Berkshire News Briefs - 11/21/14

Warren Buffett Reaches Out to Spanish Property Through His New Real Estate Firm (Aura Real Estate Experts)

Last week, Buffett set up a developer company in Spain called Berkshire Residential Assets 1, with an objective of buying all property types, principally dwellings put up for sale by the sector’s companies, banks and Sareb, the bad bank. Known as the ‘Oracle of Omaha’, the investor plans to include rehabiliation and building construction services in its vehicle’s activities range. The third richest man on the globe has bought Catalan firm Merquinsa and has come to an agreement with Caixabank on reinsurance of its policy portfolio valued at €600 million.

Berkshire unit in fight over bird-death data (Omaha World Herald)

A company that operates at least 13 wind-energy facilities across three states is suing in federal court to block the U.S. government from releasing information about how many birds are found dead at its facilities. [...] Portland, Oregon-based Pacificorp, which is owned by Omaha-based Berkshire Hathaway, is seeking an injunction in U.S. District Court in Utah to prevent the Interior Department from releasing information it considers confidential. [...] The information AP sought was part of its larger investigation into bird and eagle deaths at wind farms and the administration’s reluctance to prosecute the cases as it advocated the pollution-free energy source. AP asked the U.S. Fish and Wildlife Service for data collected under federal permits given to companies to collect the carcasses of protected bird species, including eagles and migratory birds, found dead at their facilities.

Berkshire Hathaway enables mobile travel insurance claims (Travel Weekly)

Berkshire Hathaway Travel Protection is beginning to allow customers to file claims electronically by taking photos of receipts with their smartphones. Berkshire Hathaway will then electronically deposit a payment into a customer's bank or PayPal account instead of mailing a check. When filing claims, customers do not have to send in original claim receipts. The new program is called ExactCare, and Berkshire Hathaway is beta testing it with travel agents and other industry partners. It will do a full rollout in the first quarter of 2015.

Berkshire Hathaway Specialty Unveils New D&O Policy (Insurance Journal)

Berkshire Hathaway Specialty Insurance (BHSI) has unveiled its Executive First Side A Difference-in-Conditions (DIC) Directors & Officers Liability Policy, which provides protection for individual directors and officers in a concise form.

Berkshire Hathaway Specialty Adds Contractor’s, Business Crisis Cover (Insurance Journal)

Berkshire Hathaway Specialty Insurance (BHSI) has created a Contractor’s Broad Form Coverage, which is now available to contractors with BHSI’s primary general liability practice policies. In addition, BHSI is offering contractors its Business Crisis Event Cost Coverage endorsement with these enhancements, further strengthening contractors’ ability to respond in a time of need while managing their risk.

Dairy Queen Offers Signature Treats This Holiday Season (Restaurant News)

Not to be outdone by the pumpkin flavor craze, the Dairy Queen® system, a Berkshire Hathaway company, is bringing back its popular peppermint treat just in time for the holidays. The DQ® system announced today the return of the Candy Cane Chill Blizzard® Treat as the featured Blizzard of the Month for December.

Berkshire Hathaway 3rd Quarter Portfolio Update

Berkshire Hathaway released its quarterly portfolio holdings report (13F) last Friday. The big changes were a new stake SA-rec Express Scripts, a big increase in Charter Communications, and a complete sell-off of its stake in John Deere.

Here's a handy summary from Dataroma: Quarterly Activity -- Updated Holdings

Commentary:

Warren Buffett's Berkshire Hathaway adds Express Scripts, dumps Deere (Fortune)

In the third quarter, Buffett’s insurance conglomerate added shares of Express Scripts to its widely followed investment portfolio. Express Scripts processes the paperwork for insurance companies and pharmacies, and makes sure the pharmacies get paid. [...] But it was not a large bet for Berkshire, and it’s likely the investment was made by either Todd Combs or Ted Weschler, who have started to manage a larger portion of Berkshire’s portfolio. [...]

Berkshire made a few other changes to its portfolio in the third quarter. Berkshire sold all of its shares of Deere in the third quarter. It held nearly $360 million worth of the tractor maker’s shares at the end of June. Berkshire also added to its stake in car giant General Motors as well as credit card companies Mastercard and Visa, and tripled its stake in Liberty Media, which is part of John Malone’s cable empire.

Berkshire Takes Express Scripts Stake; Some Trades Secret (Bloomberg)

Holdings in General Motors Co. rose by 21 percent and an investment in Charter Communications Inc. more than doubled in size during the third quarter, Omaha, Nebraska-based Berkshire also said yesterday in a filing to the U.S. Securities and Exchange Commission. A stake in DirecTV climbed. [...]

The report omitted some data that was reported confidentially to regulators. The SEC sometimes allows companies to withhold data from the public to limit copycat investing while a firm is building or cutting a position.

Buffett requested confidential treatment in 2011 filings, as he spent more than $10 billion amassing a stake in International Business Machines Corp. He did the same while building a holding in Exxon Mobil Corp. in 2013.

Berkshire News Briefs - 11/13/14

Berkshire Hathaway Inc. Earnings: Don't Trust the Headlines (Fool)

Consider the coverage from Businessweek, headlined "Berkshire Profit Slips on Buffett's Tesco 'Mistake'," or the report by Fortune, titled "Berkshire Hathaway Earnings Take a Dip on Investments." Although those are factual realities about Berkshire's third quarter, the problem is, they don't tell the whole story. As it turns out, investors have no absolutely no cause for concern.

Warren Buffett’s Berkshire to Buy Duracell From Procter & Gamble (NY Times Dealbook)

Instead of simply being spun out from Procter & Gamble, Duracell will find a new corporate home – with Warren E. Buffett. The conglomerate run by the billionaire, Berkshire Hathaway, said on Thursday that it would acquire Duracell from P.&G. through an unusual transaction aimed at lowering the overall tax bill.

Warren Buffett's Berkshire Hathaway buys Duracell batteries (CNN)

Warren Buffett's Berkshire Hathaway has agreed to buy the Duracell battery brand from Procter & Gamble in a multi-billion dollar deal. Berkshire Hathaway announced Thursday morning it will make the purchase using about $4.7 billion in P&G stock. The consumer products giant also committed to pump $1.8 billion in cash into Duracell. The amount means Buffett is virtually cashing out his entire P&G holding to buy the battery brand. That holding had made him the fifth-largest shareholder in Procter & Gamble. [...] P&G bought Duracell back in 2005 as part of its $57 billion acquisition of Gillette. Who did they buy it from? Berkshire Hathaway, which at the time was the largest shareholder in Duracell's then-owner.

Buffett Set to Save More Than $1 Billion on Taxes in Swap (Bloomberg)

For the third time in a year, the billionaire chairman of Berkshire Hathaway Inc. has structured a deal in which he buys businesses in exchange for stock that has appreciated. The transactions, called cash-rich split-offs, allow him to avoid capital gains taxes that would be incurred if he sold the shares in the open market. Berkshire announced today that it would turn over about $4.7 billion in Procter & Gamble Co. stock in exchange for P&G’s Duracell battery business, which will be infused with about $1.7 billion in cash. Since Buffett’s cost basis on the shares was about $336 million, and corporate capital gains are typically taxed at 35 percent, structuring the deal in this way could save Berkshire more than $1 billion.

Buffett Said He Paid a Lot. $15 Billion Later, BNSF Is a Cash Machine. 'He Stole It' (Bloomberg)

Days after Warren Buffett announced his $26.5 billion buyout of railroad BNSF, he insisted that he’d paid a steep price to own a business that would benefit his company, Berkshire Hathaway Inc., over the next century. [...] Five years later, that assessment rings a bit hollow. Buoyed by an onshore oil boom, BNSF has become a cash machine for Buffett. The railroad had sent more than $15 billion in dividends to Berkshire through Sept. 30, according to quarterly regulatory filings, the latest of which was released last week. More stunning: The business is on pace to return all the cash Buffett spent taking it private by the end of this year.

BNSF profit is up, but volume held back by congestion (Omaha World Herald)

BNSF Railway, employer of 5,000 people in Nebraska, said third-quarter profit rose 5 percent, with freight volume falling 1 percent as congestion continues to strain the company’s rail network. [...] net income was $1 billion, up from $989 million, a year earlier. Revenue rose 4 percent to $5.8 billion. Freight volumes fell in three of the railroad’s four categories, as crew, locomotive and railcar shortages coupled with record grain harvests and crude oil production from North Dakota have led to shipping delays. The harsh winter and spring floods also hurt the nation’s railroads in getting trains to customers on time. To speed improvements, BNSF said in its quarterly update that it has budgeted $500 million more for capital improvements, on top of the $5 billion already allocated.

Burger King tests India waters, starts with 12 outlets (CNBC)

U.S. fast food chain Burger King Worldwide will open about 12 outlets in India over the next 60-90 days, Rajeev Varman, chief executive of the hamburger chain's India unit said on Saturday. [...] In India, the hamburger chain has changed its menu to sell mutton, chicken and veggie sandwiches. [...] Burger King is a late entrant in the country. Rival McDonald's Corp has been around for close to two decades and has already grown its network in tier two and three cities.

Berkshire Hathaway 3Q-2014 Earnings

Berkshire Hathaway released their 3rd Quarter earnings report this afternoon.

Summary & Commentary:

Berkshire third-quarter profit drops on investments, operating results gain (Chicago Tribune)

Berkshire Hathaway Inc said on Friday third-quarter profit fell 9 percent as it took a large writeoff on one of its investments, but operating results easily topped forecasts on improvement in its insurance, energy and railroad operations.

Net income slipped to $4.62 billion, or $2,811 per Class A share in the third quarter, from $5.05 billion, or $3,074 per Class A share, a year earlier.

Operating profit, however, rose 29 percent to $4.72 billion, or $2,876 per Class A share, from $3.66 billion, or $2,228 per Class A share. [...]

During the quarter, Berkshire wrote off $678 million on its investment in Tesco Plc , a British grocery chain being probed by regulators at home over accounting errors. Buffett has been reducing Berkshire's Tesco stake. [...]

Profit from the BNSF railroad rose about 5 percent to $1.035 billion. In utilities and energy, profit jumped to $697 million from $472 million. [...]

Book value per Class A share, Buffett's preferred measure of growth, rose 7.1 percent from the start of the year to $144,542.

Berkshire's cash stake soared during the quarter to $62.38 billion from $55.46 billion three months earlier.

Berkshire News Briefs - 11/6/14

Berkshire Hathaway is expected to release its 3rd quarter earnings after the market closes on Friday, November 7.

3 Things to Watch When Berkshire Hathaway Inc. Reports Earnings (Fool)

The elephant in the room with Berkshire Hathaway is the question surrounding what will be done with the mountain of cash it's currently sitting on. At the end of June, Berkshire had $55.5 billion in cold, hard cash sitting on its balance sheet. Astoundingly, that's nearly $20 billion more than it had in June of last year [...] In other words, in one year's time, Berkshire brought in cash roughly equivalent to the market value of Chipotle Mexican Grill. So the question becomes, what will Buffett do with all of that cash?

How Buffett's Brooks Running plans to become a $1 billion brand (Fortune)

Brooks Running Co., a subsidiary of Warren Buffett’s Berkshire Hathaway, hit the $500 million mark in annual sales last April. The company hit that milestone as a result of CEO Jim Weber’s efforts over a decade to specialize on running, rather than trying to be a mini-Nike and be all things to all people. The result is a 13% share of the performance running shoe market (Nike is in the low 40’s). Weber, CEO since 2001, says the company can become a billion-dollar brand at some point thanks to an overhaul to its apparel selection hitting stores in a year, a continued focus on marketing to runners specifically and sponsoring the right running events.

Crash into flight simulator company stops training (HutchNews)

(FlightSafety has been owned by Berkshire Hathaway since 1996.)

A twin-engine Beechcraft King Air crashed into the FlightSafety Cessna Pilot Learning Center on Thursday, killing the pilot and three people inside flight simulators. The cause of the crash, which also seriously damaged the building, is still being investigated. [...] FlightSafey will "definitely have to scramble" but has a large network to help and is good at managing situations, said Rolland Vincent, an aviation consultant. "This is very disruptive," Vincent said. "These flight simulators are very busy and are booked well in advance."

More:

FlightSafety operates five centers in Wichita (The Wichita Eagle)

The building struck by a Beechcraft King Air B200 at Wichita Mid-Continent Airport shortly after takeoff Thursday is one of FlightSafety International’s five centers in Wichita. Wichita has the highest concentration of FlightSafety centers in the world, the company has said. Pilots and maintenance technicians come to Wichita from around the world to train in Cessna, Learjet, Beechcraft and Hawker products.

Three bets going sour on Buffett (MarketWatch)

(Referencing losses with Tesco, IBM, and Coca-Cola.)

Judging by the share price alone, Warren Buffett's Berkshire Hathaway is having a terrific 2014. After all, Berkshire Hathaway is up 17.7% year to date, trouncing the 7.95% rise in S&P 500. [...] Recently, several of Buffett's high-profile bets have fallen out of bed. Each stumble has its own particular explanation. But taken together, they share an overarching theme. The moats that protect these businesses aren't as wide as they once were. Even worse, competitors aren't even bothering to try to cross them. They're just inventing a completely different way of doing business.

MidAmerican Signs Longterm Wind-Power Services Deal With Siemens (Bloomberg Businessweek)

MidAmerican Energy Co., the utility owned by Warren Buffett’s Berkshire Hathaway Inc., has signed an agreement through June 2024 with Siemens AG to support a dozen wind farms in Iowa. Siemens will provide service and maintenance for 958 turbines that will have a combined capacity of more than 2.2 gigawatts, according to a statement today. Financial terms of the agreement weren’t disclosed.

Buffett Railroad’s Shale Focus Blunts Ports’ Comeback Bid (Bloomberg Businessweek)

Seattle and Tacoma are being stymied in their push to regain market share from Canada as railcars destined for the harbors sit idle on tracks across the U.S. Pacific Northwest. Even as the ports, on Washington’s Puget Sound, agreed to consolidate some operations after a century of competition, 40-fold growth in shipments of crude from the Bakken oil fields is straining the region’s main railroad company, BNSF Railway Co., causing delays that have helped shift traffic to less congested harbors in Canada. In September, as many as 150 grain cars piled up in nearby rail yards, said Dale Frazier, manager of Seattle Bulk Shipping Inc.

Forest River, Thor Foundation to Aid Employees (RV Business)

Forest River Inc., a Berkshire Hathaway company, and publicly held Thor Industries Inc. yesterday (Nov. 4) announced the establishment of an unprecedented community foundation set up to benefit the 15,000-plus employees of the two RV-building corporate giants and their families during times of need. The Forest River/Thor Community Foundation will be jointly funded by the two companies and will provide grants of up to $20,000 per qualifying employee or family to help cover emergency financial needs incurred in a variety of unforeseen family crises such as acute illnesses, natural disasters, fires or other hardships. Both firms are based in Elkhart, Ind.