Berkshire News Briefs - 7/28/15

Berkshire Hathaway joins major renewable-energy effort (Omaha World-Herald)

Berkshire Hathaway Energy on Monday joined a dozen major U.S. businesses at the White House in calling for robust action on global warming. [...]

BH Energy has invested more than $15 billion in renewable energy and is targeting another $15 billion in investments, Greg Abel, chairman, president and chief executive officer, said in a press release.

“Joining these other U.S. businesses is one more way we can demonstrate our commitment to lead on climate action,” said Abel, who is seen as a possible successor to Buffett, who turns 85 next month.

MidAmerican aiming for 57 percent of energy from wind (Des Moines Register)

Bill Fehrman, CEO of MidAmerican Energy, said Monday the company could get up to 57 percent of its energy from wind with its latest renewable energy project.

And while wind's growing presence in MidAmerican's portfolio is encouraging, so is news that the Des Moines-based utility is looking to invest in solar projects in Iowa, with community solar gardens and utility-sized solar leading the possible options. [...]

He talked with the Register as the utility's parent, Berkshire Hathaway Energy, joined a dozen other national companies in launching the American Business Act on Climate Pledge at the White House.

More on the American Business Act on Climate Pledge (including BH Energy's specific pledges).

Inside PacifiCorp's IRP: How efficiency will power the Buffett utility's next decade (UtilityDive)

PacifiCorp, part of Warren Buffett's Berkshire Hathaway Inc., serves 1.8 million customers in six states through its Pacific Power and Rocky Mountain Power utilities, and is planning to meet 86% of new demand across the next decade through demand side management. [...]

That means the utility won't need to construct another major power plant until 2028, and along the way will either shutter 10 older, inefficient coal units, or convert them to natural gas.

Berkshire Hathaway’s Bright Future (Barron's)

The Heinz score rivals anything ever achieved in the private-equity industry. It also demonstrates that Buffett, who is celebrating his 50th year at the helm of Berkshire this year, is still going strong ahead of his 85th birthday in August. Berkshire is his baby, and the company is better than ever despite the lackluster performance of its big equity portfolio [...]

“I’m scratching my head about Berkshire,” says Jay Gelb, a Barclays analyst. “The earnings power is stronger than ever, the company has done a series of attractive acquisitions, and it just closed on Kraft. None of that is reflected in Berkshire’s valuation.” [...]

British Open playoff win-win for Buffett’s Netjets (Irish Times)

The three-man British Open playoff was a win-win-win for NetJets. Zach Johnson, Louis Oosthuizen and Marc Leishman, the three men in Monday’s four-hole playoff, each have sponsorship agreements with the luxury aviation unit at Warren Buffett’s Berkshire Hathaway.

All three wore shirts with the company’s logo throughout the 18-hole final round at St. Andrews in Scotland, then the playoff, which Johnson won. Monday’s final round telecast on ESPN generated about $6.5 million in media exposure for NetJets [...]

EU clears Berkshire Hathaway's purchase of Duracell (Reuters)

The European Commission said on Thursday it had approved Berkshire Hathaway's purchase of Procter & Gamble's Duracell battery unit.

The Commission said in a statement the proposed acquisition would not raise competition concerns given the absence of horizontal overlaps and the existence of numerous competitors in the vertically related market where the parties are active. [...]

Austbrokers faces major buffeting (Sydney Morning Herald)

Austbrokers, which takes up to 25 per cent of the first year's premium as a commission, is in trouble.

Berkshire intends to use its established position and substantial resources to sell commercial insurance online with a new initiative called Berkshire Hathaway Direct, cutting out brokers once and for all. Berkshire will focus on small to mid-size businesses – Austbrokers' bread and butter.

Until now, the company was protected by the complexity of insuring a business compared with an individual or car. Berkshire's decision to focus on internet-based, direct-to-customer commercial insurance suggests technology is now at a point where policies can be priced and written entirely online.

Italian Real Estate Agent Admits Buffett Greek Island Claims False (Newsweek)

On Monday, Proto Enterprises, a company owned by Italian real estate agent Alessandro Proto and based in London, claimed that the company had purchased St Thomas island along with Buffett, one of the world's richest men, for 15 million euros. The company added there were plans to develop real estate on the island, which is not far from Athens.

However, Buffett denied the claim on Tuesday, telling the Omaha World Herald newspaper, which is owned by Buffett's company, Berkshire Hathaway, by email that: "Until the reports started coming out, I had never heard of the guy who is making the claims about the Greek Island." [...]

On Wednesday, after the company gave conflicting accounts to the media, Newsweek received an email from the same address, claiming to be Alessandro Proto himself, admitting that the story had been fabricated and saying that the company's claims had been a "sociological experiment", orchestrated by him. Proto predicted a meeting between himself and Buffett, and an economic bounce for Greece as a result of his actions.

Learn to code like it’s the ’90s with Berkshire Hathaway’s normcore website (Quartz)

The website of Berkshire Hathaway is famously crude. You might even call it ugly. But look at the HTML code of this spartan “WEB page” and you’ll see that the best term for it is simply old school. It is a blast from the internet’s past. [...]

Maybe it’s a conscious choice. Berkshire Hathaway and chairman Warren Buffet’s down-home reputation gives shareholders confidence through nostalgia for simpler times, when investors really knew their companies and stuck with them. The website brings us back to a time when people really knew their websites, when they wrote HTML by hand, character-by-character. That is to say, this ’90s site is completely on-brand.

Berkshire News Briefs - 7/18/15

BNSF adds to wind energy portfolio (FreightWeek)

BNSF Logistics, part of Berkshire Hathaway's Burlington Northern Santa Fe railway, has purchased Transportation Technology Services, a provider of outsized cargo movements by rail. The acquisition price was not disclosed. TTS began as a rail engineering company in 2001 and has since evolved to provide specialty services with a particular focus on the wind turbine industry. [...]

TTS will become the U.S. Rail, Project Cargo and Engineering Services division of BNSFL. The two companies have developed and managed nearly 50 unique project cargo transload sites across the U.S. over the past six years covering the wind energy, power generation, oil & gas, heavy machinery and manufacturing sectors.

The company manages a fleet of nearly 2,000 rail cars of which 1,200 are equipped with patented fixtures designed to handle wind turbine components including blades, tower sections and nacelles.

Derailed BNSF train spills 35,000 gallons of oil in Montana (Fort Worth Star-Telegram)

Three tank cars leaked an estimated 35,000 gallons of oil after a BNSF train hauling crude from North Dakota derailed in rural northeast Montana, the latest in a series of wrecks across the U.S. and Canada, authorities said Friday.

No one was injured in the derailment Thursday night, which led to the temporary evacuation of some homes. [...] Unlike many other accidents, no fire or explosions were reported after the train, bound for Washington state, derailed about 5 miles east of Culbertson, near the North Dakota border, officials said.

As premiums fall, Berkshire pulls back from property insurance (Omaha World Herald)

Damage from natural disasters so far this year is down, a report said Tuesday, pushing premium prices for catastrophic insurance lower.

For Omaha-based Berkshire Hathaway Inc. and other property insurers, fewer disasters and fewer claims mean smaller insurance payouts and bigger profits — good news.

But for Berkshire, lower insurance prices also mean less revenue coming in and a pullback from the property insurance business. That’s because Berkshire’s insurance operators turn down business if the premiums go too low.

NetJets bargaining with pilots’ union amid customer gripes (NY Post)

After two years of refusing to bargain with its pilots’ union, Berkshire Hathaway-owned NetJets is now racing to reach a new contract before the end of the summer, The Post has learned.

Already new CEO Adam Johnson, who replaced Jordan Hansell in June, is making concessions to the union. He has tentatively agreed not to subcontract more flights without paying significant penalties, according to sources.

Warren Buffett's auto investment in China just took a huge hit (Fortune)

Warren Buffett’s Berkshire Hathaway owns a 10% stake in electric automaker BYD, which is down by around 28% on Friday. At its lowest point, shares were down as much as 40%. The company had a market cap of $118 billion as of mid-June. [...]

Despite the news, BYD recently announced an expansion into Australia. This comes just a month after it started selling energy-storage units in Germany, according to Bloomberg. BYD, which is based in Shenzhen, China, boasts selling over 100 storage systems in Australia, which it considers a “strategic market.” The company also plans to raise over $2.4 billion to expand its battery input [...]

Berkshire News Briefs - 7/10/15

Warren Buffett Re-Examines Reinsurance (WSJ)

The obscure business of reinsurance has always been one of Warren Buffett’s favorite money makers, but a changing landscape has led his Berkshire Hathaway Inc. to adjust its strategy. [...]

Berkshire is pivoting toward parts of the insurance industry it feels look more promising than reinsurance, putting the company in the unfamiliar role of upstart.

“What was a very lucrative business is no longer a very lucrative business going forward,” Ajit Jain, a longtime top lieutenant to Mr. Buffett and a potential candidate to succeed him as chief executive, said in an interview. Berkshire will pursue reinsurance deals when they make sense, he said. “But since the reinsurance business isn’t going to offer as many opportunities for the foreseeable future, we feel like we should go down the food chain.” [...]

The new focus is on commercial insurance through Berkshire Hathaway Specialty Insurance, and a new initiative called Berkshire Hathaway Direct, copying GEICO's strategy of using the internet to market insurance directly to small and midsized businesses.

Warren Buffett Will Celebrate July 4th With A New Stock: The Kraft Heinz Company (Forbes)

On Thursday, Heinz’s takeover of Kraft Foods closed. The new company will begin trading on the Nasdaq under ticker ‘KHC’ on Monday, July 6.

Ahead of the deal’s closing, Kraft Heinz announced that 3G executive Bernardo Hees will become CEO of the combined company, while Heinz CFO Paulo Basilio will assume the same role with the merged company. [...]

Kraft Heinz’s board will consist of eleven directors, including Berkshire’s Warren Buffett, Greg Abel and Tracy Britt Cool, and 3G Capital executives Jorge Paulo Lemann and Marcel Telles.

Buffett’s Kraft Heinz Bet Valued at $24 Billion in Debut (Bloomberg)

This makes Kraft Heinz BRK's second largest holding, after Wells Fargo ($26B).

Warren Buffett helped take over H.J. Heinz in 2013 and facilitated its combination with Kraft Foods Group Inc. this year. His prize: a stake of about $24 billion in the new company, which began trading Monday.

Kraft Heinz closed at $72.96 at 4 p.m. in New York trading. Buffett’s Berkshire Hathaway Inc. owns about 325 million shares, or roughly a quarter of the company, after investing approximately $9.5 billion over the transactions to acquire common stock.

Berkshire Hathaway’s MedPro Group to Acquire PLICO Insurance (BusinessWire)

PLICO, Inc. (PLICO), one of the Southwest’s premier healthcare liability insurers, the Oklahoma State Medical Association (OSMA), and Berkshire Hathaway’s MedPro Group (MedPro) today announced the signing of definitive agreements for the sale of PLICO to MedPro. The boards of each have approved OSMA’s sale to MedPro of 100% ownership of PLICO in an all-cash transaction, which is subject only to customary closing conditions and regulatory approvals and is expected to close in the third quarter. [...]

Based in Oklahoma City, PLICO serves approximately 2200 healthcare providers in Oklahoma; it has annualized gross written premiums of about $30 million and had statutory surplus of over $60 million at year-end 2014. PLICO’s principal operations will remain in Oklahoma City, where it was founded in 1979.

Berkshire Hathaway's Forest River fined for safety reporting violations (Omaha World Herald)

A manufacturer owned by Berkshire Hathaway Inc. has agreed to a civil penalty and stricter oversight for not reporting safety information properly, the U.S. Department of Transportation said Thursday.

Forest River Inc., based in Elkhart, Indiana, agreed to a $5 million cash penalty and an additional $30 million in “deferred” penalties that would be levied if it violates a 25-page safety enforcement agreement with the department.

The agreement cited reporting violations involving loose wiring on 726 camper trailers that could cause fires and a lack of fresh air exhaust vents in furnaces on 200 other campers that could cause fires or carbon monoxide exposure. The campers were manufactured last year.

Buffett Scores Cheapest Electricity Rate With Nevada Solar Farms (Bloomberg)

Warren Buffett’s Nevada utility has lined up what may be the cheapest electricity in the U.S., and it’s from a solar farm.

Berkshire Hathaway Inc.’s NV Energy agreed to pay 3.87 cents a kilowatt-hour for power from a 100-megawatt project that First Solar Inc. is developing, according to a filing with regulators.

That’s a bargain. Last year the utility was paying 13.77 cents a kilowatt-hour for renewable energy. The rapid decline is a sign that solar energy is becoming a mainstream technology with fewer perceived risks. It’s also related to the 70 percent plunge in the price of panels since 2010, and the fact that the project will be built in Nevada, the third-sunniest state.

International Dairy Queen Opens Newest International Location in the United Arab Emirates (BusinessWire)

The Dairy Queen® system, part of Berkshire Hathaway, has officially re-launched in the United Arab Emirates (UAE) with the opening of a DQ Grill & Chill® restaurant. The UAE is now the 26th country outside the U.S. and Canada with a DQ® presence. [...] Bajco Gulf, LLC is scheduled to develop a minimum of 20 new locations across the territory over the next five years.

Warren Buffett makes $2.84bn donation to Gates Foundation and charities (The Guardian)

Warren Buffett has donated about $2.84bn of Berkshire Hathaway Inc stock to the Bill and Melinda Gates Foundation and four family charities, as part of the billionaire’s plan to give away nearly all of his wealth.

The 10th annual donation, Buffett’s largest, comprised 20.64m Class “B” shares of Berkshire and increased Buffett’s total contributions to the charities to more than $21.5bn.

Berkshire News Briefs - 7/1/15

Geico Nabs a Film Grand Prix at Cannes -- With a Pre-Roll Ad (Ad Age)

In a move that may spark a welcome sea change in the snooze-worthy arena of pre-roll advertising, the Cannes Lions International Festival of Creativity Film Jury awarded one of its top prizes to a mold-breaker in the category: a spot from Geico's "Unskippable" campaign that dares viewers to try and stop watching ads in which "nothing" happens. [...]

Geico topped the Non-Television category. Its pre-roll, "Family," created by The Martin Agency and directed by Park Pictures' Terri Timely, put a hilarious twist on the typically boring genre and features a family sitting at the dinner table with the Geico logo plastered boldly in the middle of the frame. Seconds into the ad, a voice-over announces, "You can't skip this Geico ad because it's already over," and mid-action, the family stops, except for the dog, who proceeds to devour every bit of food on the table. Although nothing much happens beyond that, the ad gets progressively funnier since it's blatantly obvious that the actors in the scene are simply holding their poses as the dog carries on.

Here's the extended version of GEICO's winning ad:

There's more of them in the series, if you play that one to the end and then watch the next suggested videos. GEICO is one of the few companies that I can waste 20 minutes on YouTube just watching their hilarious ads. This one is another current favorite of mine:

Warren Buffett's Berkshire Hathaway Expands in Australia, Opens New Zealand Office (Bloomberg)

Warren Buffett’s Berkshire Hathaway Inc. is adding an office in New Zealand and expanding its operations in Australia as part of a push to sell more commercial insurance globally.

The specialty-insurance unit is underwriting property and casualty coverage through a new office in Auckland, the company said Monday in a statement. Berkshire also announced it will sell policies to hospitals and medical practices in Australia, led by former American International Group Inc. executive Tony Bainbridge.

With Kraft Heinz merged, now comes the cutting (Chicago Tribune)

(Berkshire Hathaway is the majority shareholder of Heinz.)

Kraft Foods Group shareholders voted Wednesday to approve the company's sale to H.J. Heinz, a deal that brings together two storied packaged-food companies vying for attention as consumers look for healthier, fresher fare. [...]

More than 98 percent of votes cast were in favor of the transaction, representing over 69 percent of all outstanding Kraft shares, Corporate Secretary Kim Rucker told the small group. [...]

The acquisition may lead to heavy job losses as Kraft and Heinz — which have each already trimmed their ranks in recent years — try to cut $1.5 billion in annual costs. [...]

On Monday, the companies announced that many of Kraft's top executives, including Chief Financial Officer James Kehoe, will leave the food maker soon after the deal is completed.

Utilities commission approves TransAlta plant near Wabamun (Edmonton Journal)

TransAlta’s new gas-fired electricity plant near Wabamun got a green light from the Alberta Utilities Commission, which dismissed concerns about increased air pollution into the Edmonton area.

Sundance 7 — an 856-megawatt plant — is a joint venture with Warren Buffett’s Berkshire Hathaway Energy Company and could come on stream in 2018, according to the AUC ruling.[...]

TransAlta notes that gas-fired electricity is less polluting than coal-fired plants and the company intends to shut down two smaller coal units in 2019.

Berkshire Hathaway Inc. is Expected to Report $N/A for QN/A (The Markets Daily)

Remember kids, if you're going to use Mad-Libs computer programs to write your business news, be sure to hire a human editor.

Wall Street analysts expect Berkshire Hathaway Inc. to report earnings per share of $N/A for the current fiscal quarter. This number is based on the average estimate of the sell-side research firms that cover the stock. Berkshire Hathaway Inc. most recently reported earnings per share of $N/A on N/A for the quarter ended N/A.

This number was N/A away from what analysts had expected, a difference of N/A%.

Warren Buffett is now the world’s richest cartoon character (MarketWatch)

[...] Already known as one of the most famous investors in the world, the Oracle of Omaha has become celebrated of late among the grade-school set for his work with the Secret Millionaires Club, an animated program that teaches kids about finance. [...]

Since its relatively low-key inception in 2009, the series has grown to encompass a full slate of “webisodes” and half-hour TV programs (the show has aired on The HUB cable network, now the Discovery Family Channel; a new network partner is expected to be announced soon). Additionally, it has spawned a book, DVDs and “business in a box” kits that help youngsters start their own small-scale enterprises.