Berkshire News Briefs - 4/3/15

Buffett: Tesla doesn't threaten me (CNBC)

Warren Buffett and Larry Van Tuyl appeared on CNBC this week, with lots to say about the auto business. Buffett went on to talk about a number of other topics (Kraft, the Euro, Iran, interest rates, etc.), far more than I could squeeze into this excerpt.

Warren Buffett's new auto dealership business isn't under any threat from Elon Musk or his Tesla distribution model, the billionaire said Tuesday. [...] Buffett said he did not anticipate much of a threat from the electric car company's direct-to-consumer model because of Tesla's relatively small market. [...] Buffett also dismissed the notion of an near-term takeover of self-driving cars, saying "I think it's a long way off and I don't think everybody will adopt it." The billionaire said that he would bet there is less than a 10 percent penetration rate for self-driving cars by 2030. He did admit, however, that "if it's a safer way of driving, it's good for society and it's bad for our insurance business." Buffett also revealed Tuesday that he has big plans for his newly acquired unit, and that it is already on the prowl for new deals. "I'd be very surprised if five years from now we aren't a whole lot bigger," he said.

Full transcript of the interview here.

Berkshire Hathaway Automotive targets growth, possibly abroad (Automotive News)

Another perspective on the news from a different source.

Its chairman, Larry Van Tuyl, and Berkshire Hathaway Inc. CEO Warren Buffett spoke today on CNBC’s “Power Lunch.” Van Tuyl said the company is interested in buying dealerships “in the U.S. primarily,” leaving open the option for some foreign investments. Van Tuyl went on to list what he is looking for in future acquisitions: “We look for throughput and volume, high-volume dealerships that are reasonably priced and owned by somebody who wants to put it in good hands.” The company wants to buy the real estate, too, where available, he added.

The mobile-home trap: How a Warren Buffett empire preys on the poor (Seattle Times)

But until informed recently by a reporter, they didn’t realize that the homebuilder (Golden West), the dealer (Oakwood Homes) and the lender (21st Mortgage) were all part of a single company: Clayton Homes, the nation’s biggest homebuilder, which is controlled by its second-richest man — Warren Buffett. Buffett’s mobile-home empire promises low-income Americans the dream of homeownership. But Clayton relies on predatory sales practices, exorbitant fees, and interest rates that can exceed 15 percent, trapping many buyers in loans they can’t afford and in homes that are almost impossible to sell or refinance, an investigation by The Seattle Times and Center for Public Integrity has found.

Berkshire Hathaway's media business buys two Virginia newspapers (Chicago Tribune)

Berkshire Hathaway Inc. has purchased two Virginia newspapers as the company run by billionaire Warren Buffett adds to its stable of publications. Berkshire's BH Media Group acquired a daily, the Martinsville Bulletin, and the tri-weekly Franklin News-Post from closely held Haskell Newspapers, according to a statement issued Tuesday. The papers have a combined circulation of 17,350. Terms weren't disclosed.

BNSF Slows Oil Trains Up to 30% to Boost Safety After Accidents (Bloomberg)

BNSF Railway Co. is cutting the speed of oil-carrying trains in some urban areas to as slow as 35 miles per hour, a 30 percent reduction, to improve safety following crude-by-rail accidents this month. BNSF, owned by Warren Buffett’s Berkshire Hathaway Inc., implemented the slower train speeds and measures to inspect tracks and rail cars more closely on March 25, Mike Trevino, a spokesman, said on Monday. The reduction trims the speed from the 40 mph (64 kilometers per hour) in high-risk areas that railroads, including BNSF, last year voluntarily installed in 46 urban areas. In some cases, the cut is from 50 mph for cities with populations of at least 100,000, the Fort Worth, Texas-based rail company said.

POSCO shares drop following media reports on Warren Buffet's stake sale (Korea Herald)

POSCO shares fell sharply on Wednesday following media reports that Berkshire Hathaway Inc., led by U.S. billionaire investor Warren Buffet, has sold its entire stake in the steelmaking giant, raising speculation that the sell-off might have been prompted by concerns over the South Korean steelmaker's cloudy business outlook. [...] The drop comes after Maeil Business Newspaper and other local media reports showed that Berkshire Hathaway unloaded 4.5 percent, or nearly 4 million shares, of POSCO during the second quarter of last year, citing an analysis by a global financial information provider.

Kraft Deal Boosts Buffett (Barrons)

The merger deal announced last week between Kraft Foods Group and H.J. Heinz is a good deal for Kraft shareholders, who will get a nice premium, but it’s a far better one for 3G Capital and Berkshire Hathaway, which took Heinz private nearly two years ago in a leveraged buyout. [...] By our calculation, 3G and Berkshire have more than tripled their original $8.5 billion equity investment in Heinz in less than two years, which amounts to a private-equity type score on a deal that originally looked like it was fully priced. Heinz was taken private at about 20 times forward earnings. We estimate that Berkshire and 3G are each sitting on more than $10 billion in profits from their investments in Heinz.

Regulator accuses Iowa governor of appeasing MidAmerican (Lincoln Journal Star / AP)

An outgoing member of the Iowa Utilities Board bluntly told Gov. Terry Branstad in a letter that his decision to remove her is improper and is being done to placate a powerful energy subsidiary of Warren Buffett's Berkshire Hathaway. Sheila Tipton told the governor in the March 18 letter that his move to replace her and demote board chair Elizabeth Jacobs is an inappropriate attempt to influence future decisions to favor utilities and "appease MidAmerican Energy." The company had complained about a ruling requiring the company to use some proceeds from a $280 million wind energy investment to reduce customers' rates.

Warren Buffett sees no weakness in economy, but too many 'are left behind' (Omaha World Herald)

Investor Warren Buffett says the economy continues to grow steadily, but too many people continue to miss out on the American dream. Buffett told CNN Thursday that he doesn't see any real sign of weakness in the economy. Buffett looks at reports from the more than 80 businesses his Berkshire Hathaway conglomerate owns for insight. But Buffett reiterated his concerns about income inequality in this country while the super-rich continue to thrive. He said that America should be able to do more to help people who are struggling do better.