Berkshire News Briefs - 12/24/15

Merry Christmas and Happy Holidays everyone! See you in 2016, unless Warren Buffett goes and buys another Fortune 500 company next week...

Warren Buffett has a year to forget (CNN Money)

Warren Buffett's Berkshire Hathaway is on track for its worst year since 2008. Shares of Berkshire's A and B shares are each down about 13% so far in 2015. [...] The last time the Oracle of Omaha's company did so poorly was in 2008, when both classes of Berkshire's stock fell 32%. [...]

This year, Buffett is lagging the market. The S&P 500 is down ... but only by 2%. The last time that Berkshire had a down year and underperformed the S&P 500 was all the way back in 1999. That year, the S&P 500 gained 19.5% while Berkshire's A shares fell 20% and the B shares were down 22%. [...]

A Fresh Peek at Berkshire Hathaway's Hot Portfolio and Valuations (Market Realist) A seven part series... just keep scrolling down the page for other installments. Lots of good analysis of the various business units.

Berkshire Hathaway, with a market capitalization of more than $335 billion, is a holding company whose subsidiaries engage in diverse business activities across sectors. The following are the major businesses where its subsidiaries operate: insurance and reinsurance, freight rail transportation, utilities and energy, finance, manufacturing, service and retail [...]

Buffett's NetJets Wins Agreement From Pilots Union on Contract (Newsmax Finance)

NetJets, the luxury aviation business at Warren Buffett’s Berkshire Hathaway Inc., just won over its pilots union, ending a dispute that’s stretched on for years.

Members of the NetJets Association of Shared Aircraft Pilots, which represents more than 2,700 pilots who fly for the business, voted to ratify a new contract with the company, the union said Sunday in a statement. Of the pilots who voted, more than 75 percent endorsed the agreement, the union said.

The deal included a double-digit increase in average wages, a signing bonus and a continuation of company-funded health care, among other benefits. Negotiations had been a sore spot over the past few years for Buffett, Berkshire’s billionaire chairman and chief executive officer. [...]

How Buffett Turned Around A $23.5 Billion Insurance Bet (Fool)

Berkshire Hathaway's insurance companies are worthy of envy. Large, profitable, and responsible for generating billions of dollars for Buffett to invest, the insurance group at Berkshire Hathaway underlies much of its recent and historical success. [...]

In fact, in the last 10 years, three of four of its insurance units have been profitable in every single year. One, Berkshire Hathaway Reinsurance, lost money in just one of the last 10 years.

This result is simply phenomenal. When investment income earned from Berkshire's float is included, the insurance companies have been profitable in 17 out of the last 18 years. [...]

Why Wall Street is Wrong and Warren Buffett Is Right About Beaten-Down IBM (The Street)

For confirmation, look no further than Warren Buffett, who seems to understand IBM's hidden potential. Buffett's Berkshire Hathaway boosted its stake in IBM by roughly 2% in the third quarter to 81 million shares from 79.6 million, for a value of about $11.7 billion. That makes IBM Berkshire Hathaway's fourth biggest holding. [...]

But here's what most investors are missing and what Warren Buffett understands: IBM is in the midst of a profound corporate reinvention that will soon bear fruit. The company is shedding its declining hardware businesses to emphasize the higher-margin areas of cloud computing, analytics and big data. [...]

Buffett endorses Clinton, likens Republican debate to vaudeville (Chicago Tribune)

He also singled out Republican front-runner Donald Trump for bragging "every five minutes" about how smart he is.

"Incidentally, I went to Wharton, too," Buffett said, referring to the University of Pennsylvania's business school, which Trump attended. "And I left after two years to go to the University of Nebraska." [...]

Berkshire Subsidiary Briefs - 12/14/15

What It’s Like to Be Owned by Berkshire Hathaway (Harvard Business Review)

Berkshire Hathaway is known for its extreme decentralization. The company’s more than 80 operating subsidiaries have complete independence and minimal oversight from headquarters, which requires little else besides regular financial statements and the return of excess cash that is not needed to sustain and grow the business. The company does not ask for budgets, financial forecasts, or strategy documents. It has no central marketing, procurement, sales, HR, IT, or legal department. It does not even have a General Counsel. This is for a corporation greater in size than General Electric, General Motors, IBM, or Chevron.

How exactly does such a structure work, given that it defies almost every major tenet taught in business school regarding management and governance?

Could This Company Be Berkshire Hathaway's Largest "Bolt-On" Acquisition to Date? (Fool)

The Financial Times reported this morning that Warren Buffett's Berkshire Hathaway Inc. is one of the companies exploring a bid for ITC. [...]

As of today, ITC Holdings has a market capitalization of $5.8 billion (enterprise value: $10.2 billion), which would make it the largest "bolt-on" acquisition in Berkshire Hathaway's history by a large margin.

However, the setup for this deal would be highly atypical for Berkshire, which generally announces agreed deals after conversations in which it is the sole potential acquirer.

Buffett's BNSF May 'Participate' In CP-Norfolk Battle (Investors Business Daily)

Shares of Norfolk Southern rose Friday on a report that BNSF Railway Chairman Matt Rose said his company may enter the bidding for the struggling railroad.

BNSF, which is controlled by Warren Buffett's Berkshire Hathaway (NYSE:BRKB), might step in to provide a competitive bid to Canadian Pacific Railway's $28 billion hostile offer for Norfolk Southern, Rose told Bloomberg in an interview.

How Berkshire Hathaway Travel Protection Is Targeting Millennials (Travel Agent Central)

From claims sent via smartphone to claim payments that can be made directly into the consumer’s bank or PayPal accounts, the company's technology-focused innovations are being used to attract a younger customer, says Sivley.

“In 2013, when we were looking at the market and what we wanted to do, it was all geared around the fact that we wanted to do something totally different and it was actually aimed at or targeted at the Millennials,” Sivley tells Travel Agent. [...]

NetJets' Profits Take Hit with Aircraft Cancellations (Aviation International News)

While its aircraft share sales have increased this year, NetJets' earnings suffered in the third quarter as the company continued to streamline its fleet with the cancellations of some older orders and the realignment with new models. In the quarter, NetJets reported a 37-percent drop in earnings from “increased nonfuel flight operation costs and increased general and administrative expenses, including fees to cancel certain aircraft purchases,” parent company Berkshire Hathaway reported.

Berkshire Hathaway often does not break out specifics on revenues and earnings for NetJets and its sister company FlightSafety International, and did not specify which aircraft cancellations eroded earnings in the third quarter. But French airframer Dassault in July reported the cancellation of a NetJets order for 20 Falcon 2000s that dated back to 2006. [...]

Warren Buffett And Berkshire Hathaway's Collection Of Privately Held Companies (Seeking Alpha)

Buffett has built up his wealth over the years through his conglomerate Berkshire Hathaway. The company started out as a textile business but over time transformed into a holding company for his many equity investments. Most of Berkshire's largest holdings are minority positions he's taken in large companies like Coca Cola and Wells Fargo.

But some may not know about the privately held companies that Buffett also owns. Buffett has been known to purchase some companies in entirety if he's a fan of its business model. Buffett and Berkshire Hathaway now fully own over 50 different companies including several well known names. [...]

How Warren Buffett Helps Start-Ups Without Spending a Dime (The Street)

Buffett, the CEO of Berkshire Hathaway, "has never allocated capital to a start-up and wouldn't, because he's way too conservative," said Lawrence Cunningham, corporate law professor at George Washington University and author of Berkshire After Buffett. "On the other hand, the operating companies are allowed to do whatever they want pretty much."

Those companies include a variety of household names, from fast-food chain Dairy Queen to auto-insurer Geico and Burlington Northern railroad. And some of them, like furniture business CORT, are dipping their toes into the start-up realm. [...]

Berkshire News Briefs - 12/14/15

Buffett's Investment Managers Posting More Gains Than Losses in 2015 (Forbes)

The two investors Warren Buffett hired several years ago to help manage and eventually take over Berkshire Hathaway portfolio had a fantastic start, with returns reminiscent of their boss’ virtuosity. But recent results have been more mixed, including so far in 2015.

For Warren Buffett, a house divided on climate change (Las Vegas Sun)

Buffet is a study in contrasts. Berkshire Hathaway owns power companies, natural gas pipelines, coal plants and large chunks of oil companies. Buffett’s electricity providers are fighting across the country in courts, legislatures and utility commissions against policies that mandate utility companies pay rooftop solar customers for the energy that they provide.

Conversely, Buffett and his company have invested $15 billion into renewable energy since 2000. He is a dominant wind provider in the Midwest. His Nevada utility has a portfolio that’s one-fifth renewables. In July, Buffett promised the White House he would double what he’s already spent to build more wind farms and solar arrays, close coal plants and reform the nation’s power grid.

Buffett May Get Dow Chemical Stock, But Regret It (WSJ MoneyBeat)

Warren Buffett could wind up with a hefty new stock position soon. But he may not want it.

Mr. Buffett’s Berkshire Hathaway Inc. owns a big slug of preferred shares in Dow Chemical Co., the industrial giant that the Journal reported last night is in advanced talks to combine with DuPont Co. Berkshire got the shares in 2009, when Mr. Buffett’s company gave Dow $3 billion to help finance its purchase of chemical maker Rohm & Haas Co. In return, Berkshire received preferred stock that pays an 8.5% annual dividend. [...]

From Mr. Buffett’s perspective, however, that may not be the best outcome. Berkshire has been collecting $255 million in interest on the preferred shares each year, and Mr. Buffett has long warned shareholders that he’d be hard-pressed to earn similar returns for his crisis-era investments as they roll off the books.

Buffett's Berkshire Hathaway Cuts Munich Re Holding to 4.6% (Bloomberg)

Warren Buffett’s Berkshire Hathaway Inc. further reduced its stake in Munich Re as the billionaire investor re-evaluates the attractiveness of the reinsurance market.

The holding was trimmed to 4.6 percent from 9.7 percent, Munich Re said in a filing Friday. Buffett’s firm once owned about 12 percent of the Munich-based reinsurer and has been lowering the stake this year. [...]

Where Could Berkshire Hathaway Be in 10 Years? (Fool)

A round-up of opinions from Fool writers...

I think there's a good chance the Berkshire Hathaway of 2025 will have a much larger presence in energy. In fact, the company's energy arm, Berkshire Hathaway Energy, already represents a substantial portion of the company's business, equal to about 9% of year-to-date sales and 15% of its assets. Berkshire Hathaway Energy focuses on the kinds of fixed-fee, long-term contracted revenue that results in the predictable cash flow that is the hallmark of the kind of business model Buffett likes. [...]

AIG, Berkshire Get $400 Million as Alleghany Deal Winds Down (Bloomberg)

Weston Hicks’s Alleghany Corp. will pay $400 million to wind down reinsurance deals with American International Group Inc. and Warren Buffett’s Berkshire Hathaway Inc. for policies that date back decades.

Transatlantic Reinsurance Co., owned by Hicks’s firm, will end contracts that covered asbestos-related illness and environmental liabilities, according to an Alleghany regulatory filing Tuesday. [...]

Has Warren Buffett Finally Found a Winning Big Oil Investment? (Fool)

[...] In the recent release of Berkshire's 13F filing with the SEC, the company disclosed that it had more than doubled its holdings in midstream and downstream integrated giant Phillips 66 in the third quarter.

According to the filing, Berkshire bought more than 31 million shares of the company, putting Berkshire's total holdings in Phillips 66 stock at 61.5 million shares. Add it all up, and Berkshire now owns more than 11.5% of the refining and petrochemicals giant.

Warren Buffett just bought this stock personally (CNN Money)

[...] Buffett rarely makes personal investments outside of Berkshire Hathaway. He disclosed one on Thursday.

Buffett personally bought 2 million shares of a company called Seritage Growth Properties (SRG). That works out to an 8% stake and makes him Seritage's second-largest shareholder. [...]

What the heck is Seritage? It's a real estate investment company that was spun off by struggling retailer Sears (SHLD) earlier this year. Seritage owns 262 retail locations. Most of them are Sears or Kmart stores. (Sears also owns Kmart.) Seritage then leases the properties back to the Sears and Kmart stores.

2016 Berkshire Hathaway Annual Meeting Dates Announced (Guru Focus)

Berkshire Hathaway just announced The 2016 Annual Shareholders Meeting information. The 2016 Berkshire Hathaway Annual Meeting will be held on Saturday, April 30, 2016 at the same location as last year [...]

The Billionaire and the Ukulele: Warren Buffett’s Lifetime Investment (Hear Nebraska)

More than 65 years have passed since Warren first picked up the ukulele. In that time, he’s worn many hats: husband, father, investor, Berkshire Hathaway CEO, billionaire, philanthropist. He’s been dubbed “The Oracle of Omaha” and, according to 2015 Forbes Magazine rankings, is the third richest person in the world.

And he still plays the ukulele.

Berkshire News Briefs - 11/24/15

The quarterly 13F came out last week, detailing the changes in Berkshire Hathaway's portfolio last quarter. Dataroma has a convenient chart to visually show what changed.

Berkshire Hathaway Reduces Goldman Sachs, Wal-Mart Stakes (ABC)

Buffett told CNBC on Monday that the main reason he reduced Berkshire's stakes in Wal-Mart Stores Inc. and Goldman Sachs Group Inc. was to generate cash for his $32 billion acquisition of Precision Castparts Corp. that's expected to close next year. [...]

Warren Buffett is having an unusually bad year (CNBC)

Warren Buffett has seen shares of his Berkshire Hathaway fall more than 11 percent this year. Even worse, Berkshire shares have underperformed the S&P 500 by more than 10 percent.

What makes this highly unusual is that Berkshire famously tends to underperform when the S&P skyrockets and outperform when the stocks as a whole do less well, which makes sense given Buffett's long-term time frame. [...]

Buffett Doubles Down on Big Blue (Fool)

To me, and presumably Buffett, as well, there's a readily identifiable disconnect with IBM's very gradually declining core business and the huge discount the market has placed on the company's future outlook. For context, IBM stock currently trades at a remarkably low 9.5x its LTM earnings, and yields 3.9%. Wall Street analysts expect IBM's revenue to continue to fall into next year, but believe that Big Blue will actually return to EPS growth in 2016. That reversal alone could be enough to inject some much-needed optimism into IBM shares, even as its broader business realignment requires more time to fully materialize.

Is Warren Buffett Still a Bargain Hunter? (CNN Money)

Consider Axalta Coating Systems, which makes automobile finishes and other coatings. [...] Axalta sells for a whopping 130 times its past 12 months of earnings and sports a price/earnings ratio of 22 based on future estimated profits. [...]

On paper, this would hardly seem like a stock that a vaunted bargain hunter would gravitate to. Yet Axalta isn’t the only example.

Berkshire Hathaway [Travel Insurance] expanding again (Insurance Business)

Insurance giant Berkshire Hathaway Travel Protection (BHTP) teamed up with VacationGuard, a specialist provider of vacation rental insurance, this week to create customized travel insurance products for timeshares, travel clubs, resorts and vacationers.

Targeted at both property owners and vacation renters, the products protect against trip cancellation, delays, injuries and accidental damage to rental units.

Fire at Leetsdale chemical plant leads to 70 homes being evacuated (Pittsburgh Post-Gazette)

Residents were evacuated from more than 70 Leetsdale homes Tuesday after a fire at a chemical manufacturing plant filled the sky with black smoke and noxious fumes.

Four workers at the Lubrizol Corp. Oilfield Chemistry site in the Leetsdale Industrial Park were adding chemicals used in gas well fracturing to a production tank about 10 a.m. when the fire exploded to life, a company spokesman said. The workers — and about 36 other employees — escaped the buildings, though five of the workers were injured.

Buffett’s Grandson Seeks Own Investment Route: Social Change (NY Times)

At 32, Howard Warren Buffett, the grandson of the Berkshire Hathaway founder Warren E. Buffett, has already enjoyed a diverse career. He teaches at Columbia University, runs a farm in Nebraska, previously oversaw his family’s foundation and worked on economic redevelopment efforts in Afghanistan for the Defense Department. [...]

Now, that is changing. Mr. Buffett has co-founded a permanently capitalized operating company with big ambitions [...] The plan is for the new company, called i(x) Investments, to invest in early-stage and undervalued companies that are working on issues such as clean energy, sustainable agriculture and water scarcity. [...]

Berkshire gets flak from ClimateTruth, others for solar panel policy (Omaha World-Herald)

A climate activist group said Tuesday that Berkshire Hathaway Inc.’s utility division favors policies that would hinder the spread of rooftop solar energy panels.

Outside Omaha’s Kiewit Plaza, where Berkshire has its offices, representatives of ClimateTruth.org and other groups gave a security guard what they said was an electronic copy of an online petition with about 100,000 signatures. The petition, addressed to Berkshire Chairman Warren Buffett, said, “End your profit-driven challenges to net metering programs in Nevada and all over the country.”

Prominent film company focuses documentary lens on Buffett (Omaha World-Herald)

Kunhardt Films of Pleasantville, New York, is gathering information, photos and videos about the chairman and chief executive of Omaha-based Berkshire Hathaway Inc.

When the project airs, possibly within two years, Buffett would join a long list of prominent Americans profiled by the film company headed by Emmy winner Peter Kunhardt.

Berkshire News Briefs - 11/13/15

Berkshire Hathaway and the Billion-Dollar Acquisition No One Noticed (Fool)

Well, I wouldn't say no one noticed.

Through superior capital allocation and the resulting compounding of intrinsic value, Warren Buffett's conglomerate, Berkshire Hathaway, has become so large that its subsidiaries make billion-dollar acquisitions that go nearly unnoticed. [...]

On September 30, 2015, UTLX acquired approximately 25,000 tank cars from General Electric Company's leasing unit for a total purchase price of approximately $1.0 billion. This transaction and related transactions to be completed in the fourth quarter of 2015 are expected to further enhance the full-service capabilities of UTLX's repair, maintenance and inspection network and contribute to future revenue and earnings growth.

Here's the press release from Marmon, explaining that Union Tank Car (UTLX) and Procor will add the tank cars to their fleet which they lease out.

Kraft Heinz to close 7 North American plants, cut 2,600 jobs (Pittsburgh Post-Gazette)

Kraft Heinz Co. told about 2,600 employees at seven North American plants on Wednesday they wouldn’t have a future with the processed food company on a mission to streamline operations and meet goals set when investors created the bulked-up business earlier this year.

The cuts mark the second round of job trimming since the company was formed this summer in the merger of Pittsburgh’s H.J. Heinz Co. and Northfield, Ill.-based Kraft Foods Group. [...]

A plant in Pennsylvania’s Lehigh Valley that employs 400 people making A1 sauce, Grey Poupon mustard and single-serve coffee is among those slated to close in the next 12 to 24 months.

It and five other plants being closed had been part of Kraft. Those are in Fullerton, Calif.; San Leandro, Calif.; Federalsburg, Md.; Campbell, N.Y.; and Madison, Wis. The other plant being shuttered, in St. Marys, Ontario, Canada, was a Heinz plant. [...] In addition, Kraft Heinz will move its Oscar Mayer and U.S. meats business from Madison, Wis., to Chicago, taking about 250 jobs along.

Warren Buffett's Ice Cream Chain Dairy Queen Looks to Fix Its Winter Problem (Newsmax)

With a new menu of snacks and sandwiches, the 75-year-old fixture of American summers is looking beyond its signature soft-serve and diving deeper into fast-food fare, where even giants like McDonald’s Corp. have been struggling lately.

It’s a major bet — but one that DQ’s chief executive officer, John Gainor, says is already starting to pay off. After introducing a line of hot desserts and artisan-style sandwiches, part of the company’s biggest menu overhaul in its history, same-store sales grew in September and October. [...]

The bigger test will come when winter sets in next month. The hope is new warm fudge-stuffed cookies and chicken-bacon sandwiches will get customers to think of Dairy Queen when the weather turns cold. [...]

Jordan’s Furniture to open in New Haven (Yale Daily News)

Zip lines, a 45-foot fountain and the world’s largest indoor adventure rope course will all come to New Haven in time for Christmas, bundled inside a 200,000-square-foot furniture store.

Jordan’s Furniture — a family-run business that offers shoppers entertainment options including theaters in six locations across New England — opens on 40 Sargent Dr., the former New Haven Register building, on Dec. 11, President and CEO Eliot Tatelman announced Wednesday [...]

Though Jordan’s is owned by American conglomerate holding company Berkshire Hathaway, Tatelman said his family runs the day-to-day affairs of the company. He added that Warren Buffett, CEO of Berkshire Hathaway, will make an appearance at the private opening ceremony on Dec. 10.

Tianjin explosions cost Berkshire Hathaway $130 million in reinsurance losses (Canadian Underwriter)

Berkshire Hathaway Inc. reported Friday its estimated losses from the Tianjin, China explosions last August were $130 million, though the Q3 underwriting gain for the Berkshire Hathaway Primary Group increased 31% year over year. [...]

On Aug. 12, explosions in Tianjin originated from a warehouse storing 700 tons of sodium cyanide, which can form a flammable gas on contact with water, the Associated Press reported at the time. As of Sept. 11, AP reported 173 were dead and eight persons were still unaccounted for. Guy Carpenter & Company LLC said at the time that the blast damaged shipping containers and vehicles, while windows several kilometres away were blown out. [...]

Former NetJets executive joining private equity firm (Washington Post)

Four months after Jordan Hansell resigned in the midst of NetJets’ contract dispute with its pilots’ union, he took a job as president of Rockbridge Holdings.

While at NetJets, Hansell had appeared alongside Buffett in interviews to discuss the cost-cutting turnaround he led from 2011 until June. But near the end of tenure, Hansell became the focus of the union’s ire over concessions the company sought in prolonged talks.

“Ultimately, it became a little bit about me as a leader, and I thought it was probably best if I got out of the way to see if they could come to a conclusion in those arrangements,” Hansell said about why he left NetJets. [...]

Howard Buffett Is Getting His Hands Dirty (Bloomberg)

To date, the Howard G. Buffett Foundation has given away $775 million to combat global hunger—efforts include teaching sustainable farming techniques and improving access to clean water—especially in the world’s conflict zones. The Democratic Republic of Congo and Rwanda top his list of countries where he intends to spend a total of more than $700 million during the next decade. They’re about as far away as you can get from Omaha, Nebraska, the site of Buffett’s quiet, humble upbringing. [...]

Berkshire Hathaway 3rd Quarter 2015 Earnings

Berkshire Hathaway's Quarterly Report for the 3rd Quarter of 2015: 10-Q PDF

Buffett’s Berkshire Hathaway reports record profit (Financial Times)

Warren Buffett’s Berkshire Hathaway recorded its best ever quarterly profit in the third quarter, as earnings were boosted by a one-off $4.4bn gain from the merger of Kraft and Heinz.

Net income climbed to a record $9.43bn from $4.62bn a year earlier, the Omaha, Nebraska-based conglomerate said on Friday. Operating earnings, which exclude some investment results, came to $4.55bn for the period, narrowly beating the $4.47bn average estimate of three analysts surveyed by Bloomberg. [...]

Kraft Heinz gain leads ‘mediocre’ Berkshire Hathaway earnings (Omaha World Herald)

“I was looking for sort of a mediocre quarter, and that’s kind of what we got,” said Cathy Seifert, an analyst with S&P Capital IQ. She had predicted operating earnings per share slightly lower than Friday’s report.

Seifert said Berkshire’s results from reinsurance — taking on risk from other insurance companies in return for payments — seem to have declined too sharply.

“I think an argument can be made that some of this may be them intentionally stepping away from the insurance business, but the top-line is a little disturbing,” she said. Revenue from Berkshire’s reinsurance division dropped 48 percent to $2.4 billion compared with a year ago.

She said the company’s energy, industrial and railroad operations were “a little better than I had thought,” with flat revenues even though other companies in the same businesses have been reporting declining revenue.

Consumer-oriented businesses were “OK,” she said.

Berkshire Hathaway Inks a Record Third Quarter (Fool)

Berkshire's quarterly results are notoriously volatile, the result of a 12-figure portfolio of publicly traded securities and stakes in insurance companies, which produce volatile earnings by their nature.

Its insurance companies produced underwriting profit of $414 million, compared to an underwriting loss of $38 million last quarter, and profit of $629 million a year ago. [...] The insurance companies earned $840 million from investments this quarter, up from $811 million in the same quarter last year. The insurance float grew to $86.2 billion, up from $83 billion during the year-ago period. [...]

The railroad produced net income of $1.16 billion, an improvement over last year's earnings of $1.04 billion. BNSF reported that lower oil and coal prices have negatively affected its volumes, which grew only 1% year to date, but were offset by lower fuel prices and an increase in agricultural car loads. [...]

Berkshire's utility businesses steamed ahead. The company reported quarterly net earnings of $786 million from energy, up from $697 million in the year ago period. [...]

An assortment of smaller businesses, from its real estate brokerage to Clayton Homes, made up 43% of Berkshire's operating income. There was a slight year-over-year decline in the other operating companies' profitability, with combined earnings falling to $1.48 billion this quarter from $1.5 billion last year.

Berkshire News Briefs - 10/29/15

NetJets reaches deal with pilots, ending Berkshire Hathaway distraction (Columbus Business Journal)

NetJets Inc. has agreed in principle to a contract covering its 2,800 union pilots, ending more than two years of contentious negotiations that saw a management shakeup and required billionaire Warren Buffett to defend parent Berkshire Hathaway Inc.’s attitude toward organized labor. [...]

The union said the proposed agreement meets goals of “protecting, repairing and improving” the previous contract. It comes days after NetJets reached a tentative contract with 278 flight attendants.

Warren Buffett’s Millionaires Club (WSJ)

In 50 years at the helm of Berkshire, Mr. Buffett has transformed a struggling textile mill into a massive holding company with $200 billion in revenue and created a legion of unlikely millionaires—and even a few billionaires. [...]

Early Berkshire stockholders have used shares to finance children’s educations, buy homes and put up collateral for loans. Hundreds of millions of dollars of stock already have gone to shareholders’ alma maters, cultural institutions and medical research.

Warren Buffett's really bad week (Fortune)

Warren Buffett likely had a worse week in the market than you did.

[...] Walmart’s stock fell 10%, [...] so that was a $360 million hit to the conglomerate’s investment portfolio. That same day, Wells Fargo [...] shares dropped a modest $0.36. But to Buffett’s Berkshire [...] that small drop meant another $170 million shaved off the Oracle of Omaha’s portfolio. Then came IBM, [...] IBM’s shares fell 6%, or $8.58. The resulted in a $680 million hit to Buffett’s Berkshire [...]

Three stocks, one week, $1.2 billion down the drain.

Trust and Consequences: A Survey of Berkshire Hathaway Operating Managers (Stanford)

For much of its history, Berkshire Hathaway has been regarded primarily as the investment vehicle of Warren Buffett rather than a bona fide corporation. However, as Berkshire Hathaway has expanded beyond its core insurance operations, more attention is being paid to the structure by which these entities are managed. Notable features of the company’s system are its decentralization, the autonomy afforded to its managers, its long-term investment horizon, and its emphasis on ethical behavior.

We explore this system in greater detail, based on the results of a survey of the chief executive officers of the company’s operating subsidiaries.

Precision Castparts Q2 Earnings & Revenues Lag, Down Y/Y (Nasdaq)

Precision Castparts Corp. reported second-quarter fiscal 2016 earnings from continuing operations of $2.49 per share [...] Also, the bottom line declined 23.1% on a year-over-year basis.

The decline in bottom line was mainly led by poor top-line performance during the quarter. Moreover, higher interest expense as well as selling & administrative costs dragged earnings. This apart, pricing pressure in the oil & gas market, persistent "fastener destocking" and operational issues in the Airframe Products segment added to the year-over-year fall in earnings. [...]

On Aug 10, 2015, Precision Castparts disclosed the signing of a merger deal with Berkshire Hathaway Inc. for about $37.2 billion. The deal is expected to conclude in the first quarter of calendar year 2016 [...]

BYD's Third-Quarter Profits Surge (Nasdaq)

BYD Co.said it is expecting a strong 2015 performance after the Chinese company on Thursday reported a surge in third-quarter net profit, lifted by higher electric-car sales and government subsidies.

The battery and car maker, which is 9.1%-owned by Berkshire Hathaway Energy, a unit of Warren Buffett's Berkshire Hathaway Inc., said its net profit for the July-Sept period totaled 1.49 billion yuan (US$234.5 million), sharply higher from CNY28.2 million a year earlier. Its operating revenue during the period was up 23.5% to CNY16.9 billion. [...]

BYD expects its full-year net profit to rise by around 435% to 481% from a year ago, on anticipation of strong sales of its plug-in hybrid cars in the fourth quarter [...]

Buffett's Berkshire takes on Charles Taylor insurance books (Telegraph)

Charles Taylor has offloaded its last tranche of property and casualty insurance policies to a subsidiary of Warren Buffett’s Berkshire Hathaway, three years after increasing competition prompted it to call time on its general insurance run-off business. [...]

Tenecom, a subsidiary of Mr Buffett’s business empire, will liquidate the businesses before paying Charles Taylor a dividend.

Insurance consolidation firms such as Tenecom buy up legacy businesses from other firms in the hope of generating more money than it takes to pay for claims made on the policies before they expire.

7 Secrets From Warren Buffett’s Employees (Fool)

"I would describe it as very strange and almost bizarre the way he manages, because he doesn't manage," Matthew Rose, executive chairman of Burlington Northern Santa Fe Railway said in a D Magazine article. "He takes companies that he likes, he spends a lot of time in terms of developing the goals of how management will be compensated and how the scorecard will look, and then he allows management to run the company."

Berkshire News Briefs - 10/15/15

Buffett Builds Rail Superhighway to Grab Truck Freight (Bloomberg)

After this year, BNSF Railway Co. will be more than 99 percent finished with a second, parallel line to its 2,200-mile (3,500-kilometer) Los Angeles-to-Chicago route. Doubling up will create a rail superhighway speeding deliveries of toys, electronics, autos and other goods, because trains won’t have to yield to each other on sidings as they do on single tracks.

The goal: help the unit of Buffett’s Berkshire Hathaway Inc. grab cargo now going by road. [...]

The Los Angeles-to-Chicago route links the busiest U.S. container port to the biggest mid-continent rail hub, giving BNSF a leg up in the race to find alternatives to those dwindling coal cars. [...]

Warren Buffett: We don't do due diligence — we just look into your eyes (Business Insider)

Buffett told Loomis he met with Precision Castparts CEO Mark Donegan for about 10 or 15 minutes and asked whether he would listen to a takeover offer from Berkshire. After taking this to his board, Donegan agreed to listen to an offer.

And so Buffett made an offer, they talked about it, and then they had a deal. At this point, Buffett said, he and Donegan had talked for about 25 minutes in total.

How does a deal like this come together so quickly? "We basically do no due diligence," Buffett said. "Our due diligence is basically looking into their eyes." [...]

Lubrizol acquires Particle Sciences (Today's Medical Developments)

The Lubrizol Corporation announces that it has acquired Particle Sciences, a leading contract drug development and manufacturing organization with a comprehensive suite of services for the formulation, analysis and production of complex drug delivery solutions. Headquartered in Bethlehem, Pennsylvania, Particle Sciences is a global leader in complex formulations including drug eluting device product development as well as sterile and particulate drug products. This acquisition further expands Lubrizol LifeSciences' pharmaceutical development capabilities, providing full service drug delivery solutions to the market across a variety of dosage forms.

Goldman Sachs is planning to ditch a Warren Buffett-owned news wire for earnings releases (Business Insider)

When Goldman Sachs announces its third-quarter earnings on October 15, it is planning to do so with a release on its own website and a tweet linking to the release.

It does not plan to release its results on Business Wire as it did in the second quarter, however, according to people familiar with the matter. [...]

Buffett's Portfolio Takes Another Hit as Wal-Mart Shares Plunge (Bloomberg)

Billionaire Warren Buffett’s stock portfolio suffered another setback as Wal-Mart Stores Inc. plunged after predicting profit would decline in its next fiscal year.

Wal-Mart fell $6.70, or 10 percent, to $60.03 at 4:15 p.m. in New York. That translates to a one-day paper loss of more than $450 million for Buffett’s Berkshire Hathaway Inc., which had about 67.7 million shares as of June 30. [...]

Warren Buffett expected to win over regulators on reinsurers (Financial Times)

Regulators will drop proposals to hit the world’s biggest reinsurance companies with tougher safety rules, thanks in large part to the influence of veteran investor Warren Buffett, the head of one top reinsurer has predicted. [...]

Mr Kieholz said Mr Buffett’s status in US financial and political circles seemed to have helped global reinsurers fend off inclusion in the systemically important insurers list. [...]

Mr Buffett’s office denied suggestions he had directly lobbied contacts in Washington. But he has been outspoken in speeches and interviews, arguing that it would be illogical to apply a systemic label to Berkshire Hathaway, but not to the likes of Apple, ExxonMobil or Walmart.

MasterCard Send Streamlines Berkshire Hathaway Travel Pay (Pymts)

A new partnership was announced yesterday (Oct. 14) between Berkshire Hathaway Travel Protection and MasterCard that’s aimed at taking the hassle out of paying travel insurance claims.

Because those payments are traditionally made online, through EFT transaction or paper checks, there’s typically a lag of a few days — or even a few weeks. By using MasterCard Send, Berkshire Hathaway Travel Protection can streamline that process by facilitating the payments for those claims nearly instantly. This solution then sends funds directly to a personal account through a debit card. [...]

Warren Buffett (still) doesn't want to be an activist investor (Fortune)

Chatting with Carol Loomis, Fortune’s retired senior editor-at-large, Buffett said that activism is a profitable and "salable form," which happens to be attracting big money right now. But it’s spurred a wave of activism that may have gone about as far as it can go. "They stretch for targets, and you’re seeing that now," he said.

A famous buy-and-hold investor, Buffett compared activism—where investors push companies to make major changes to increase shareholder returns—to an old saying: "If you want to guarantee yourself a life of misery, marry someone with the expectations of changing them."

Warren Buffett dumped on hedge funds for a promise that lasts long enough to get them rich (Business Insider)

Billionaire investor Warren Buffett, the chief executive of Berkshire Hathaway, dumped on hedge funds during Fortune's Most Powerful Women Summit.

He said that as hedge fund assets grow in size, the fund managers don't really need to worry as much about performance. [...]

Berkshire News Briefs - 10/6/15

Marmon and Wells Fargo buy GE Capital rail businesses (Railway Gazette)

Berkshire Hathaway’s Marmon Holdings has bought ‘substantially all’ of GE Railcar Services’ tank wagons with immediate effect, and expects to complete the acquisition of GE Railcar Repair Services in the fourth quarter of 2015.

The wagons will be managed by Union Tank Car Co and Procor, while the repair facilities will expand the UTLX Repair Services and Procor Repair Services networks.

Buffett Cuts Munich Re Stake After Lamenting Reinsurance Slump (Bloomberg)

Warren Buffett’s Berkshire Hathaway Inc. has cut its stake in Munich Re after lamenting a slump in the reinsurance business.

Berkshire’s holding was lowered to 9.7 percent from about 12 percent, Munich Re said in a statement Tuesday, citing a notification from Buffett’s Omaha, Nebraska-based company. [...]

“It’s a business whose prospects have turned for the worse and there’s not much we can do about it,” Buffett told shareholders at his company’s annual meeting in May.

Berkshire's Abel Targeted by Pilots Union Over Board Secrecy (Bloomberg)

A union representing pilots at Berkshire’s NetJets unit said that it took out an advertisement Monday in Abel’s hometown newspaper, Iowa’s Des Moines Register, identifying the executive as a board member of the business. Two other directors remain unidentified, despite attempts to learn who is overseeing the company, the group said on its website.

Berkshire Hathaway Said to Borrow $275 Million for Texas Wind (Bloomberg)

Warren Buffett’s Berkshire Hathaway Inc. borrowed $275 million for a 300-megawatt wind farm in Texas that’s supplying power to Austin Energy, according to two people familiar with the deal. [...]

Berkshire Hathaway’s BHE Renewables unit owns the wind farm, which it acquired from Chicago-based Lincoln Clean Energy LLC.

Warren Buffett Gets Into Cybersecurity Insurance (24/7 Wall St)

Berkshire Hathaway Specialty Insurance (BHSI) unveiled two new types of insurance policies on Tuesday, providing cyber liability and breach response coverage. The company now offers risk management resource policies: the Professional First Network Security & Privacy Policy and the Professional First Professional Liability and Network Security & Privacy Policy. Berkshire Hathaway indicated that the latter also includes customizable errors and omissions liability coverage. [...]

As far as what features these policies include, that would be coverage for third party exposures, breach expense and extortion threat coverage, media liability coverage, business interruption coverage, access to the eRiskHub and more. [...]

Warren Buffett Saved Media General: Don't Dismiss Berkshire In A Fight Over Its Future (Forbes)

In the case of broadcasting conglomerate Media General, Buffett similarly helped revive the company through a creative May 2012 deal where he bought 63 of its newspapers for $142 in cash and provided the Richmond, Va.-based company with a $400 million term loan and a $45 million revolving credit facility. [...] This morning Nexstar Broadcasting disclosed that during Media General’s stock slide, it has been lobbying to buy the company in a merger that would instantly create a powerhouse broadcaster touching nearly 40% of U.S. households. [...] Berkshire, according to the BAML analysis, is a potential friendly investor for Nexstar. However, Berkshire, currently a holder of nearly 4% of Media General’s outstanding stock after a series of stock-funded acquisitions, has historically balked at hostile takeover deals. If Media General’s board decides to continue on its path for Meredith and its standalone strategy, odds are Buffett will support the plan. [...]

Lubrizol opens CPVC resin facility in Thailand (Business Standard)

The Lubrizol Corporation, , a Berkshire Hathaway company, on October 5, 2015 opened a chlorinated polyvinyl chloride (CPVC) resin manufacturing facility in Rayong, Thailand as part of a joint investment with Sekisui Chemical Company Ltd. The plant opening is the latest in the company's efforts to increase global CPVC capacity as previously announced in 2013. [...]

The Thailand facility, combined with Lubrizol's other recent investments in Louisville (Kentucky) and Dahej (India), as well as its existing CPVC operations around the globe, better positions the organisation to support its future business growth. [...]

MetLife Fighting Systemic Tag Asks Why Buffett Gets Pass (Bloomberg)

MetLife Inc., the insurer fighting the U.S. government’s decision to label it a potential threat to financial stability, wants to know why Warren Buffett’s Berkshire Hathaway Inc. has gotten a pass. [...]

“It is difficult to understand why, say, Berkshire Hathaway with $64 billion in debt and $277 billion of market capitalization should not be considered a systemic risk,” Hele said at the November meeting at the Treasury Department in Washington.

Hele also mentioned Visa Inc., noting that the world’s largest payments network had a market capitalization of $135 billion. MetLife’s market capitalization is about $52 billion.

Conservative think tank attacks NV Energy plan to build new power plant (Las Vegas Sun)

The Beacon Hill Institute, a conservative think tank backed by the Koch brothers, released a report Monday condemning a new, $1 billion natural gas plant proposed by NV Energy.

The institute, based at Suffolk University in Boston, said building the new plant could cost consumers $604 million by 2025 and that a new power plant could cost Nevada more than 1,600 jobs and $18 million of private investment.

The Nevada Policy Research Institute, which opposes shutting down coal-fired power plants in exchange for solar and natural gas generation, hired Beacon Hill to do the study. [...]

NV Energy hopes to phase out its use of coal entirely and have one quarter of its electricity generated from renewable sources in the next decade.

Warren Buffett outlasts Ndamukong Suh in final arm-wrestling duel (WPLG 10)

There was more than just football taking place Monday at the Miami Dolphins Training Facility in Davie.

Inside, WPLG Local 10 owner and billionaire Warren Buffett was challenging Dolphins defensive tackle Ndamukong Suh to an arm-wrestling rematch. [...]

It was a struggle, but in the end Buffett, aka "The Bicep," reigned victorious over Suh, aka "The Dominator," once again.

Berkshire News Briefs - 9/28/15

Charlie Munger: Buffett’s ‘Abominable No-Man’ (Think Advisor)

Sharp as a tack and blunt as Lenny Bruce, Charlie Munger, Warren Buffett’s peppery longtime business partner, is the not-so-secret sauce in the Oracle of Omaha’s extraordinary investing success.

Munger, the curmudgeonly 91-year-old vice chairman of Buffett's holding company, Berkshire Hathaway, is a humorous, deep-thinking billionaire whose judgment has been indispensable to growing Berkshire into a $360 billion-plus enterprise. Indeed, last year it picked up $18.3 billion in net worth.

Now comes “Charlie Munger: The Complete Investor” (Columbia University Press-Columbia Business School Publishing), by Tren Griffin, a book that neatly ties together the astute nonagenarian’s investing acumen in just under 200 pages. [...]

Kraft Heinz, Phillips 66 Targeted by Fake Securities Filings (WSJ)

Two separate filings that said they were submitted by Loreto M. Zamora on behalf of LMZ & Berkshire Hathaway Co. to the Securities and Exchange Commission on Thursday morning claimed to hold at least 10% stakes in both Kraft Heinz and Phillips 66.

Both companies told The Wall Street Journal that the filings are fraudulent and they have contacted the SEC. Warren Buffett, whose Berkshire Hathaway Inc. owns stakes in the food and energy companies, said in an email that he has never heard of Mr. Zamora. [...]

Could Warren Buffett's Utility Empire Be in Trouble? (Fool)

No matter where you look, particularly in Nevada, utilities are under serious pressure from customers looking to find lower-cost and cleaner energy elsewhere. Now that Buffett is one of the largest utility owners in the country, he's directly at odds with some of these trends.

Wynn Resorts is offering $15 million to break ties with NV Energy, and if it weren't for a limit on distributed solar in Nevada, there would be thousands of customers putting up their own generation systems.

The dual threat shows the challenge utilities are facing as the energy industry evolves. [...]

Borsheims CEO Goracke plans visit to share a wealth of retail knowledge with UNK students (Kearney Hub)

When Karen Goracke was approached to be University of Nebraska at Kearney’s Executive in Residence this fall she was at first surprised, then ecstatic. [...]

Giving back, by sharing her knowledge and ideas with students, is something the Borsheims CEO has been waiting to do. The College of Business and Technology Executive in Residence will give her that chance: To talk to students, visit with faculty and play a mentor role to anyone who wants to learn more about retail, Berkshire Hathaway, working for Warren Buffett, merchandising, accounting, sales – her list of what she wants to talk about is long. [...]

Perpetrators of a $10-Million Telemarketing Scam that Used Warren Buffett and Berkshire Hathaway's Names as Baits (Realty Today)

According to the indictment, Jonathan Papa and Methsiri "Lal" Palliyaguru sold phony investments in certificates of deposit and real estate to nearly 200 investors, primarily American senior citizens. They knowingly misrepresented that Warren Buffett and Berkshire Hathaway were involved with the purported real estate investments, in order to lure in unsuspecting investors who idolize Buffett and Hathaway.

Ndamukong Suh and Warren Buffett huddle up (Lincoln Journal Star)

[...] “Every time, we have a great conversation,” Suh said. “And they’re really conversations around the concepts of business or understanding commodities, how it can all work together. It’s not (Buffett saying), ‘You should go pick this stock.’

“He knows my goals, and he’s like, ‘You should think about this’ or ‘This is some advice from people I’ve worked with.’ It’s also him with open arms saying, if you want to learn about something else, if you want to learn about the aviation business — which is something I’m very into — he said, ‘I own NetJets’ and opened the door for me to go out and learn from those people.” [...]

Billionaire Warren Buffett is ready to sub in for Ndamukong Suh (CBS Sports)

When you're worth $70 billion you can do whatever you want and sometimes doing whatever you want includes showing up at a Dolphins game wearing shoulder pads and an Ndamukong Suh jersey.

That's exactly what billionaire Warren Buffett did on Sunday. The third-richest man in the world showed up on the Dolphins sideline before their game against Buffalo and Buffet definitely wasn't wearing his normal suit-and-tie combo. [...]

Berkshire News Briefs - 9/19/15

BNSF Pressures Congress to Extend 2015 Rail Safety Deadline (Bloomberg)

BNSF Railway Co., the railroad owned by Warren Buffett’s Berkshire Hathaway Inc., is ratcheting up pressure on Congress to postpone a deadline for installing a safety system by the end of the year, saying it would probably have to halt freight and passenger traffic if the requirement isn’t delayed.

Congress mandated in 2008 that U.S. railroads install what’s known as positive train control, which can automatically stop a train to avoid a collision, by the end of 2015. But the major railroads have said they’re still years away from fully implementing it. Safety regulations trump BNSF’s obligation as a common carrier to haul freight for customers, BNSF said in a letter sent to Senate commerce committee chairman Wednesday. [...]

NetJets Pilots Ask for Better Pay for Flying Millionaires (Vanity Fair)

[...] At six other airports—Columbus, Dallas, Scottsdale, Seattle-Tacoma, Van Nuys, and Palm Beach International—700 of their colleagues did the same. The pilots, who all work for the fractional jet-ownership company, picketed as part of a more than two-year-long labor dispute. The roughly 3,000 pilots who fly for the company have been working without a contract since 2013. Their union, the NetJets Association of Shared Aircraft Pilots, and NetJets blew past their self-imposed September 3 deadline for a tentative agreement.

The bristle, of course, has been over pay and benefits. The pilots’ union said salaries are not high enough and the company’s proposed changes to benefits would put them on the hook for more health-care costs. NetJets said in a statement that on economic issues, the two sides are still a long way apart. [...]

Smaller panels have benefited Berkshire Hathaway (Intelligent Insurer)

The trend of buyers rationalising their reinsurance programmes—using fewer, bigger players with a broader reach—has benefited Berkshire Hathaway, Manfred Seitz, managing director of international reinsurance at Berkshire Hathaway, told Monte Carlo Today.

“As larger insurers have become ever more sophisticated in their programmes, it has meant opportunities for us because we are often a starting point for companies that want to structure these large, complex programmes,” he said. [...]

Kraft Heinz Pushes Retirees to Health Exchanges to Cut Costs (Bloomberg)

Kraft Heinz Co., which counts Warren Buffett’s Berkshire Hathaway Inc. as its largest shareholder, is pushing some of its retirees to health exchanges as the company cuts expenses. [...]

3G Capital, which combined H.J. Heinz and Kraft Foods Group Inc. with Buffett’s backing, has been cutting jobs and office expenses to boost profits. As of Jan. 1, Kraft Heinz will offer medical and prescription coverage through the individual marketplace for retirees age 65 and older. Coverage options including dental and vision plans will be available through the private Towers Watson OneExchange. [...]

International Dairy Queen Opens First Location in Poland (BusinessWire)

The Dairy Queen® system, part of Berkshire Hathaway, has opened a new DQ® Treat store at Wola Park Mall in Warszawa, Poland. The opening of this location in Poland represents the 28th country outside of the U.S. and Canada with a DQ brand presence.

Sparrow 4 Sp. Z.O.O. has entered into a long-term franchise agreement with International Dairy Queen and plans to develop 26 DQ Grill & Chill® restaurants and DQ Treat stores throughout Poland over the next five years. [...]

Shaw Industries to invest $45 million, create 50 jobs at S.C. plant (Dalton Daily Citizen)

Dalton-based Shaw Industries has announced it is investing at least $45 million in its Lexington County, S.C., carpet fiber plant for additional capacity for both nylon and polyester production. The investment will create more than 50 new jobs. [...]

The plant’s new polyester extrusion operations will include the use of recycled plastic beverage bottles, expanding Shaw’s use of the material. On average, Shaw recycles three billion plastic drink bottles annually at its Clear Path Recycling facility in Fayetteville, N.C., a joint-venture with DAK Americas. Fiber made from that recycled plastic is used in Shaw’s ClearTouch residential carpet products. This keeps a significant volume of waste out of the landfill and saves 1.9 trillion BTUs of energy each year, enough energy to power more than 51,000 U.S. homes a year [...]

Clayton builds disc golf course for all (Daily Times)

An 18-hole disc golf course at Clayton Homes headquarters in Alcoa will be open to the public through a unique private-public partnership. [...]

The disc golf course was the idea of Clayton Homes President and CEO Kevin Clayton, who plays the game, said David Jordan, vice president of corporate services for Clayton.

“We’ve got a large campus here — over 240 acres — and we thought it would be a good opportunity to do something nice so our employees could enjoy it,” Jordan said, noting Clayton’s wellness program. [...]

When I Die, My Entire Fortune Will Be Donated To Charity, Except The $40 Billion I Will Have Buried With Me (The Onion)

I’ve been incredibly fortunate throughout my life. Not only have I had a long and successful career and been blessed with a beautiful family, but I’ve also had the opportunity to give back, which has been a reward beyond measure. And as I get older and begin to put my affairs in order, I want to reaffirm my commitment to advancing the causes I care so much about. Which is why, when I die, I plan to donate my fortune to charity, minus the $40 billion I will have buried with me. [...]

Berkshire News Briefs - 9/11/15

Warren Buffett says Berkshire Hathaway still shopping abroad (Reuters)

Billionaire investing icon Warren Buffett said on Tuesday there are dozens of countries in which his sprawling Berkshire Hathaway Inc conglomerate would be interested in buying new businesses.

Berkshire earlier this year agreed to acquire a German motorcycle apparel and accessories retailer - a purchase that Buffett described as an advertisement to markets that he is shopping abroad. [...]

Berkshire Hathaway Inc. Increases Holdings in Phillips 66 (Business Finance News)

Berkshire Hathaway Inc. increased its investment in Phillips 66. The purchase of another 3.51 million shares of US oil refiner has sum the total number of stakes to 11.4%. Berkshire now holds about 61.5 million shares in the company, with net worth of $4.98 billion. [...]

Another reason for Mr. Buffet’s investment might be that Phillips is one of the customers of Berkshire’s Burlington Northern Santa Fe (BNSF) railroad division. With the supply glut in the economy, more refining opportunities existed for refiners. In order to get the oil to the markets, Phillips turned towards BNSF for service. An increased stake in Phillips 66 might be in best interest of BNSF. [...]

Of would-be $1B fees, trips to Omaha and hardball negotiating: Behind the scenes of the Precision-Berkshire deal (Portland Business Journal)

A new Securities and Exchange Commission document outlining specifics of the pending Precision Castparts Corp. sale to Berkshire Hathaway offers insights into the worlds of two upper-echelon business leaders. [...]

Before the companies reached that point, though, many pieces needed to all into place. Here's a truncated timeline, based on last week's SEC filing. [...]

Follow Buffett Reinsurance Guru’s Sage Advice (WSJ)

When Ajit Jain can’t see value in reinsurance, investors across the industry should worry.

The man who runs Warren Buffett’s reinsurance business told The Wall Street Journal this summer that Berkshire Hathaway would be putting more money into normal commercial and retail insurance instead.

Mr. Jain’s views are almost as influential among reinsurers as Mr. Buffett’s are among investors. [...]

Symmonds' stand a boost for Seattle-based Brooks Running (King 5)

[...] Symmonds, after all, is a two-time Olympian and six-time U.S. Champion. He won the 800-meter race at the U.S. Nationals earlier this year and was poised to be a part of last week's events.

That was until he was asked to sign a document.

"I'm outspoken and some would say brash, arrogant, I don't know," he said. But he felt like he needed to take a stand, when USA Track and Field required him to sign a Statement of Conditions to take part in the competition. He declined. "I wasn't going to sign a contract without all the terms defined."

That's because Symmonds felt the contract required him to wear Nike branded Team USA gear all the time in Beijing. He's sponsored by Seattle-based Brooks Running and says he's a loyal guy.

"I'm a businessman and when you have partners you try to protect those partners. I want to run for Brooks for another 10 years."

Nevada solar update: Senator Harry Reid takes on Warren Buffet’s Berkshire Hathaway in net metering debate (Lexology)

Nevada’s solar net metering policies will continue until year end, perhaps in part thanks to Senator Reid (D-NV) who threatened to intervene in the state’s Public Utilities Commission’s (PUC) review of the policy. Senator Reid, a staunch renewable energy advocate, believed that residential solar in Nevada had gotten a “lousy deal,” and pointed the finger at Warren Buffet’s Berkshire Hathaway. [...]

While NV Energy is promoting policies that make roof top solar potentially uneconomic, Warren Buffet has boosted his holding company’s massive investments in large-scale renewable energy—an attractive investment in the state due to Nevada’s ample solar incentives for industrial sized installations for businesses and power companies. [...]

Richline Debuts Wearable Style News Website (IDEX)

The Richline Group has announced the launch of a wearables news website. The company says that WearableStyleNews.com “brings a unique ‘function needs fashion’ perspective to the rapidly growing world of wearables.”

The site will focus on the designers, technologists, and manufacturers who are leading the wearable industry. The blog features curated and original content, including interviews with industry talent such as Uri Keren, CEO and co-founder of Hermes Innovation, Scott Amyx of Amyx+McKinsey and Amanda Parkes, Chief of Technology & Research for Manufacture NY. [...]

Warren Buffett On LTCM, Blind Spots, Leverage, and Unnecessary Risk (Alpha Architect)

Notes and highlights from a Buffett talk from 2007. The full talk and Q&A is on YouTube.

Here's an excerpt of Buffett talking about the collapse of Long-Term Capital Management (LTCM):

The whole story is really fascinating because if you take John Merriwether, and Eric Rosenfeld, Larry Hilibrand, Greg Hawkins, Victor Haghani, the two Nobel Prize winners, Merton and Scholes, if you take the 16 of them, they probably have as high an average IQ as any 16 people working together in one business in the country…an incredible amount of intellect in that room. Now you combine that with the fact that those 16 had had extensive experience in the field they were operating in…In aggregate, the 16 had probably had 350 or 400 years of experience doing exactly what they were doing. And then you throw in the third factor that most of them had virtually all of their very substantial net worths in the business. So they had their own money up. Hundreds and hundreds of millions of dollars of their own money up. Super high intellect, working in a field they knew. And essentially they went broke. And that to me is fascinating. [...]

Berkshire News Briefs - 9/4/15

Berkshire Hathaway Takes Larger Stake in Phillips 66 (NY Times)

Berkshire Hathaway, the holding company led by Warren E. Buffett, disclosed a $4.48 billion stake in the oil refiner Phillips 66, rebuilding a bet Berkshire had made in the energy industry before oil prices fell.

Berkshire’s stake of 57.98 million shares, or roughly 10.8 percent of the stock, was revealed on Friday night in a filing with the Securities and Exchange Commission. [...]

Mr. Buffett’s company once held a large stake in Phillips 66, which is based in Houston, but shed nearly two-thirds of it in February 2014 when Berkshire swapped $1.35 billion worth of shares for a chemicals business that it folded into its Lubrizol unit.

Crude oil prices have since fallen more than half, though Phillips 66’s share price has dropped less than 1 percent.

Buffet’s Solar “Insurance” Coup In Nevada (OilPrice)

Nevada utility company NV Energy is ideally positioned to benefit from solar power. Nevada is one of those states with a lot of sun, a lot of land, and not many people. The Nevada wilderness is a great place to economically develop large scale solar projects. The cheap cost of land, abundant sunshine, and lack of serious environmental obstacles are all a boon for NV Energy – so much so that the firm just signed a deal to buy solar power at an unbelievably cheap rate of less than 4 cent per kWh. [...]

But in addition to the profit value of generating power at this price point, the deal has another big benefit for NV Energy; it can be used to start squashing the complaints about NV Energy’s roof top solar program. [...]

NetJets fails to reach agreement with pilots in contract dispute (Omaha World Herald)

Berkshire Hathaway Inc.’s NetJets shared-aircraft company and its pilots union did not reach an agreement on a new labor contract by Thursday, as they had hoped. [...]

In a statement posted online, Johnson said bargaining teams had made “remarkable” progress and settled non-economic issues “with a few exceptions.” But the two sides are “a long way apart” on pay and benefits, Johnson said [...]

Union President Pedro Leroux said in a statement that the impasse is “because of company proposals to cut insurance benefits while shifting additional health care costs to the workforce, and pay issues.”

Berkshire Hathaway now fourth place in reinsurance market (Canadian Underwriter)

Berkshire Hathaway Inc. has jumped ahead of SCOR SE in the reinsurance market, replacing the Lloyd's market as the fourth-largest reinsurance group in 2014, A.M. Best Company Inc. suggests in a report released Wednesday. [...]

The top three reinsurance groups, in order, are Munich Reinsurance Company, Swiss Re Ltd. and Hannover Rueckversicherung AG, in 2014 [...] Those are unchanged from 2013. Omaha, Nebraska-based Berkshire Hathaway, which placed sixth in 2013, ranked fourth in 2014.

MedPro Group Finalizes Acquisition of PLICO (MarketWatch / BusinessWire)

MedPro Group (MedPro), a Berkshire Hathaway subsidiary, announced yesterday the completion of its acquisition of PLICO, Inc. (PLICO), one of the Southwest’s premier healthcare liability insurers, from the Oklahoma State Medical Association (OSMA). [...]

PLICO employs about 30 employees, serves over 2,200 Oklahoma healthcare providers, and has annualized gross written premiums of approximately $30 million.

Danish restaurant menu gives Buffett a shoutout (Omaha World Herald)

Omahans Tom and Marilyn Byers shared an outdoor table at the waterfront Cafe Razz in Middelfart, Denmark, earlier this month and spotted the most expensive item on the elegant menu: the “USA Greater Omaha Ribeye,” priced at 350 kroner, about $70.

A translated description from the menu: “The cattle come from Omaha, Nebraska, United States ... known for Buffalo Bill, Warren Buffett and the Missouri River. The meat is specially selected and of the best quality. 375g of meat, served with fried potatoes and pepper sauce or Béarnaise sauce and the free salad bar.” [...]

Berkshire News Briefs - 8/28/15

This week, 90% of the news I saw about Berkshire Hathaway fit into three categories:

1. Slower news outlets and blogs covering last week's announced purchase of Precision Castparts.
2. The stock market dip earlier this week caused Warren Buffett to lose a lot of money.
3. Comparisons between Berkshire Hathaway and Google... errr... Alphabet.

But there were a few interesting other news bits:

Geico to pay $6M to settle Calif. insurance bias charges (St. Louis Post-Dispatch)

Geico, the auto insurance unit of Warren Buffett's Berkshire Hathaway Inc, agreed to pay $6 million to settle charges it discriminated based on gender, education level and occupation when quoting rates online, the California Department of Insurance said on Monday.

The settlement lasts three years and resolves claims first raised by the Consumer Federation of California against Geico, which insures more than 22 million vehicles.

Geico was accused of targeting women, people with low incomes and people not working in professional or executive jobs with deceptive and inflated rate quotations, while offering better terms to drivers it considered more desirable. [...]

DQ Bakes is Dairy Queen's largest-ever menu expansion (Minneapolis Star Tribune)

Look for a raft of Dairy Queen TV ads next month for the Turkey BLT, Triple Chocolate Brownie a la Mode and more items from the new DQ Bakes menu.

Dairy Queen says it’s the restaurant chain’s largest-ever menu boost, aimed at bolstering its appeal as a food destination, while fortifying its stronghold in sweet treats.

Dairy Queen’s franchisees nationwide are installing oven systems — a big investment — to make DQ Bakes. And the Edina-based chain is for the first time doing year-round advertising to burnish a brand that turned 75 this year. [...]

While Berkshire is publicly traded, it doesn’t include Dairy Queen’s results in its financial reports. Gainor said that Dairy Queen’s stores together do $4.1 billion in annual sales. The company’s massively popular Blizzard makes up about 36 percent of that tally.

The chain’s same-store sales growth, a key restaurant financial gauge, has been in the high single digits in the past year or so, and in the mid-single digits on average since the 2009 recession, Gainor said. [...]

Shaw to make more carpet from recycled PET (Plastics News)

Shaw Industries Group Inc. plans to spend tens of millions of dollars at a South Carolina carpet fiber plant to increase the use of fiber from recycled plastics.

The world’s largest carpet maker, based in Dalton, Ga., is planning new polyester extrusion operations that will include the use of recycled PET beverage containers. The company also will add nylon fiber capacity. [...]

The $45 million project will create more than 50 new jobs at the facility, which already employs 290, the company said. Across South Carolina, Shaw has seven plants and more than 1,500 workers. [...]

S&P: Reinsurance M&A Will Be Driven by Berkshire Hathaway Model (Insurance Journal)

“We have seen an increased interest by investors to emulate the Berkshire Hathaway Inc. business model,” S&P said in its report. “Through their investment holding companies, they are acquiring [insurer/reinsurers] with strong operating cash flows that will be upstreamed to the parent company. This buy now and pay later [insurance/reinsurance] model generates cash flows, or “float” that these [Berkshire Hathaway] copycats invest.” [...]

The Berkshire Hathaway “business model is hard to duplicate and it is becoming a crowded trade in an already saturated reinsurance market,” the ratings agency said. “We expect more similar deals to come to the market during the next 12 months, which will likely continue to put pressure on reinsurance pricing given these holding companies’ lower cost of capital relative to stand-alone, publicly traded reinsurers.”

Burger King peace offer to McDonald's: 'Let's make a McWhopper' (Business Insider)

In the name of global peace, Burger King proposed making the hybrid hamburger to its rival McDonald's on Wednesday, at least for one day, the United Nations-promoted International Day of Peace on Sept. 21.

Burger King, perpetually locked in tough competition with the larger but less profitable McDonald's, delivered the olive branch via a full-page advertisement in The New York Times, saying it is time to "call a ceasefire on these so-called burger wars." [...]

Behind the scene in the campaign is some of the financial power of Burger King's part-owner, Berkshire Hathaway head Warren Buffett.

Peace One Day is strongly backed by the charitable foundation of the tycoon's son Howard Buffett, who is a director of Berkshire Hathaway and possible successor to his father as chairman.

Berkshire News Briefs - 8/21/15

This was 13F week, where Berkshire Hathaway submits its portfolio changes to the SEC each quarter. As always, you can find updated holdings and activity details at Dataroma.

Berkshire Hathaway hints at new purchase, ups Charter stake (Reuters)

Warren Buffett's Berkshire Hathaway Inc on Friday said it boosted its stake in cable TV operator Charter Communications Corp, and signaled it may have another large investment planned after agreeing to buy Precision Castparts Corp in its largest-ever purchase. [...]

Berkshire kept some details about its holdings confidential. The SEC sometimes lets the Omaha, Nebraska-based company delay disclosures of new stakes so Buffett can build them quietly, rather than have investors piggyback on him before he finishes. [...]

Berkshire reported lower stakes in conglomerate Chicago Bridge & Iron Co, media company Viacom Inc and Wabco Holdings Inc, which sells braking and suspension systems for commercial vehicles.

Warren Buffett’s Berkshire Hathaway Sells Off Shares in Phillips 66, National Oilwell Varco (WSJ Moneybeat)

Warren Buffett’s Berkshire Hathaway Inc. sold off its shares in Phillips 66 and National Oilwell Varco Inc. in the second quarter, as it continued to cut its positions in energy companies amid a global supply glut that has sent crude prices into a tail spin.

Berkshire had already sold most of its stake in National Oilwell Varco in the first quarter, when it slightly raised its Phillips 66 holdings. [...]

Berkshire’s only new stake in the quarter was a 20 million share investment in auto-paint maker Axalta Coating Systems Ltd., which Berkshire bought from Carlyle Group LP for $28 a share.

Buffett’s Precision Castparts Deal Will Boost Berkshire Hathaway’s Value (Barron's)

Precision Castparts, a once fast-growing supplier to the airline industry, looks to be a good—not great—deal for Berkshire. Its profits have been pressured due to the company’s exposure to the energy industry. The shares were down 20% year to date before the Berkshire announcement, although the company has been a huge winner under CEO Mark Donegan. [...]

Berkshire is paying $235 a share, or about 19 times Precision’s earnings for the fiscal year ending March 2016. That implies an earnings “yield” of 5.5%, well above the near-zero yield Berkshire has been earning on its cash, which totaled $60 billion on June 30. Berkshire’s return could be closer to 7% initially because it will issue about $10 billion of low-cost debt to finance the deal.

After hacking scheme, it's time to rethink how companies use wire services (PR Week)

Business Wire sent an e-mail to its clients with a letter from CEO Cathy Baron Tamraz. It began, "We understand your concerns surrounding this week’s federal indictment of a global hacking…We would like to take this opportunity to provide you with the story behind the headlines."

The letter explained that government investigators asked Business Wire about fewer than 85 releases, and pointed out that no examples listed in the indictments and the SEC complaint were Business Wire releases.

"Despite our extreme vigilance, today's reality is that no one today is immune from hacking," it continued. "We want to reassure you that Business Wire’s systems are safe and secure. We continue to work closely with a leading cybersecurity firm to ensure that they remain so."

Warren Buffett's Berkshire Hathaway gets special ASX treatment in IAG deal (Sydney Morning Herald)

The Australian Securities Exchange has granted billionaire Warren Buffett's Berkshire Hathaway poll position in any future capital raisings by Insurance Australia Group, which has raised the hackles of some investors, and proxy adviser group Ownership Matters.

IAG, which has one of the biggest shareholder bases of companies listed on the local exchange, was granted a waiver that would permit Berkshire anti-dilution rights for its shares in the insurer.

The initial deal between IAG and Berkshire, which saw the insurance giant sign away 20 per cent of its business to the US group, was announced in June but not many investors were aware of the waiver. [...]

Sure, but what does that mean in layman's terms?

The hidden catch to Berkshire Hathaway’s Insurance Australia Group Ltd investment (Fool Australia)

If IAG were to issue say, one new share for every thirty held, this would normally dilute NICO who currently holds one share in every twenty (5%) on issue. However, as it has this anti-dilution protection, NICO will be entitled to buy one share for every twenty it holds.

If NICO happened to hold 10%, it would be entitled to 10% of the new shares to be issued.

Buffett-Backed Kraft Heinz Cuts 2,500 Jobs as Hees Targets Costs (Bloomberg)

Kraft Heinz Co., the food company that counts Warren Buffett’s Berkshire Hathaway Inc. as its largest shareholder, is eliminating about 2,500 jobs in the U.S. and Canada under the new management. [...]

Kraft Foods and H.J. Heinz merged in July in a deal orchestrated by Buffett and 3G Capital, which jointly controlled the ketchup company. 3G’s Bernardo Hees, who is now running the combined foodmaker, cut more than 7,000 jobs in 20 months after taking over at Heinz. Berkshire Vice Chairman Charles Munger has endorsed the job cuts, saying such measures are essential to a productive capitalist system.

The alternative to reducing staff is “what happened in Russia,” Munger said at Buffett’s annual meeting in May. “The whole damn economy didn’t work.”

How Much Is Warren Buffett’s $5 Billion Investment in Bank of America Worth Today? (Fool)

At the low point of Bank of America's post-financial crisis struggles, Warren Buffett became its biggest advocate by investing $5 billion of Berkshire Hathaway's money into the nation's second biggest bank by assets. [...]

When you include the $5 billion in preferred stock, Berkshire Hathaway's investment in Bank of America is worth a total of $12.2 billion. That equates to a 144% gain in four years -- 168% if you also account for the roughly $1.2 billion in cumulative dividend payments on its preferred stock.

How rich Warren Buffett was at your age (Business Insider)

By age 43, Buffett's personal net worth was at a high of $34 million. He used some of this capital the year prior to purchase See's Candies for $25 million, reports The Motley Fool, and it became an investment that's still profitable in 2015. But, the mid-1970s proved to be a rough period for Berkshire. By 1974, its decreasing share price lowered Buffett's net worth to $19 million when he reached 44, reports Dividend.

Never one to let his savvy investment skills fall by the wayside, Buffett was able to recover financially. By the end of the decade, he had increased his net worth to $67 million at age 47. By the close of the 1970s, the median U.S. household income was $16,530.