Berkshire News Briefs - 7/29/14

Canada Approves Berkshire Buy of SNC-Lavalin’s AltaLink (Bloomberg)

Berkshire Hathaway Inc.’s energy unit won Canadian approval for its planned purchase of SNC-Lavalin Group Inc.’s AltaLink electric transmission business after committing to reinvesting in the country. The subsidiary of Warren Buffett’s Berkshire has agreed to maintain AltaLink’s staffing and keep the company’s headquarters and senior management in Alberta, Industry Minister James Moore said in a statement yesterday. Berkshire Hathaway Energy also promised to reinvest all of AltaLink’s earnings back into the company or elsewhere in Canada for at least five years.

The transaction is expected to be formally completed in late 2014 or early 2015. Altalink Press Release; Berkshire Hathaway Energy Press Release.

Buffett faces end of $255m a year dividend cheque (New Zealand Herald)

Dow Chemical shares rallied past $53.72 on Wednesday for the first time in nine years. If they close above that price for 20 trading days in a 30-day window, the chemical maker can convert Buffett's $3 billion preferred stake into common stock. Swapping the shares would cut dividend payments that Dow has been paying since it turned to Buffett's Berkshire Hathaway to help finance a takeover in 2009 of Rohm & Haas. [...] The preferred stake is particularly expensive for the chemical maker with interest rates now near record lows. The securities have an 8.5 per cent yield, entitling Berkshire to $255 million in dividends annually.

US railways: Back on track (Financial Times - Free Registration Required)

Since 2011, all seven big Class I railroads in the US and Canada have been earning returns higher than their cost of capital – a modest achievement in most industries but a mark the US’s railroads had missed for the past 70 years. Rising traffic levels are letting railroads sweat their assets harder and work more efficiently. Matt Rose, executive chairman of BNSF, operator of the US’s second-biggest rail network, says the industry is in a “virtuous cycle”. “You make investments,” he says. “You make more money on that; you make more investments. That’s this virtuous cycle that nobody in the 1970s or 1980s thought was possible.”

This Man Will Not Destroy Warren Buffett's Empire Berkshire Hathaway Inc. (Fool Video)

Replacing Warren Buffett atop Berkshire Hathaway will be no easy task once the 83-year old billionaire is out of the picture. While debate rages on over who should replace the Oracle of Omaha as CEO, Buffett has made it clear that he'd like to see his son, Howard, step as a non-executive chairman of the board. Will this mark the beginning of the end of Berkshire Hathaway's greatness?

Geico's gecko ain't cheap: Top 10 insurance advertisers (Insurance Business)

Geico spent more money on advertising than any other insurance company in the U.S, expending a whopping $935.1 million in 2013 alone, according to Nomura. The second biggest advertiser was Allstate Corp., who had a budget of $654.8 million - about $280 million less than Geico. [...] “Berkshire Hathaway’s auto-insurance company Geico has been a growth machine in recent years and the advertising data show just how important good advertising is to growth,” said Nomura. Geico enjoyed 11.2% growth in personal lines in 2013, which is slightly over the 2% growth rate it experienced the previous year.

Major Brands To Acquire Fellow Missouri Wholesaler MoBev (Shanken News Daily)

Missouri-based spirits and wine wholesaler Major Brands has agreed to acquire local rival Missouri Beverage Co. (MoBev) for an undisclosed sum. The deal is expected to close this fall. MoBev, with 2013 sales of around $20 million, is minority-owned by Wirtz Beverage and McLane Co., the latter of which is owned by Warren Buffett’s Berkshire Hathaway firm.

BNSF train carrying North Dakota oil derails in Seattle (Yahoo/Reuters)

A Burlington Northern Santa Fe train carrying crude oil derailed as it left a railyard in north Seattle on Thursday, but there were no reports of a spill or injuries, BNSF said in a statement. Four railcars came off the tracks at around 2 a.m. PDT, three of which were carrying crude oil, said BNSF, which is owned by Berkshire Hathaway. The train originated in North Dakota and was bound for Tesoro Corp's 120,000 barrel-per-day Anacortes oil refinery, 80 miles north of the city, Tesoro confirmed. The derailment comes at a pivotal moment for the booming crude-by-rail industry, which has come under intense scrutiny after a series of accidents over the past 18 months.

Berkshire Unit Needn't Arbitrate Asbestos Coverage Rows (Law360)

A New York federal judge has refused to force a Berkshire Hathaway Inc. subsidiary to arbitrate disputes under Transatlantic Reinsurance Co.'s reinsurance agreements covering American International Group Inc. insurers' asbestos liabilities. U.S. District Judge Edgardo Ramos on Tuesday sided with Berkshire's National Indemnity Co. and denied TransRe's arbitration petition [...] The more than 40 treaties at issue provided reinsurance coverage to AIG for policies dated from 1978 through 1985. While NICO did not sign any of the treaties, it purportedly replaced AIG as a party through loss portfolio transfers, according to TransRe's petition. [...] According to NICO, its agreements with the AIG insurers were for typical services provided by third-party administrators that help insurers collect reinsurance.

Berkshire News Briefs - 7/20/14

Warren Buffett and Berkshire Hathaway Have Scored Another Billion-Dollar Business (Fool)

In June of 2013, we learned that Berkshire Hathaway Specialty Insurance (BHSI) had officially started its efforts in America. Launched by none other than oft-praised insurance executive Ajit Jain, BHSI is the commercial property casualty insurance group that focuses on excess and surplus lines insurance, which allows companies to design specific policies and coverage depending on the needs of their businesses. [...] Earlier this year, we learned Berkshire Hathaway, in total, saw its total excess and surplus insurance premiums written -- which includes a few of its other businesses -- jump by $150 million, or nearly 40% in 2013, to stand at $561 million. The overall industry only saw premiums increase by 7.6%, and industry leader AIG saw its premiums actually fall by 4.2%, to $4.8 billion.

Berkshire Gets $3 Billion in Liberty Mutual Risk Transfer (Bloomberg Businessweek)

Warren Buffett’s Berkshire Hathaway Inc. agreed to backstop as much as $6.5 billion of Liberty Mutual Holding Co.’s obligations tied to asbestos, environmental and workers’ compensation policies. Liberty Mutual said in a statement today that it paid Omaha, Nebraska-based Berkshire’s National Indemnity Co. about $3 billion for the coverage. Berkshire has assumed billions of dollars in asbestos risk from insurers including CNA Financial Corp. and American International Group Inc. over the last decade. The contracts are a bet that Buffett’s company can generate profit by investing policy reserves and managing claims that will stretch out for years.

Warren Buffett Shares The Inside Scoop: He Bought A Cadillac (Forbes)

“The truth is, I only drive about 3,500 miles a year so I will buy a new car very infrequently.” In fact, his 2006 Cadillac DTS which had just 19,000 miles on it, was barely broken in when he became convinced recently it was time to replace it. [...] The sales pitch came from none other than GM Chief Executive Mary Barra, who had flown to Omaha in mid-May to meet one of GM’s largest shareholders amid a growing safety crisis that threatened to stall the automaker’s comeback. The meeting came around the same time Buffett’s holding company, Berkshire Hathaway, disclosed that it had cut its stake in GM by 25 percent, to 30 million shares, during the first quarter.

Buffett-owned office tower construction firm opening Phoenix facility (Biz Journals)

This is the first Berkshire company that you may not have heard of before to make this week's update.

A Warren Buffett-owned company that constructs glass and steel façades for high-rises and skyscrapers is opening a manufacturing and assembly facility in west Phoenix. Portland-based Benson Industries LLC has leased nearly 93,500 square feet at the Durango Commerce Center near 75th Avenue and Interstate 10. Benson is a subsidiary of MiTek Inc., which is owned by Buffett’s Berkshire Hathaway. Benson manufactures glass and steel structures outfitted on the outside of large buildings including One World Trade Center and the New York Times Building in New York, as well as towers in Los Angeles, Las Vegas, Singapore and Hong Kong. The company has an assembly plant in Tijuana.

Berkshire Hathaway continues massive growth (Stevens Point Journal)

Berkshire Hathaway Travel Protection leaders said Wednesday that the company already has hired 150 full- and part-time employees this year and intends to grow to about 2,000 workers over the next five years, most of them in central Wisconsin. The company formerly known as the Noel Group now employs about 230 people in Wisconsin and Florida offices. [...] On Wednesday, Gov. Scott Walker was in Stevens Point to tour its growing operations and praise the company's growth. In January, Berkshire Hathaway Specialty Insurance, a division of Warren Buffett's Berkshire Hathaway conglomerate, bought the assets of the Noel Group's two key companies, MyAssist and Insure America. In May, the Noel Group became Berkshire Hathaway Travel Protection; since then, the company has ramped up its hiring.

AltaLink president confident of approval of sale to U.S. firm

As the planned sale of Alberta’s largest electrical transmission company to an American firm comes under scrutiny from politicians and the public, the president of AltaLink remains confident the deal will win approval from provincial and federal reviews. The $3.2-billion sale of AltaLink by Quebec-based SNC Lavalin to Berkshire Hathaway Energy — owned by billionaire Warren Buffett — is attracting attention, from the hiring of lobbyists to full-page newspaper ads from ATCO warning about “serious consequences” if the deal goes ahead.

WSJ: Retail Investments Represent Blemish on Buffett's Record (MoneyNews)

Warren Buffett, CEO of Berkshire Hathaway, has succeeded with his investments in almost every sector he's entered. But retail constitutes an exception. Buffett has called his performance in that area "awful," "pretty bad" and "really bad," The Wall Street Journal reports. [subscription required] [...] It's not significant, given that Berkshire's nine retail businesses make up only 2 percent of its $182 billion in revenue, according to the paper's calculations. Those businesses include See's Candies, Ben Bridge Jeweler and Nebraska Furniture Mart.

Warren Buffett: Why Being Cheap With Money Is a Big Mistake (Fool)

"Long ago, Ben Graham taught me that "Price is what you pay; value is what you get." Whether we're talking about socks or stocks, I like buying quality merchandise when it is marked down."

Let's say you see a pair of socks at the dollar store versus some at the neighborhood sports store. The sports store has a $25 three pack on sale for $15, while you could buy three pairs for $3 at the business next door. Knowing one "investment" is five times more expensive, Buffett would tell you to pay $3 for the socks, right? Wrong. You'd have to consider so much about the socks beyond just the price. For example, what if the cheaper socks carried significant risk of injuries like blisters? Or what if they wore out after just a few months of use? And so on. The $15 socks could in fact provide better value. If the $3 socks must be replaced every eight months -- their "quality" may be anything but -- and you could hold onto the $15 socks for five years, you'd end up paying more over the long term for being cheap.

Details of crude-oil shipments in Nebraska remain mostly a mystery (Omaha World-Herald)

Both Union Pacific Railroad and BNSF Railway move crude oil in Nebraska by rail, though neither they nor state officials will say exactly when, where or how much. [...] The topic has entered the public realm in recent years as oil shipments via train have skyrocketed amid production for newly tapped reserves in North Dakota, Montana and Canada’s Saskatchewan province. According to the Association of American Railroads, major freight rail companies originated 9,500 carloads of crude oil in 2008. In 2013, they originated 407,761 carloads. While the industry says the accident rate for transporting the combustible liquid is low, the accidents that have happened have been lethal or potentially so, amping up public interest, safety concerns and demands for details on the shipments.

The Best Business Book I’ve Ever Read (LinkedIn, by Bill Gates)

Not long after I first met Warren Buffett back in 1991, I asked him to recommend his favorite book about business. He didn’t miss a beat: “It’s Business Adventures, by John Brooks,” he said. “I’ll send you my copy.” I was intrigued: I had never heard of Business Adventures or John Brooks. Today, more than two decades after Warren lent it to me—and more than four decades after it was first published—Business Adventures remains the best business book I’ve ever read. John Brooks is still my favorite business writer. (And Warren, if you’re reading this, I still have your copy.)

Billionaire Warren Buffett Donates $2.1 Billion to Gates Foundation (Techsonia)

Second-richest person in the U.S. Warren Buffett donates on Monday $2.1 billion to the Bill and Melinda Gates Foundation, which is his biggest ever given to charitable institutions. This year’s Buffet gift to Gates Foundation is higher from the $2.0 billion last year and it is also more than any of his previous eight donations. Buffett has given about 21.73 million Class “B” shares of Berkshire Hathaway Inc. and around 16.6 million of that, which is worth over $2.1 billion, went to the Gates Foundation. The remainder went to four charities run by Buffet’s family members, including a foundation named for his late first wife Susan and foundations for his children Howard, Peter and Susan.

Jordan’s Furniture collects clothes, shoes for kids (Furniture Today)

This is the second company in this week's update that you may not be familiar with.

Jordan’s Furniture has started collecting new and like-new clothes and shoes for children at its stores and distribution center here, benefiting the Cradles to Crayons Ready for School program. The retailer, part of Berkshire Hathaway’s furniture division, is partnering for the third year with the organization and with social service agencies that help distribute the donations to children in homeless or low-income situations.

Paul McCartney, Warren Buffett spotted in Dundee (Omaha World-Herald)

Paul McCartney was spotted with Omaha billionaire Warren Buffett in Dundee on Sunday night having dinner, dessert and a walk around the neighborhood. [...] After dinner, the group went up the street to eCreamery.

And finally... this has nothing to do with Berkshire Hathaway, but everything to do with this blog. Apparently, I'm nothing more than a 19th century scrapbooker.

When Copy and Paste Reigned in the Age of Scrapbooking (Smithsonian)

Cutting, pasting, collating: This feels like a new behavior, a desperate attempt to cope with a radical case of information overload. But it’s actually a quite venerable urge. Indeed, back in the 19th century we had a similarly intense media barrage, and we used a very similar technology to handle it: the scrapbook.

Berkshire News Briefs - 7/12/14

Why Buffett is betting on energy stocks again (CNBC)

"[Energy] was never in Warren's wheelhouse,'' Morningstar analyst Warren said. "There's probably some influence from Todd and Ted in there, some more confidence with the energy names now that he has more eyes to watch over them. Given his issue with COP in the past, he has got to be leaning more on Todd and Ted," he added. Buffett has long sought investments in industries that he considers cornerstones of the modern economy and bets on the U.S. economy, in particular. [...] Berkshire Hathaway Energy is owner of everything from utilities to gas pipelines to the $15 billion worth of solar and wind investments, which Cunningham said is the parent Berkshire's biggest commitment to any industry other than insurance.

Flight Delayed or Canceled? You Could Be Paid Up to $1,000 (NBC News)

“There are 660 million air travel segments a year that could have a problem,” said John Noel, Berkshire Hathaway Travel Protection president. “That’s our market potential.” AirCare is designed to fill a gap left by the $2.5 billion traditional travel insurance market, which most commonly offers to cover losses from trip cancellation and delay, lost baggage and medical emergencies.

Airport hosts national commercial production for Berkshire Hathaway Travel Protection (Sun Prairie Star)

Dane County Regional Airport (DCRA) announced today that the airport facility is featured in a national Berkshire Hathaway Travel Protection (BHTP) commercial with the launch of their new travel insurance product line. [...] The commercial follows “Peter” during his airport experience, and demonstrates many of the AirCare product benefits such as: paying travelers when they encounter travel problems like: tarmac delays and lost baggage, missed connections, baggage delays, and flight delays.

AltaLink CEO reveals past bids by Atco, possible motive for ads (Globe and Mail)

The local political soap opera surrounding Berkshire Hathaway Energy's impending purchase of Alberta power transmission company AltaLink continues...

Atco Ltd. made several attempts to acquire AltaLink LP in the years before Berkshire Hathaway Energy’s $3.2-billion winning bid, the chief executive officer of Alberta’s largest transmission provider revealed in an interview Monday. [...] In an interview on Monday, AltaLink chief executive Scott Thon said Atco had made several attempts in the past decade to buy his company – which transmits electricity to 85 per cent of Albertans. He suggested that Atco’s push to stir debate about the sale – and the consequences of foreign ownership of critical infrastructure – isn’t as altruistic at Atco chairwoman and chief executive Nancy Southern has made out. Mr. Thon said Atco has had a long-standing commercial interest in AltaLink. [...] If Atco had at any point acquired AltaLink, “they would have virtual 100-per-cent control of transmission in Alberta,” he said. “There would be less competition if Atco had acquired AltaLink, and I think competition is good for consumers.” [...] Mr. Thon said he was “shocked and disappointed” by the anonymous ads from Atco, which he said were designed “to incite the public to do something that really is based on misinformation.”

Major 3-year deal sealed by Berkshire with PDvsa (IPS Group)

Berkshire Hathaway has taken a 40 percent share of top-10 energy account PDvsa on a three-year basis, The Insurance Insider reveals, giving credence to insurers' fears that it will begin writing energy business direct. In an article by the Insurance Insider, they state, “Sources said that at the main 1 July renewal for the Venezuelan state-owned energy company the London order was halved as Berkshire and an unidentified Mexican insurer took half of the programme across both upstream and downstream risks." [...] The PDvsa story has intrigued the energy market for over a year now and the Berkshire deal is the latest twist. The Insurance Insider concludes, “During this period, PDvsa has made a number of abortive attempts to place its programme, switched brokers numerous times and chosen, after some toing and froing, not to submit a claim for a $300mn loss on a refinery.”

BNSF train derails near Worden; 13 cars off tracks (Helena Independent Record)

A BNSF Railway spokesman says the company is investigating the cause of a coal train derailment in which 13 cars came off the tracks in southeastern Montana. BNSF spokesman Matt Jones said the loaded train originated at the Decker Mine in Bighorn County. It was en route to Superior, Wisconsin, when the cars derailed about 35 miles east of Billings at about 7:45 p.m. Thursday.

Ruling is victory for solar energy (Des Moines Register)

A split Iowa Supreme Court ruled Friday that Eagle Point Solar would not violate Iowa law by selling electricity to the city of Dubuque that the company generates through a solar panel installation on the roof of a city building. Industry leaders praise such arrangements, called power purchase agreements, as a key to developing more solar energy. [...] Iowa's main public utility companies, Alliant Energy and MidAmerican Energy, have fought power purchase agreements, arguing that state regulations give them exclusive rights to sell energy in defined territories.

Berkshire News Briefs - 7/5/14

Boeing Reviews Derailment That Dumped Fuselages in River (Bloomberg)

Boeing Co. has sent technicians to the site of a train derailment that dumped six 737 fuselages and other aircraft components into a Montana river as they were being transported to a Washington state assembly plant. The accident occurred Thursday in western Montana near Rivulet, said Doug Alder, a Boeing spokesman, in an e-mailed statement. The BNSF train carrying six 737 fuselages and assemblies for 777 and 747 commercial planes was on its way to Renton, Washington, from Spirit Aerosystems Holdings Inc. in Wichita, Kansas, he said.

Another story with a picture of the scene.

New CEO named at NV Energy (Reno Gazette-Journal)

NV Energy today named Paul Caudill as president/CEO, replacing Michael Yackira, who has retired after seven years as head of the Las Vegas-based utility. Caudill has served as president of NV Energy since the company, formerly known as Sierra Pacific Resources, was acquired by privately held Berkshire Hathaway Energy in December 2013 for $10 billion. Caudill rose through the ranks at Berkshire Hathaway Energy's MidAmerican Solar, a division of MidAmerican Renewables LLC, most recently as president.

Fruit of the Loom updates plan for Summerville warehouse expansion (Charleston Post and Courier)

Apparel giant Fruit of the Loom plans to add 49 jobs over the next 18 months as part of a major expansion of its Summerville distribution center. The company said in a statement that it will build a 402,000-square-foot addition to its 350,000-square-foot warehouse, more than doubling the size of the building. The new jobs would increase the existing payroll of 171 full-time workers by 28 percent. [...] Fruit of the Loom said the expansion of its Palmetto Distribution Center is being driven by growth in its electronic-commerce and intimates businesses. [...] The maker of underwear, T-shirts, socks and other apparel items is owned by billionaire investor Warren Buffett's Berkshire Hathaway Inc.

Buffett’s Berkshire Sets Final Terms for TV-Station Deal (WSJ)

Warren Buffett’s Berkshire Hathaway Inc.added a television station to its media holdings with the acquisition of Miami-based WPLG-TV from Graham Holdings Co. The roughly $1.1 billion share-swap deal, which was announced in March, closed Tuesday after securing approval from the Federal Communications Commission. Although the outlines of the transaction were laid out in previous regulatory filings, the exact number of shares exchanging hands was established only at the deal’s closing. In addition to WPLG, an ABC affiliate, Berkshire got back 2,107 of its own Class A shares, 1,278 of its own Class B shares and about $328 million in cash from Graham Holdings. In exchange, Omaha, Neb.-based Berkshire handed over 1.62 million common shares of Graham Holdings. The Berkshire shares are valued at about $400 million based on their Monday closing price. The TV station is valued at $364 million.

Warren Buffet: The Future Is Bright for This Incredible Business (Fool)

"We passed Allstate this year. It has one of the great company histories in America. Started by a farmer with no insurance experience. He built this incredible business based on a better business model, this was 1920, and then Geico came up with an even better model. [...] Tony Nicely has done a job that belongs in the hall of fame in terms of achieving that objective. In the 15 years prior to Tony taking over, market share had hovered around 2%. Since then, it's gone to 10%-plus and it'll keep going. State Farm has a net worth of probably $60 billion to $70 billion, and a strong presence in homeowners, a strong agency force, and a lot of satisfied customers."

How Warren Buffett Made More Than $3.5 Billion in Three Months (Fool)

With the calendar officially closed on the first second quarter of 2014, the Motley Fool takes a look at a few of the stocks which allowed Warren Buffett and Berkshire Hathaway to earn $3.7 billion in April, May, and June. On a raw dollar basis -- and a very strong return basis -- the biggest winner in the $106 billion Berkshire Hathaway portfolio was none other than the stock Buffett said he'd never sell a share of, Coca-Cola. Through the second three months of the year Coca-Cola saw its stock price jump by nearly 10%, which netted Buffett a staggering $1.5 billion.

Insurers Suffer Like It’s 1965 With Low Portfolio Yields (Bloomberg)

The industry averaged annualized yields of just 3.1 percent on investments in the first quarter this year, the lowest since 1965 [...] Buffett, too, has said that current yields make fixed-income securities among the riskiest investments and instead steered his company’s funds into stocks and toward takeovers. In 2013, he called bonds on insurer balance sheets “wasting assets.” Berkshire’s insurance units include Geico, a seller of car coverage, National Indemnity and General Re. Premiums from those businesses helped fuel the company’s expansion, giving Buffett funds for stock picks and acquisitions.

Warren Buffett's 'editor' retires after 60 years (CNBC)

After a remarkable 60 years at Fortune, writer and reporter Carol Loomis is ready to retire from her day job at the age of 85. [...] Loomis is a long-time friend of Warren Buffett and has helped edit his annual letters to Berkshire Hathaway shareholders. [...] Loomis has broken some of Buffett's biggest stories, including his 2006 decision to give away almost all of his money to the Bill & Melinda Gates Foundation. In late 2012, Buffett made several media appearances with Loomis, including one of CNBC, to help promote her book, Tap Dancing to Work: Warren Buffett on Practically Everything, 1966-2012. It's a collection of Fortune's articles about Buffett.