Berkshire News Briefs - 5/30/14

Berkadia Boosts Loan Servicing by $2 Billion With Deal (Bloomberg Businessweek)

Berkadia Commercial Mortgage LLC, the joint venture of Berkshire Hathaway Inc. and Leucadia National Corp., added $2 billion to its loan-servicing portfolio with the purchase of Phoenix-based Keystone Commercial Capital. Keystone, with mortgage-banking offices in Boston and San Diego as well as Phoenix, will continue to be overseen by co-founder and managing partner Charlie Williams, Berkadia said today in a statement. Berkadia picks up 16 employees with the purchase.

Laissez-faire Alberta jolted by free-market paranoia (Globe and Mail)

If there are two things that the free-market energy bastion of Alberta has never been completely comfortable with, they are the free market and energy. That’s become clear again in the wake of Berkshire Hathaway Energy’s $3.2-billion bid for AltaLink LP, the company that operates power lines serving more than four-fifths of the province. The deal has sparked heated debate about foreign ownership of “critical infrastructure” in a place where new transmission projects get embroiled in battles over property rights even when demand drives the grid close to the breaking point.

Dairy Queen Finds a Summer Love: The S’more (NY Times)

A marketer that may be a symbol for those whose sales surge in the summer is the American Dairy Queen Corporation, a division of Berkshire Hathaway that has 6,450 Dairy Queen stores in 27 countries. A campaign to begin on Tuesday for the American market, where Dairy Queen has about 4,800 restaurants, has one goal: to make those few summer days count at the cash register. [...] According to Kantar Media, a unit of WPP, Dairy Queen spent $76.8 million on advertising last year. That was an increase from the $67.3 million spent in 2012 and just less than the $77 million spent in 2011. Dairy Queen will increase its spending this year, Mr. Westrum said.

The Dairy Queen System’s First-Ever Manhattan Location Opens Today (Marketwatch)

As of today, Manhattan residents and visitors will now have America’s most iconic treats right around the corner as the Dairy Queen® system, part of Berkshire Hathaway , opens the first-ever DQ Grill & Chill® restaurant in Manhattan. [...] Located at 54 West 14th St. between 5th and 6th Avenues [...] The Manhattan location is the only two-story DQ Grill & Chill restaurant in the country.

MiTek launches new roof design software in the UK & Ireland (Specification Online)

MiTek Industries Ltd, a Berkshire Hathaway company and the world’s leading supplier of connector products, software, equipment and services for the pre-fabricated roof truss and metal web joist market, has announced the UK and Irish launch of its new roof design software Pamir. [...] "The software has been ten years in development, comprises of more than 760,000 lines of code and has taken 130 man years of work to complete. The result is software that delivers the modern truss manufacturer quicker estimating capabilities, quicker roof editing tools and a more integrated software environment. [...]

Clayton Homes Unveils Newest Features for Tech-Savvy Homeowners (Digital Journal / PRWeb)

With tablets, smartphones and smart appliances becoming prominent features of American lifestyles, Clayton Homes, the nation's largest home builder*, is now unveiling several innovative amenities to its customers. Earlier this month, Clayton Homes presented its new Gen-Now Concept Home at the annual Berkshire-Hathaway Meeting to Warren Buffett and shareholders. The home was technologically integrated with devices and appliances on the cutting edge of technology, and many of those features will be available in other Clayton Homes models.

Buffett has advice for your kids (BusinessTech)

"Not everybody’s going to be an entrepreneur, but everybody should be financially literate. Financial literacy is a base requirement like spelling or reading or something of the sort that everybody should acquire at any early age. The financial habits you develop when you are young are going to go with you into your adulthood. But you can’t be an entrepreneur unless you’re financially literate."

Warren Buffett's older sister works one-on-one to help (CBS Money Watch)

When Warren Buffett announced in 2006 that he would give away his billions, he was flooded with individual requests for help that still flow in today. Instead of tossing the letters aside, Buffett packages them up and sends them to his big sister Doris. With the help of seven women, her Sunshine Lady Foundation scrutinizes each request to find people who have come upon bad luck through no fault of their own.

Berkshire News Briefs - 5/22/14

The big news of the week was the quarterly 13F disclosure of Berkshire Hathaway's stock portfolio ownership. You can catch up on all the latest portfolio changes in a convenient color-coded table on Dataroma: http://www.dataroma.com/m/holdings.php?m=brk

Buffett’s Berkshire Discloses $528.7 Million Verizon Bet (Bloomberg Businessweek)

Warren Buffett’s Berkshire Hathaway Inc. (A:US) disclosed a holding in Verizon Communications Inc. (VZ:US) in a wager that the telecommunications company will benefit after buying out its partner in the largest U.S. wireless business. Verizon posted the biggest increase in the Dow Jones Industrial Average. Berkshire held 11 million Verizon shares as of March 31, Buffett’s company said yesterday in a regulatory filing. The investment is valued at about $530 million.

The 12 Stocks Warren Buffett and Berkshire Hathaway Just Bought and Sold (Fool)

Tough to excerpt from this one, because it's mostly tables. To sum up, Buffett was likely responsible for adding to the big positions of IBM, WalMart, and US Bancorp, while Ted & Todd were probably responsible for smaller transactions adding to DaVita, VeriSign, Verizon, and Liberty Global (class A and B), and selling parts of DirecTV, GM, Phillips 66, and Starz.

Brazil grants 'eventual reinsurer' permit to Buffett's Berkshire (Reuters)

Susep, Brazil's insurance industry regulator, on Thursday issued a license allowing Berkshire Hathaway Inc to operate in the country as "eventual reinsurer." The license permits reinsurers domiciled in a foreign country to operate in Brazil without a representative office in the country.

Berkshire Hathaway Specialty Insurance Enters Travel Insurance Business (Boston Herald)

Attentive readers may remember the recent news that Berkshire Hathaway had acquired a small company called MyAssist...

Berkshire Hathaway Travel Protection, part of Berkshire Hathaway Specialty Insurance, today unveiled AirCare, the first product in its new travel-insurance line designed for travelers, travel agencies, tour operators and travel suppliers. AirCare is the first low-cost fixed-benefit flight protection coverage available up to one hour before flight departure. [...] AirCare also includes proactive travel-assistance solutions through MyAssist, a global-assistance and concierge service. [...] AirCare is the first of several innovative travel-protection products slated to be released under the Berkshire Hathaway Travel Protection name over the next several months.

Warren Buffett's Win-Win Deal with Bank of America Corp (Fool)

Given its size and importance to the U.S. economy, Bank of America is always in the news. Recently, the company came under scrutiny for revealing a miscalculation of its assets -- the result, an unexpected $4 billion loss. In the annual meeting, Buffett comments on that miscalculation, and he explains why he choose to alter the terms of the deal he made with Bank of America in 2011 -- and why it will benefit both companies.

NetJets Soaring to New Heights on Its 50th Anniversary (BusinessWire)

A nice history of the company is included in this press release.

NetJets Inc., a Berkshire Hathaway company and the worldwide leader in private aviation, will celebrate its 50th anniversary on May 21 with employees at an event at its headquarters in Columbus, Ohio. NetJets was incorporated as Executive Jet Airways, Inc. on May 21, 1964. [...] "I purchased a small, used aircraft in 1986 that I named Indefensible because I felt guilty about flying privately,” said Berkshire Hathaway Chairman and CEO Warren Buffett. “I quickly realized the value of having a private jet as a business tool for utility and convenience, and a few years later Berkshire purchased a larger jet that I named Indispensable. I joined the NetJets family shortly thereafter, purchased the company in 1998, and continue to see it as a remarkable company with a fascinating history and an even better future.”

NetJets CEO Says Wealth-Gap Critics Overlook Aviation Employment (Bloomberg Businessweek)

Jordan Hansell, who heads the luxury-aviation unit at Warren Buffett’s Berkshire Hathaway Inc., said people who point to private air travel as an example of widening inequality miss that his business creates well-paying jobs. [...] NetJets employs more than 6,000 people, including pilots, mechanics and flight attendants. Hansell said that the company’s average U.S. salary is $1,000 higher than it is in Silicon Valley, the California region known for technology companies like Apple Inc. and Google Inc.

The Surprising Thing GEICO and Costco Have in Common (Fool)

Following up on Buffett's remarks, Munger said, "GEICO to me is very much like Costco. One of the reasons that they succeed is because they're really committed to offering a really great product. A lot of people talk that game, but few live it. GEICO does and that will help it over time." That makes sense. Both companies are known for their low costs and remarkable customer satisfaction. In fact, GEICO and Costco in 2013 topped the American Customer Satisfaction index for their respective industries.

HEDGE FUND MANAGER: Warren Buffett 'Is Basically A Tax Evader' (Business Insider Australia)

Macro fund manager John Burbank of Passport Capital joked that Warren Buffett is “basically a tax evader” at the SALT Conference and attendees started clapping and laughing. His argument is not that Buffett is doing anything illegal or anything like that, but that a lot of his success is in investing in a way that results in the lowest tax bill. [...] “I’m not a publicist for Warren Buffett, but when I keep hearing people talk about Buffett’s record, nobody mentions his tax efficiency.

Berkshire News Briefs - 5/13/14

Greg Abel: The Next Oracle of Omaha? (Bloomberg)

For years, Abel worked in the shadow of his business partner, David Sokol, who was widely thought to be in the race until he resigned in 2011 amid a stock trading scandal. Abel is not in the shadows now. He led Berkshire’s second-biggest acquisition last year, paying $5.6 billion for Nevada’s largest electric utility, NV Energy. And he was named to the board of ketchup maker H.J. Heinz, which Berkshire took private with partners in a $23.3 billion deal in 2013.

NRG Energy Inc. and MidAmerican Energy Announce Completion of World's Largest Solar Farm (Fool)

Clocking in at 290 MW, the NRG Energy, and MidAmerican Energy Agua Caliente joint venture is a new record -- the largest fully operational solar photovoltaic facility in the world. [...] The Arizona solar facility spans 2,400 acres between Yuma and Phoenix, and is capable of powering 230,000 homes at peak capacity. As is most often the case with utility-scale solar projects, all electricity has already been sold to PG&E under a 25-year power-purchase agreement.

Berkshire to Buy SNC’s AltaLink in Buffett Energy Wager (Bloomberg)

Berkshire Hathaway Inc.’s energy unit agreed to buy SNC-Lavalin Group Inc.’s AltaLink for about $C3.2 billion ($2.9 billion) in cash to expand in electricity transmission in western Canada. The deal adds 280 substations and about 12,000 kilometers (7,500 miles) of transmission lines, according to a statement yesterday from the power unit at Warren Buffett’s Berkshire. [...] Founded in 2002, AltaLink owns more than half the transmission grid in the Canadian province of Alberta and serves 85 percent of its population. Net income for the unit was C$161.6 million on revenue of C$534 million last year, according to a regulatory filing. AltaLink said in a separate statement that it will operate under its current name within the Berkshire business and continue to be based in Calgary.

1 Warren Buffet Business Just Revealed How Utilities Can Unlock the Power of SolarCity (Fool)

Even on a good day when utility executives are in a chipper mood, they will probably still describe SolarCity as a "nuisance". The company is the most visible representation of the distributed solar movement, and for many utilities it is a disruption of the business model they have become accustomed to over many years. Several utilities have taken up opposition to distributed solar, but one of Warren Buffets recent acquisitions, NV Energy, is welcoming SolarCity in to Nevada with open arms -- but not for the reason you may think. Let's take a look at what this Berkshire Hathaway subsidiary is doing to go against the grain and explore why this may be happening.

10 Great Buffett Quotes From Berkshire Hathaway Inc.'s Annual Meeting (Fool)

Habits are such a powerful force in everyone's life, including good financial habits. Digging yourself out of the holes that financial illiteracy can cause can take a lifetime. ... A big problem is adult financial literacy. It's harder to be smarter unless the schools intercede. A lot can be done on TV and the Internet, but it is really important to have good financial habits, and anything the school system can do will help.

It's Time to Break Up Buffett's Berkshire Hathaway: The Parts Are Worth More Than the Whole (Fool)

If Warren Buffett announced a program of spinning off and distributing most of his operating companies to shareholders, Berkshire stock would soar in value. As Buffett has noted, the fair value of Berkshire is much higher than it's book value. Spinning off the conglomerate's many subsidiaries would bring this value into the light of day.

1 Overlooked Secret to Warren Buffett's Phenomenal Success (Fool)

What's interesting when you study Buffett's portfolio is while he may not like paying dividends, he sure likes receiving them. Buffett's eight largest holdings all together pay Berkshire more than $1.8 Billion in dividends. [...] Scale matters in total returns, IBM's share price has not done all that much in the short time Berkshire has owned its stake, but I think $258 million (and growing) yearly dividend income gives at least some comfort back in Omaha. Berkshire earns over $1 Billion each year from Wells Fargo and Coca Cola alone. That is almost $3m each day. Dividends add life to your portfolio.

Heinz Factory Severance Cost Rises to $93 Million (Bloomberg)

HJ Heinz Co., the ketchup maker taken private by Berkshire Hathaway Inc. and 3G Capital, projected severance cost from factory closures will climb to $93 million as the company shutters two European plants. The new figure was disclosed in a first-quarter regulatory filing today and compares with the $63 million sum listed in the annual report for 2013. Heinz said in February that it was planning shutdowns in Seesen, Germany, and Turnhout, Belgium, after last year announcing closures in Florence, South Carolina; Pocatello, Idaho; and Leamington, Ontario.

EcoWater Systems expands green product portfolio (Water Technology)

EcoWater Systems®, a Marmon Water/Berkshire Hathaway Company, has announced the expansion of its commercial business product line through the acquisition of the Controlled Hydrodynamic Cavitation (CHC) technology and operations from VRTX Technologies of Schertz, Texas, according to a press release. CHC is a proven environmentally-friendly water treatment technology used in HVAC, process cooling and refrigeration systems to effectively control scale, biological growth and corrosion without the use of chemicals, the release reported. Adding CHC technology to a cooling tower saves energy, reduces water consumption and maintenance costs and minimizes or eliminates sewer discharge volume, noted the release.

Dairy Queen CEO: 'People Need To Be Paid A Fair Wage' (HuffPost)

“People need to be paid a fair wage,” Dairy Queen CEO John Gainor told CNN’s Poppy Harlow. [...] And in a clue to his own thinking about the controversy, Gainor told CNN that low wages made it hard to keep good employees. “It takes a lot of time to train people,” he said, speaking at a convention for Dairy Queen parent company Berkshire Hathaway, the conglomerate owned by Warren Buffett. “You want to make sure you’re paying a very good wage, otherwise you have a lot of turnover.”

First Quarter Results and a Name Change

First Quarter Earnings from Berkshire Hathaway:
Berkshire Hathaway Press Release

Berkshire Profit Slips 3.8% on Insurance, Derivatives (Bloomberg)

Berkshire Hathaway Inc. reported a 3.8 percent decline in first-quarter profit, as underwriting results declined at insurance businesses and on reduced earnings from Chairman Warren Buffett’s derivatives wagers. Net income slipped to $4.71 billion, or $2,862 a share, from $4.89 billion, or $2,977, a year earlier, the Omaha, Nebraska-based company said yesterday. The decrease in profit was the first since 2012.

MidAmerican Energy Holdings now Berkshire Hathaway Energy (Des Moines Register)

MidAmerican Energy Holdings Co., the parent of MidAmerican Energy, has changed its name to Berkshire Hathaway Energy, effective immediately, the Des Moines-based company said today. [...] The name change will not affect the names or operations of the locally managed businesses that Berkshire Hathaway Energy owns, such as the Des Moines-based utility, MidAmerican Energy Co. [...] "Our new name reflects the benefits we gain from Berkshire Hathaway's ownership, particularly our ability to reinvest in our businesses and take a long-term view of our customers' needs, which have helped us become a leader in the global energy industry," said Greg Abel, Berkshire Hathaway Energy's CEO.