comfortable. For example, I don’t like yachts. They only offer the opportunity to do things with greater difficulty at sea, where I feel trapped, that I could have easily done on land (at the Y) for a fraction of the cost. Ultimately, money is not the ultimate measure of success, but rather, it is how many loved ones you have around you.

Toombs nails a billion for MiTek (St. Louis Business Journal)

(This is from 2012, but I saw it this week, and I found it interesting)

As important as the Berkshire purchase was, even more critical to MiTek’s growth was a seed planted in 1990. That’s when the company, at the recommendation of Dave McQuinn, a young MiTek software developer, bought a new software called Microsoft Windows and became an early beta site. [...] With MiTek’s proprietary software, called Sapphire and developed at a cost of more than $100 million, builders who work with MiTek’s customers get three-dimensional computerized structural drawings that detail every part - all MiTek parts, of course - needed to build a structure at the minimum cost. “We sell them everything except the lumber, delivery trucks and forklifts,” Manenti said. [...] Software as sophisticated as Sapphire provides what Buffett calls a moat, a protection against potential competitors. “I don’t care how much you spend on software. You can’t do it in a year,” said McQuinn, 57, now the company’s vice president of software development. “Software takes time, and we have a 10-year head start. We have 80 engineers adding code to this software right now.” Currently MiTek is putting the software into mobile technology.

BNSF Sees Bakken-Area Rail Tie-Up Lasting Until Year-End (Bloomberg)

BNSF Railway Co., the carrier owned by Warren Buffett’s Berkshire Hathaway Inc., will need the rest of 2014 to untangle train tie-ups in the corridor that serves North Dakota’s Bakken shale region. A system-wide traffic jam, caused by surging grain and crude-oil volumes coupled with harsh weather, is being resolved more quickly on the southern lines linking Chicago and Los Angeles, Chief Executive Officer Carl Ice said yesterday [...] Ice’s forecast underscored the scope of the recovery effort for U.S. railroads after winter storms and rising cargo shipments disrupted operations. BNSF sent 300 additional crew members to its northern region and plans to add 500 locomotives and 5,000 railcars this year to help ease the snarls, Ice said.

Warren Buffett-investee Lubrizol to set up $50 mn CPVC compounding plant in Gujarat (Business Standard)

In what will be Warren Buffett's first investment in Gujarat [India], the Lubrizol Corporation, a wholly owned subsidiary of Buffett's Berkshire Hathaway Inc. on Thursday announced setting up of a chlorinated polyvinyl chloride (CPVC) compounding plant in Dahej. To be set up at an investment of over $ 50 million (Rs 300 crore roughly), the upcoming plant is part of the company's previously announced $400 million global expansion of its resin and compounding manufacturing capacity. What's more, according to senior Lubrizol officials, the company is also exploring possibilities of setting up a CPVC resin manufacturing plant in India. "Many of the raw materials required for Lubrizol's specialty chemical product portfolio are produced in GIDC. Hence, Dahej makes sense due to raw material availability and proximity to South Asia, the Middle East and East Africa markets. [...]" said Eric Schnur, president of Lubrizol Advanced Materials and corporate vice president of Lubrizol Corporation.

Berkshire Hathaway Company Providing Private Jets to Chinese Market (Global Herald)

The business structure of Chinese companies is never simple. China generally demands that foreign companies do business by setting up joint ventures with domestic companies.

A new Berkshire Hathaway company, NetJets, is making the final preparations to launch a private jet service in China. The company has announced that it is awaiting final government approval for an operating certificate, which is expected to be granted in mid-2014. [...] NetJets Business Aviation Limited is part of a joint venture with NetJets Inc.; Hony Jinsi Investment Management (Beijing) Ltd, a subsidiary of Hony Capital, a leading private equity firm of China; and Fung Investments, part of the private investment arm of the families of Dr. Victor Fung and Dr. William Fung, the controlling shareholders of the Li & Fung group of companies.

Lessons From Rebranding a Berkshire Hathaway Consumer Business (Bloomberg Businessweek)

Companies spend an enormous amount of time and money creating a new brand, but when it comes time to launch, they often miss deadlines, communicate poorly with everyone involved, and fail to coordinate the multitude of moving parts. Opportunities are lost to delay, and worse, the company’s image is tarnished. [...] That was the challenge creating Berkshire Hathaway HomeServices, a new real estate franchise formed when Berkshire Hathaway’s real estate affiliate acquired a majority interest in the Prudential Real Estate network. The Prudential affiliates were free to join the new organization or go elsewhere when their existing contracts expired. In addition, we were acutely aware that poor execution might tarnish the Berkshire Hathaway name, which the company has rarely conferred on consumer businesses.

Berkshire Hathaway sees 38.6% growth in excess and surplus lines in 2013 (Business Insurance)

Berkshire Hathaway Inc.'s 2013 U.S. excess and surplus lines premiums grew by 38.6% over 2012 to $560.9 million, according to an analysis released by financial information firm SNL Financial L.C. on Monday. Charlottesville, Va.-based SNL said in its report that Berkshire's premium growth represents the largest percentage growth of the top 30 E&S insurers, moving it up five spaces in its ranking to become the 13th-largest E&S writer in the country, and was “well above” the 7.6% increase for the U.S. property/casualty industry as a whole.

Gov. Perry, Warren Buffett attend Katy GEICO ribbon-cutting; 357 new employees added (The Rancher)

Katy is a western suburb of Houston, TX.

Along with Texas Gov. Rick Perry and Berkshire Hathaway CEO Warren Buffett, GEICO announced Wednesday, April 3, that its Katy claims office has already added 357 new employees towards the goal of 1,000 jobs by 2017. The count is very close to meeting GEICO Chairman Tony Nicely’s 2015 goal of 400 associates.

Buffett Will Steer Investors to Airbnb to Avoid Price-Gouging by Omaha Hotels (WSJ MoneyBeat)

The billionaire investor is planning to mention the website at Berkshire Hathaway Inc.BRKB +0.39%’s upcoming annual shareholders’ meeting on May 3 as a low-cost alternative for shareholders who don’t want to pay the jacked-up rates that Omaha hotels charge while the gathering is taking place every year. [...] According to a recent article in the Berkshire-owned Omaha World-Herald, Mr. Buffett even considered a suggestion by some shareholders to move the meeting to Dallas, a bigger city. However, he was reluctant to leave his beloved Omaha. Instead, he has assigned his financial assistant Tracy Britt Cool to liaise with Airbnb.

Berkshire to Celebrate Cinco de Mayo With Fiesta Ducks (Bloomberg)

Berkshire Hathaway Inc. will sell rubber ducks of Chairman Warren Buffett and Vice Chairman Charles Munger wearing Mexican-themed outfits at the company’s annual meeting, which falls two days before Cinco de Mayo. The “fiesta ducks” sport sombreros, multicolored ponchos and -- in Buffett’s case -- a maraca, according to an advertisement in the visitor’s guide to the May 3 event, which will be held at the CenturyLink Center in Omaha, Nebraska. The souvenirs will be sold by Berkshire’s Oriental Trading party-supply business for $5 a pair. Last year, the unit sold rubber ducks of the executives in business suits.

Not going to the annual meeting? You can buy last year's Buffett & Munger business suit ducks on Oriental Trading's website. $3 for the ducks, but $7 for the shipping? Bah. Amazon Prime has spoiled me.

Oriental Trading will also be selling a Berkshire Hathaway-themed Quirkle game at the annual meeting, but that doesn't make as good of a headline.

Berkshire News Briefs - 4/3/14

MiTek acquires Ohio HVAC fabricator Ellis & Watts (St. Louis Post-Dispatch)

MiTek Industries has acquired Ellis & Watts Global Industries, a designer and fabricator of HVAC products for nuclear and military customers. Chesterfield [Missouri]-based MiTek, a supplier of engineered products, software and equipment for the construction industry that's owned by Berkshire Hathaway, said Batavia, Ohio-based Ellis & Watts will operate as a subsidiary of MiTek. [...] “By offering highly engineered HVAC and other solutions into a wide range of end markets, Ellis & Watts enables MiTek to further expand its Industrial Business segment," Tom Manenti, chairman and CEO of MiTek, said in a statement.

Berkshire Hathaway Specialty Exec on Acquisitions, Expansion Plans (Insurance Journal)

BHSI’s [Berkshire Hathaway Specialty Insurance] President Peter Eastwood said BHSI is “working hard at some expansion plans in Asia and in Europe as well” while an expansion in Latin America is “a little bit further down the road.” BHSI expects to make expansion moves outside the U.S. sometime in 2014, Eastwood said [...] Insure America LLC is a brokerage operation specializing in the travel agency errors and omissions (E&O) business, Eastwood said, “and we are going to replace the paper that supports it and write that business on our paper.” And MyAssist offers a personal assistance concierge service for motorists, Eastwood explained. [...] “Having call center capabilities within our organization will be of a huge value to us on the claims side,” he said. “It has a huge value to us as we think about expanding our business into different areas — including into the consumer space.”

Unionized Employees Picket NetJets Corporate Office (Yahoo / PR Newswire)

When you read this, note that it's a press release written by the union.

In a powerful display of solidarity, approximately 200 unionized NetJets employees participated in an informational picket across the street from the Berkshire Hathaway subsidiary's corporate headquarters to focus attention on escalating attacks on their pay, benefits and working conditions amid record profits. The event was hosted by the NetJets Unions Coalition (NUC) whose formation was announced earlier this month.

NetJets® Newest Jet Model Taking Flight (Business Wire / Marketwatch)

NetJets is the launch partner for the all-new Bombardier Challenger 350. NetJets Inc., a Berkshire Hathaway company and the worldwide leader in private aviation, announced today that it is flying a demonstration model of the all-new aircraft to more than 20 cities in the U.S. The company is showing the model to current and prospective customers. [...] NetJets will take actual delivery of the first jet this summer. The Challenger 350 jet boasts class-defining performance, 3,780 sm (6,083km) range and will connect New York to Los Angeles and San Francisco to Maui.

Berkshire Hathaway HomeServices Launches National Ad Campaign (Business Wire / Marketwatch)

Berkshire Hathaway HomeServices, the new real estate brokerage network operated by HSF Affiliates LLC, today launched a national advertising campaign to continue building brand awareness and underscoring the network’s expertise. The campaign, developed by BBDO Minneapolis, positions Berkshire Hathaway HomeServices as a brand that is “Good to know” when buying or selling a home because of its agents’ skill and forward-thinking approaches. [...] The campaign launches with :30 and :15 TV spots airing on national cable networks as well as print and digital advertising in The Wall Street Journal and industry trade publications.

Manhattan Will Get Its First Dairy Queen This Spring (HuffPost)

(Berkshire Hathaway owns Dairy Queen.)

There are 6,400 Dairy Queen locations around the world, and now you can add one more store to that number. Get ready, Manhattan, because you're about to be hit with another Blizzard. 75 years and 27 countries later, Dairy Queen is finally DQ'ing something different, and finding its way to the Big Apple. [...] In 2013, Dairy Queen opened a location just outside Manhattan, but the new location will be at 54 West 14th Street, between 5th and 6th Avenues.

Detroit-based Fathead to sell Warren Buffett Big Head wall posters for charity (MLive)

When Warren Buffett came to Detroit last fall to announce a $20 million small business lending program with Goldman Sachs, he also visibly spent time with Quicken Loans founder and Chairman Dan Gilbert. [...] In the latest Gilbert-Buffett collaboration, Fat Head announced this week that it will be selling a Warren Buffett Big Head, a large cut-out graphic that can be stuck to walls, and is donating proceeds to two Detroit charities. Fathead, which is part of Gilbert's Rock Ventures umbrella company, makes its large wall cutouts for more than 600 licensed brands and has thousands of graphics of athletes, superheroes and celebrities.

You can buy yours here.

Social media maven Warren Buffett's tweeting advice (CNBC + video) http://www.cnbc.com/id/101549253

Warren Buffett, despite what it says in our attempt at irony in the headline, is no expert on social media. [...] That's the joke behind a humorous video from the college Buffett attended more than 60 years ago, the University of Nebraska-Lincoln. In it, Buffett ("The Oracle") is seen wearing a bright red jacket (the school's color) while hand-checking a massive pile of NCAA brackets in front of him. As he happily finds an error, ("Ha! Another loser"), a bright red desk telephone rings.