Berkshire News Briefs - 11/20/17

What Warren Buffett's Berkshire Hathaway has been buying and selling lately

Adding to one of its largest positions, Berkshire bought another 3.9 million shares of Apple, bringing the company's total stake to 134.1 million shares, which represents a 2.6% stake in the tech giant. Buffett and company have been accumulating Apple shares over the past two years or so and are sitting on a nice gain, especially with the stock recently reaching a new record high.

Synchrony Financial was one of Berkshire's most recent stock investments, with the position initiated during the second quarter. In the third quarter, Berkshire purchased another 3.3 million shares of the credit card issuer.

Berkshire also bought another 832,000 shares of Monsanto, which increases that stake by about 10%. [...]

Stock sales included IBM, Wells Fargo, Charter Communications, and WABCO. For a complete look at the changes in Berkshire Hathaway's 13F filing of stock holdings, visit Dataroma for updated holdings and activity.

Taking a longer view:

Here's How Warren Buffett's Stock Portfolio Has Changed Over the Past 2 Years

Berkshire's stock portfolio consists of more than 45 positions but is heavily weighted toward its largest holdings. So here's a look at how Berkshire's "top 10" stocks have changed since the third quarter of 2015. [...]

NV Energy seeks OK for 3 new power purchase agreements

NV Energy is requesting that three new long-term power purchase agreements totaling 100 megawatts — enough energy to serve about 60,000 average customer homes — be approved by the Public Utilities Commission of Nevada. [...]

The largest of the three new projects is the 50-megawatt Turquoise Nevada solar project, to be built in the Reno Technology Park in Washoe County. The project will benefit from a 25-year power purchase agreement with NV Energy and is expected to be operational by the end of 2020.

The other two new proposed 25-year power purchase agreements are the result of a request for proposals issued June 14 by NV Energy. The 25-megawatt Techren Solar 3 project will benefit NV Energy customers in Southern Nevada and the 25-megawatt Techren Solar 4 project will benefit customers in Northern Nevada. If approved, the new solar energy projects will be operational on or before Sept. 1, 2020. [...]

The 25 year purchase agreement for the Reno project is a deal with Apple.

Berkshire Hathaway's 14-Year Winning Streak Is Coming to an End

A 14-year winning streak at Berkshire Hathaway will likely come to an end this year, as its insurance companies are set to post their first full-year underwriting loss since 2002. It's an unfortunate end to an incredible run, but insurance remains one of Berkshire's best businesses, regardless of recent losses. [...]

Here's How Berkshire Hathaway Crushed It in 2017

We're not at the end of 2017 quite yet, but it's safe to say that Berkshire Hathaway has had a solid year. Warren Buffett's investment vehicle made a number of splashy, value-enhancing moves, and strengthened its already formidable portfolio, this year.

Of course, not every play Buffett and company made was a win, but for the most part Berkshire did very well. Here's a look at the more impressive highlights of its 2017. [...]

Electronics distributor is hiring to staff massive Fort Worth warehouse

TTI, a global distributor of electronic components, is moving into a new 641,000-square-foot distribution center in north Fort Worth with plans to expand its workforce.

The new building [...] will consolidate and replace TTI’s current warehouse operations. When construction began in 2016, the estimated price tag was $40 million.

TTI, which is owned by Warren Buffett’s Berkshire Hathaway, already “is actively hiring for the new location” along with transferring employees from other facilities [...] The company employs 1,020 workers locally, up from about 870 in 2014.

The company, founded in 1971, is a major distributor of electronic components for industrial, military, aerospace and consumer electronics manufacturers worldwide. [...] TTI and its subsidiaries, Mouser Electronics, Sager Electronics and Symmetry Electronics, employ more than 4,700 workers at more than 100 locations in North America, Europe and Asia.

Warren Buffett announces changes at Berkshire Hathaway's Ben Bridge Jeweler

Ben Bridge Jeweler, the distinguished family-run fine jeweler with over 90 retail stores in 11 states and one province, announced today that Co-CEO and General Counsel Jonathan (Jon) Bridge is retiring, and current President and Co-CEO, Edward (Ed) Bridge will become Chairman and CEO. As of November 1, 2017, Lisa Bridge C.G., the company's Vice President of Education and the creator of the Lisa Bridge Collection, has been appointed as the company's President and Chief Operating Officer.

8 Warren Buffett Deals That Won Big

Warren Buffett is widely considered to be the best investor of all time, and for good reason. Since he took control of Berkshire Hathaway, the company has generated annualized returns of nearly double those of the S&P 500, mainly on Buffett's sound ability to make great investment deals.

With that in mind, here are eight examples of investments, acquisitions, and other deals that Warren Buffett has made over the years that have worked out especially well. [...]

Berkshire Subsidiary Briefs - 11/6/17

Brooks Running sees double-digit sales growth despite unpredictability of sports retail

For the latest quarter, Brooks reported double-digit revenue growth, boosted by sales of the company's shoes for avid runners, including Brooks' Ghost and Adrenaline footwear models.

Brooks' third-quarter sales climbed 11 percent, while global footwear revenue was up 14 percent during the period, the company reported Monday. The retailer is also gaining traction in the "$100 and above" segment for adult running footwear, NPD data show. [...]

Brooks Running CEO Reveals the Secrets to Winning In the Digital Retail World

(VIDEO) Considering the competition from Nike, Under Armour and Adidas the results aren't too shabby. Brooks Running CEO James Weber said the brand is winning with running enthusiasts. It also doesn't hurt to be under the Berkshire umbrella, Weber said, as he and his team could think longer term.

Shaw Industries creating 75 jobs in Decatur

A Georgia carpet-maker plans to put $42 million into its existing plant in Decatur, Tennessee, creating 75 jobs, company and state officials announced Friday.

Shaw Industries Group Inc., a Berkshire Hathaway subsidiary based in Dalton, Georgia, makes synthetic yarn at the Decatur factory for use at its other carpet plants. It plans to expand, using both nylon and polyester fiber in its product, according to a news release from the Tennessee Department of Economic and Community Development. [...]

Stuart plant closing due to declining sales, Shaw officials say

There aren't as many people buying hardwood flooring right now. That fact was part of the reason Shaw Industries decided to close their plant in Stuart, company officials said Friday. [...]

Farris said despite the downturn in sales, the company is not getting out of the hardwood business. It will continue to operate the three other solid hardwood manufacturing facilities it owns in other states. The decision to close the Stuart plant, however, means that 160 employees are out of work. Farris said that each of them will be given an offer to work in one of the company's other facilities. The Stuart plant is the only one that operated in southern Virginia, so that would require relocating if the offers are accepted. Farris said that a final closing date hasn't been set for the Stuart plant. It will continue to operate through December or at the latest, early January of 2018. Shaw bought the factory in 2010, before being itself bought out by Berkshire Hathaway. [...]

Iowa wind turbines power all of utility's customers for 2 days

MidAmerican Energy officials said winds blew hard enough on Monday and Tuesday for wind turbines to provide all of the power needed to meet its customers’ needs for the state.

MidAmerican spokeswoman Tina Hoffman said the utility’s experts noted the wind was strong enough to produce the energy needed to power 670,000 electric customers in the state.

MidAmerican’s goal is to eventually produce 100 percent of its power with renewable resources. The company is upgrading its old wind turbines and building new ones to help reach that goal. MidAmerican is owned by Omaha-based Berkshire Hathaway.

CEO of NV Energy highlights great role of geothermal for State of Nevada

In a passionate interview, Paul Caudill, the CEO of NV Energy, Nevada’s largest utility owned by Berkshire Hathaway Energy, talks about his company’s stand and commitment on renewable energy in the state of Nevada. [...]

"I see a brighter future for geothermal energy than we have for the last five, six years here. In the early days — go back 30 years — some of our longest power purchase agreements were with geothermal plants. It was a resource that was number one in those days because of the cost of solar and the fact that wind is not a great resource here. Geothermal was the place to go if you wanted renewable energy here. And then what happened is solar costs came down." [...]

"But as you go to higher penetrations of renewable energy displacing thermal plants, geothermal has a significant value. And that is you can dispatch it. 24/7. We can use geothermal plants at night when we can’t use a solar facility. I think there is a significant value there. And as you start pushing to increase [solar] penetration on the grid, geothermal is going to become more valued." [...]

Dozens of Dairy Queens are closing

About 29 Dairy Queen locations are shuttering, after a franchisee files for bankruptcy.

Vasari LLC, which operates about 70 Dairy Queen locations in Texas, New Mexico, and Oklahoma, filed for Chapter 11 bankruptcy on Monday. In the filing, the company announced plans to close approximately 29 Dairy Queen locations. [...]

Berkshire Hathaway Guard Insurance closes deal to buy WB building; new jobs on the way

[Berkshire Hathaway GUARD Insurance] ended months of speculation Wednesday, announcing it closed a deal to buy the Wilkes-Barre Center at 39 Public Square. A sales price was not disclosed.

The move means an additional 170 or so jobs will be coming to the downtown over the next two years. [...]

GUARD, a subsidiary of billionaire investor Warren Buffett’s Berkshire Hathaway Inc., had increased six-fold to more than $1.2 billion in annual sales and doubled its workforce to more than 675 over the past five years. It’s already added about 114 of the 285 new hires to be filled by August 2019. [...]

Worker Killed at Berkshire Hathaway Manufacturing Subsidiary in Georgia

Authorities in Georgia say a man is dead after being caught in a piece of machinery at a plant in north Georgia.

Whitfield County Coroner Greg Bates told The Atlanta Journal-Constitution that 51-year-old Jesus Pimentel was caught between a moving part of a machine and a stationary steel I-beam Monday. Pimentel, an employee of Shaw Industries in Dalton, died on the scene. [...]

Berkshire News Briefs - 11/6/17

Berkshire Hathaway's 3rd Quarter Earnings release: PDF

Hurricanes Drag Down Berkshire's Quarterly Earnings

Bad weather weighed on results at Warren Buffett's Berkshire Hathaway Inc, as losses from insurance claims tied to Hurricanes Harvey, Irma and Maria and an earthquake in Mexico contributed to a 43 percent drop in third-quarter profit.

Berkshire on Friday said net income fell to $4.07 billion, or $2,473 per Class A share, from $7.2 billion, or $4,379 per share, a year earlier.

Operating profit, which excludes investment and derivative gains and losses and which Buffett says better reflects company performance, fell 29 percent to $3.44 billion, or $2,094 per Class A share, from $4.85 billion, or $2,951 per share.

Berkshire said it incurred $1.95 billion of after-tax underwriting losses attributable to the hurricanes and earthquake. [...]

Berkshire Hathaway’s Third-Quarter Operating Profit Falls 29%

Berkshire Hathaway's (NYSE:BRK-A)(NYSE:BRK-B) third-quarter operating earnings declined to $3.44 billion, down from $4.85 billion in the year-ago period, due primarily to large insurance underwriting losses from natural disasters. Third-quarter weather events were particularly troublesome for Berkshire Hathaway Reinsurance, which posted a massive $1.3 billion pre-tax underwriting loss in the third quarter.[...]

• Insurance -- $395 million net loss
• Manufacturing, service, and retailing -- $1.7 billion profit
• BNSF railroad hauls it in -- $1 billion profit
• Utilities and energy -- $963 million profit
• Finance and financial products -- $341 million profit
• Berkshire cash pile -- $109 billion

Under the Hood of Berkshire Hathaway’s Pilot/Flying J

Pilot was founded in 1958 when Jim Haslam purchased a single gas station for $6,000. It dramatically increased in size when it purchased competitor Flying J out of bankruptcy. Because the bankruptcy proceedings are public, there’s valuable information within the filings made at the time, 2009. A value of $3.3 billion was placed on Pilot and Flying J was to be acquired for $300 million – $500 million in cash plus equity in the new company, valuing it in total at $1.8 billion. Post-merger, the combined entity had revenue in excess of $30 billion and would reasonably have an enterprise value of about $5.1 billion. [...]

The segment of the North American gas station industry has three main competitors: Pilot/Flying J, Love’s, and TravelCenters of America. Pilot/Flying J is the largest with $20 billion in revenue and 750 locations, while family-owned Love’s is not far behind at 430 locations and $16 billion in revenue. Travel Centers of America is the only one of the three that’s publicly traded and has 250 locations and $6 billion in annual revenue. [...]

That still leaves the question of how much Pilot is earning and what it’s worth. Margins are slim in this business – operating income is probably no more than 2% of sales, or maybe $500 million a year in total. Using a multiple of 12x operating income (a discount of about a third to the higher margin consumer gas stations of Couche-Tard and Casey’s) gives an enterprise value of $6 billion. That is roughly consistent with the value placed on the company in the Flying J bankruptcy filings in 2009. Subtracting $2.5 billion in estimated remaining debt would value the equity at about $3.5 billion. [...]

PacifiCorp facing regulatory blowback on wind power plans

Staff advisers at Oregon's utility regulator threw cold water on PacifiCorp's plan to spend $3.5 billion, one of its biggest upgrades ever, on wind turbines and a new transmission line.

The Public Utility Commission staff say the utility had failed to justify the need for the massive capital investments, whether to meet its capacity, energy or reliability needs. [...]

"There is no need for the proposed resources at all," said the staff recommendation. "PacifiCorp's existing resources are able to meet its resource needs."

That's not a universally held opinion. Some environmentalists support the wind investments, if not the transmission. And PacifiCorp insists it needs it all. But if commissioners agree with its advisory staff, it would be a big setback for the company. [...]

Carpet maker Shaw acquires Chattanooga-based digital sample provider

Shaw Industries, the country's biggest carpet maker, is buying a Tennessee-based producer of digital carpet samples and design tools.

Shaw, a subsidiary of Warren Buffett's Berkshire Hathaway, acquired Tricycle Inc. for an undisclosed sum.

Tricycle was founded in Chattanooga in 2002 and works with commercial manufacturers, interior designers and architects to visualize carpet designs and colors digitally. The company says its three-dimensional, color corrected digital images reduce waste by removing the need to produce physical samples. [...]

Warren Buffett – Mistakes of the First Twenty-Five Years

One of the best resources available to investors are the Berkshire Hathaway shareholder letters. One of my personal favorites is the 1989 letter in which Warren Buffett wrote a piece called – Mistakes of the First Twenty-five Years (A Condensed Version). It’s a great insight into how even the greatest investors can make mistakes. The lesson of course is not to make the same mistake twice. But it seems even Buffett did make the same mistake over and over in buying some of his cigar-butt companies simply because they were cheap. This of course changing when he met Charlie Munger and he coined the phrase, “It’s far better to buy a wonderful company at a fair price than a fair company at a wonderful price.”

Let’s take a look at some of the mistakes that Buffett highlighted from his first 25 years of investing [...]