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. [...]