On Saturday, Warren Buffett released his Golden Anniversary shareholder letter, followed by yesterday's release of Berkshire Hathaway's 2014 annual report. (2015 marks a half-century since Buffett took control of a struggling New England textile business by the name of Berkshire Hathaway.) Mr. Buffett's message is one of optimism, tempered by a dispassionate assessment of the facts: In terms of financial strength, earnings power, and permanence, Berkshire Hathaway appears better positioned than ever -- even as the end of Mr. Buffett's tenure draws ever nearer.
Grading Berkshire after 50 years under Buffett: How does a 1,826,163% stock rise sound? (Fortune)
Here’s another lollapalooza, brought into public view by a quiet change in the report. To the performance table that has always contained only Berkshire’s book value per share and the S&P 500 index, Buffett has added the historical record of Berkshire’s stock price. And there the record is, on the page facing Buffett’s shareholder letter: 50 years of percentage increases and declines in Berkshire’s stock, followed by two summations. For the half-century—for all the years of Buffett’s management—the price grew at a compound annual rate of 21.6%. The gain, overall, was 1,826,163%.
Berkshire Hathaway Wooed by Europe’s Low Borrowing Costs (WSJ)
Warren Buffett ’s Berkshire Hathaway raised €3 billion ($3.3 billion) on Thursday from its first-ever debt sale in Europe. The deal is the latest in a surge of U.S. companies crossing the Atlantic to sell bonds in euros, taking advantage of the region’s slender borrowing costs. Berkshire Hathaway sold three bonds that will mature in eight, 12 and 20 years. Those bonds priced to yield 0.8%, 1.24% and 1.648%, respectively, all close to record lows for those maturities.
6 Quotes From Berkshire Hathaway's Greatest Ever Shareholder Letter (Fool)
Will the "Berkshire system" ensure continued success, despite its size, and after Buffett? Buffett says yes: "Despite our conservatism, I think we will be able every year to build the underlying per-share earning power of Berkshire. That does not mean operating earnings will increase each year -- far from it. The U.S. economy will ebb and flow -- though mostly flow -- and when it weakens, so will our current earnings. But we will continue to achieve organic gains, make bolt-on acquisitions, and enter new fields. I believe, therefore, that Berkshire will annually add to its underlying earning power."
BNSF oil train derails in rural Illinois; two cars aflame (Reuters)
A BNSF Railway train loaded with crude oil derailed and caught fire on Thursday afternoon in a rural area south of Galena, Illinois, according to local officials and the company. [...] Dark smoke was seen for miles around the crash site, and the Illinois Environmental Protection Agency told local WREX.com that two of the cars were potentially on fire. The train with 105 loaded cars - 103 of them carrying crude oil - derailed around 1:20 p.m. CST (1920 GMT), according to a BNSF statement. The incident occurred on what appears to be a major rail line alongside the Mississippi River that handles as many as 50 oil-trains a week, one official said.
Why Warren Buffett Is Worth $72 Billion and You’re Not: Two Theories on Berkshire Hathaway (NY Times)
Academics who study corporate finance overwhelmingly believe that conglomerates — giant companies that operate in a wide range of industries, often built through acquisitions — are an awfully inefficient way to organize businesses. And one of the most successful American companies of the last 50 years is a conglomerate called Berkshire Hathaway, run by the renowned investor Warren Buffett, which is the fourth-most valuable firm in the United States, behind Apple, Google and Exxon Mobil. It employs 340,000 people, roughly the population of Honolulu.
Understanding Succession at Berkshire Hathaway After Buffett (NY Times DealBook)
Today, Berkshire’s succession plan envisions investments run by several portfolio managers, likely including two hired in recent years, Todd Coombs and Ted Weschler. On the executive side, Mr. Buffett’s replacement is to come from among top managers of Berkshire’s many subsidiaries. Berkshire followers speculate on succession at the top, with several names mentioned often—especially Greg Abel of Berkshire Hathaway Energy and Ajit Jain of Berkshire Reinsurance—and another dozen capable candidates, making for a deep bench of chief executives. But a question often overlooked by outsiders is who will assume Mr. Munger’s role. [...]
A Closer Look at Berkshire Hathaway’s Insurance Operations (Insurance Journal)
Insurance operations contributed $5.2 billion to total operating income of $16.6 billion for Berkshire Hathaway in 2014—with the underwriting component of $1.7 billion (after taxes) representing the 12th straight insurance underwriting profit for the Nebraska-based conglomerate. “Our underwriting profit totaled $24 billion during the twelve-year period, including $2.7 billion earned in 2014,” wrote Berkshire’s Chair Warren Buffett in the company’s annual report released last Saturday, referring to the pretax underwriting profit for all insurance operations. “And all of this began with our 1967 purchase of National Indemnity for $8.6 million,” Buffett wrote in his annual letter [...]
The Fate of the Berkshire Mill (WSJ)
They paved a capitalist paradise and put up a parking lot. Okay, maybe “paradise” is overselling it a bit. Maybe we just wanted to reference the Joni Mitchell song. But the fact remains: The building in New Bedford, Mass. that once served as the headquarters of the old Berkshire Hathaway Inc. textile mill was torn down last year, and a parking lot was put in its place. [...] But the fact is, large parts of the original Berkshire mill complex remain. The headquarters building was taken down to build more parking for the other commercial buildings, where Mr. Letendre rents out space to roughly 20 tenants and runs his own company [...] Those remaining buildings represent the majority of the square footage that Mr. Letendre acquired when he purchased the mill from Berkshire in 2000 for $215,000.
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