Berkshire News Briefs - 10/8/14

Buffett to Buy Van Tuyl, Create Berkshire Auto Unit (Bloomberg)

Warren Buffett’s Berkshire Hathaway Inc. agreed to buy Van Tuyl Group, the largest privately owned U.S. auto dealership group. The business, with more than 100 franchises, will be renamed Berkshire Hathaway Automotive and continue to be run by Larry Van Tuyl, Omaha, Nebraska-based Berkshire said today in a statement that didn’t disclose terms. The target company has more than $8 billion of revenue. “I fully expect we’ll buy a lot more dealerships,” Buffett told CNBC in an interview today. “We’ve gone a long time without getting into automobiles, but Larry’s got an operation that we think could be scaled up a lot from where it is.”

Buffett's Van Tuyl purchase puts top retailers in cross hairs (AutoNews)

When Buffett signed a deal to buy Van Tuyl Group last week through his Berkshire Hathaway Inc. investment company, he clearly signaled that the top four dealership groups are in his sights. When a CNBC host mentioned AutoNation Inc. and said it was the country's biggest auto retailer, Buffett quipped: "Temporarily." "This is just the beginning for Berkshire Hathaway Automotive," Buffett said of the new venture, which is being called the biggest acquisition by far in automotive retail history. Terms weren't disclosed, but outsiders estimated the all-cash price tag at over $4 billion.

Ironwood Plastics expanding to keep up with growing demand (Plastics News)

Custom injection molder Ironwood Plastics Inc. has embarked on an ambitious expansion program. The Ironwood, Mich., company will spend $19 million in Twin Rivers, Wis., to buy a building next door to its factory there and to add injection presses. [...] Ironwood’s new strategic push is partly due to it being part of CTB Inc., a Milford, Ind., company that sells internationally. CTB primarily makes agricultural products and most of its molded components are made in house but Ironwood molds a few complex parts for CTB. CTB has been owned by investment giant Berkshire Hathaway Inc. since 2002. The CTB and Berkshire Hathaway connections help Ironwood’s access to capital and give customers more confidence to do business with the custom molder. CTB acquired Ironwood in 2010 from the Stephens family, which had founded it in 1979.

Billionaire Buffett Says Tesco Investment Was ‘A Huge Mistake’ (Bloomberg)

Billionaire investor Warren Buffett said his investment in Tesco Plc was a “huge mistake,” as the U.K. supermarket leader’s share price remains close to an 11-year low amid declining sales and an accounting probe. [...] Buffett’s Berkshire Hathaway Inc. has held Tesco shares since March 2006, when it acquired a stake for $328.7 million. By 2012, the holding had reached 5.08 percent of the grocer’s shares, worth about 1.3 billion pounds ($2.1 billion). More recently, Buffett has been cutting the stake, owning 3.7 percent of the shares as of Dec. 31, according to Berkshire Hathaway’s annual report.

Warren Buffett’s Big Bet on Renewables in Nevada (NY Times)

Thanks in part to the transmission lines alongside Interstate 15, Mr. Buffett’s company, Berkshire Hathaway, and its subsidiary Berkshire Hathaway Energy stand to make steady, predictable profits in an energy market undergoing transformations. “This is not a value play,” said Christine Tezak, managing director of research at ClearView Energy Partners, referring to Mr. Buffett’s normally conservative investing approach. “He’s looking at this as a way to participate in the structural shift taking place in the power and energy industry.”

California Is Integrating Buffett’s Western Utilities Into Its Grid Balancing Market (GreenTechGrid)

Starting next month, PacifiCorp will start simulating the trading of generation and grid capacity every fifteen minutes on CAISO’s market, with “financially binding” operations to start in November, according to the U.S. Energy Information Administration. CAISO is also working with NV Energy to add most of Nevada’s grid to its EIM as well, with operations set to start in fall 2015. Both utilities are owned by Berkshire Hathaway [...] The rewards, according to a study by the Energy and Environmental Economics (E3) research group, could add up to $21 million to $129 million for PacifiCorp by 2017 or so, as the company buys lower-cost power from California’s grid or sells its own capacity when CAISO prices are high.

Buffett’s ‘All-Equities’ Pensions Escape Bill Gross Drama (Bloomberg)

Bill Gross’s departure from Pacific Investment Management Co. sent ripples through the bond market. Berkshire Hathaway Inc. pensioners didn’t feel it. Warren Buffett, Berkshire’s chairman and chief executive officer, said today that he didn’t know of a single investment that his company or its dozens of subsidiaries had with Pimco, manager of the world’s largest bond fund. Why? “We manage all of our pensions internally, except for those connected with the utility business,” Buffett said today in an interview with CNBC. “We are all-equities, anyways. We don’t have any bonds in our pension funds.”

The Future Realignment of Berkshire Hathaway Will Be an Investors’ Bonanza (Fool)

[...] even though the Omaha, Neb.-based billionaire is continuing to grow his empire, completing two multi-billion dollar deals in 2013 alone, it is inevitable that Berkshire will someday reverse course and unleash the greatest spin-off investment bonanza the world has ever seen. [...] Upon Berkshire's realignment, these two deals alone could spawn upwards of 50 independent companies. Heinz will be able to spin off over 10 of its corporations to shareholders, and I envision Hortons, along with Burger King, following suit with over 40 separate entities.

Buffett Gets His Wish: Coke Is Revising Executive Pay Plan (Forbes)

It’s been a good week for billionaire investors: on Tuesday, Carl Icahn got his way when eBay announced that it and PayPal will go their separate ways. And on Wednesday, Coca-Cola announced that it will revise the executive pay structure that Warren Buffett recently called “excessive.”

Warren Buffet Dismisses Berkshire's Low Score On LGBT Policies; Says He's Supportive (On Top Magazine)

Berkshire Hathaway Chairman and CEO Warren Buffet has dismissed a report that gave his investment firm a low score for its LGBT policies. Berkshire scored a “0” on the Human Rights Campaign's (HRC) annual Corporate Equality Index (CEI), which ranks companies based on employment policies and practices pertaining to lesbian, gay, bisexual and transgender employees. [...] “I do not set the policies for the 75 companies,” he said, then added, “Certainly, our managers know how I feel. I am 100% for full rights, in every respect, for gays and lesbians.”