Berkshire News Briefs - 7/5/14

Boeing Reviews Derailment That Dumped Fuselages in River (Bloomberg)

Boeing Co. has sent technicians to the site of a train derailment that dumped six 737 fuselages and other aircraft components into a Montana river as they were being transported to a Washington state assembly plant. The accident occurred Thursday in western Montana near Rivulet, said Doug Alder, a Boeing spokesman, in an e-mailed statement. The BNSF train carrying six 737 fuselages and assemblies for 777 and 747 commercial planes was on its way to Renton, Washington, from Spirit Aerosystems Holdings Inc. in Wichita, Kansas, he said.

Another story with a picture of the scene.

New CEO named at NV Energy (Reno Gazette-Journal)

NV Energy today named Paul Caudill as president/CEO, replacing Michael Yackira, who has retired after seven years as head of the Las Vegas-based utility. Caudill has served as president of NV Energy since the company, formerly known as Sierra Pacific Resources, was acquired by privately held Berkshire Hathaway Energy in December 2013 for $10 billion. Caudill rose through the ranks at Berkshire Hathaway Energy's MidAmerican Solar, a division of MidAmerican Renewables LLC, most recently as president.

Fruit of the Loom updates plan for Summerville warehouse expansion (Charleston Post and Courier)

Apparel giant Fruit of the Loom plans to add 49 jobs over the next 18 months as part of a major expansion of its Summerville distribution center. The company said in a statement that it will build a 402,000-square-foot addition to its 350,000-square-foot warehouse, more than doubling the size of the building. The new jobs would increase the existing payroll of 171 full-time workers by 28 percent. [...] Fruit of the Loom said the expansion of its Palmetto Distribution Center is being driven by growth in its electronic-commerce and intimates businesses. [...] The maker of underwear, T-shirts, socks and other apparel items is owned by billionaire investor Warren Buffett's Berkshire Hathaway Inc.

Buffett’s Berkshire Sets Final Terms for TV-Station Deal (WSJ)

Warren Buffett’s Berkshire Hathaway Inc.added a television station to its media holdings with the acquisition of Miami-based WPLG-TV from Graham Holdings Co. The roughly $1.1 billion share-swap deal, which was announced in March, closed Tuesday after securing approval from the Federal Communications Commission. Although the outlines of the transaction were laid out in previous regulatory filings, the exact number of shares exchanging hands was established only at the deal’s closing. In addition to WPLG, an ABC affiliate, Berkshire got back 2,107 of its own Class A shares, 1,278 of its own Class B shares and about $328 million in cash from Graham Holdings. In exchange, Omaha, Neb.-based Berkshire handed over 1.62 million common shares of Graham Holdings. The Berkshire shares are valued at about $400 million based on their Monday closing price. The TV station is valued at $364 million.

Warren Buffet: The Future Is Bright for This Incredible Business (Fool)

"We passed Allstate this year. It has one of the great company histories in America. Started by a farmer with no insurance experience. He built this incredible business based on a better business model, this was 1920, and then Geico came up with an even better model. [...] Tony Nicely has done a job that belongs in the hall of fame in terms of achieving that objective. In the 15 years prior to Tony taking over, market share had hovered around 2%. Since then, it's gone to 10%-plus and it'll keep going. State Farm has a net worth of probably $60 billion to $70 billion, and a strong presence in homeowners, a strong agency force, and a lot of satisfied customers."

How Warren Buffett Made More Than $3.5 Billion in Three Months (Fool)

With the calendar officially closed on the first second quarter of 2014, the Motley Fool takes a look at a few of the stocks which allowed Warren Buffett and Berkshire Hathaway to earn $3.7 billion in April, May, and June. On a raw dollar basis -- and a very strong return basis -- the biggest winner in the $106 billion Berkshire Hathaway portfolio was none other than the stock Buffett said he'd never sell a share of, Coca-Cola. Through the second three months of the year Coca-Cola saw its stock price jump by nearly 10%, which netted Buffett a staggering $1.5 billion.

Insurers Suffer Like It’s 1965 With Low Portfolio Yields (Bloomberg)

The industry averaged annualized yields of just 3.1 percent on investments in the first quarter this year, the lowest since 1965 [...] Buffett, too, has said that current yields make fixed-income securities among the riskiest investments and instead steered his company’s funds into stocks and toward takeovers. In 2013, he called bonds on insurer balance sheets “wasting assets.” Berkshire’s insurance units include Geico, a seller of car coverage, National Indemnity and General Re. Premiums from those businesses helped fuel the company’s expansion, giving Buffett funds for stock picks and acquisitions.

Warren Buffett's 'editor' retires after 60 years (CNBC)

After a remarkable 60 years at Fortune, writer and reporter Carol Loomis is ready to retire from her day job at the age of 85. [...] Loomis is a long-time friend of Warren Buffett and has helped edit his annual letters to Berkshire Hathaway shareholders. [...] Loomis has broken some of Buffett's biggest stories, including his 2006 decision to give away almost all of his money to the Bill & Melinda Gates Foundation. In late 2012, Buffett made several media appearances with Loomis, including one of CNBC, to help promote her book, Tap Dancing to Work: Warren Buffett on Practically Everything, 1966-2012. It's a collection of Fortune's articles about Buffett.

Berkshire News Briefs - 6/28/14

The World's Most Respected Companies (Barron's)

Apple is back on top. Last year, Berkshire Hathaway knocked Apple out of the No. 1 spot in Barron's annual ranking of the world's most respected companies. But the iEverything maker has reclaimed the throne with a flourish in 2014, its winning score leaving No. 2 Berkshire and others a blur in the rearview mirror. [...] Although Berkshire slipped one rung this year, Warren Buffett's investment conglomerate is no slouch, either. It has finished out of the top five just once in the past nine years -- in 2012. That's a strong endorsement of Buffett's tenure and a reflection of the esteem he has earned in his storied career.

The 1 Person Who Should Replace Warren Buffett (Fool)

As much as long-term shareholders would like him to, Warren Buffett isn't going to be atop Berkshire Hathaway forever. The topic of Buffett's potential successor is nothing new, but who are these potential heirs and what could they mean for Berkshire Hathaway shareholders who aim to hold their position for decades to come. To get a better idea of this talent pool, we asked five Berkshire-loving Fools who they would like to see step into Warren's shoes after he's gone.

Buffett Unit Closes Second Deal This Month for Utah Solar Power (Bloomberg Businessweek)

A utility owned by Warren Buffett’s Berkshire Hathaway Inc. has closed its second deal this month to buy solar power from renewable-energy developer First Wind Holdings Inc. Rocky Mountain Power, a unit of PacifiCorp, will buy 320 megawatts under 20-year contracts, First Wind said today in a statement. Four 80-megawatt solar farms in Utah’s Beaver and Iron counties will supply power to PacifiCorp, a Berkshire Hathaway subsidiary. Construction on the Four Brothers solar development is expected to begin next year and be finished by 2016. The project will produce enough energy to power about 64,000 homes.

California, Buffett’s PacifiCorp Approved for Western Market (Bloomberg)

Warren Buffett’s PacifiCorp power utility and the California Independent System Operator Corp., which manages the grid in a state that consumes more electricity than all of Mexico, won approval to start a regional market. [...] The system, slated to become the only real-time, regional one of its kind in the western U.S., will be capable of automatically dispatching power every five minutes from plants with a combined capacity of 68,846 megawatts, enough to supply 51.6 million homes. The ISO and PacifiCorp have hailed it as the first step toward an organized market stretching across the entire Western Interconnection, where 38 authorities from Canada to Mexico now manage fluctuations on their own grids.

Fired Worker Finds Paint Names Offensive (Courthouse News Service)

A black worker named Clinton Tucker claims in court that Benjamin Moore paints fired him after his repeated complaints about their "despicable and racially insulting paint colors called 'Clinton Brown' and 'Tucker Chocolate.'" Tucker sued the paint giant in Essex County Court. [...] Tucker says that after this exchange, a colleague asked, "If you think that is bad, what about Confederate Red?" which Tucker says is a color of paint that is "offensively described by Benjamin [Moore] as a 'timeless and enduring classic.'"

The Biggest Threat to Warren Buffett's Empire (Fool)

Earlier this year, we learned regulators had begun to look at Berkshire Hathaway -- and its nearly half a trillion dollars in assets -- to determine whether or not it should be deemed a "Systematically Important Financial Institution," or SIFI. If the Financial Stability Oversight Council determines Berkshire Hathaway is a SIFI -- meaning its failure could threaten the broader stability of the markets -- it could be a devastating blow to Buffett's company. This designation would result in new regulatory scrutiny and oversight. It would become regulated by the Federal Reserve and as the consultancy Deloitte notes, "Nonbank SIFIs must comply with the Board of Governors' capital plan rule and develop annual capital plans, conduct capital adequacy stress tests, and maintain adequate capital."

How Berkshire Hathaway's GEICO Crushes Allstate and Progressive (Fool)

Still trailing State Farm though, if you're keeping score at home...

For the full year in 2013, we learned that GEICO supplanted Allstate to claim the title of being the second-largest auto insurer in the United States. The business at Berkshire Hathaway saw its auto insurance premiums rise by 11.3%, to $18.6 billion, while Allstate only saw its rise by 3.4%, to $18.1 billion. The growth of Progressive and market leader State Farm was better than Allstate, but none of the big four in insurance saw the gains posted by GEICO [...]

Local 10 sale deal approved by FCC (Local10 WPLG)

The FCC officially approved the deal that will allow Graham Holdings to sell the station to Warren Buffett's Berkshire Hathaway company. With the approval, the companies will spend the next few days finalizing the deal with completion expected to take place sometime in the near future. The sale, announced in March, is part of a complicated stock swap between the two companies.

New Shaw Evergreen Facility in Ringgold, Ga., to Recycle Multiple Fiber Types (Digital Journal / PRWeb Newswire)

Georgia Governor Nathan Deal announced today that Shaw Industries Group, Inc. (Shaw) will expand its robust reclamation and recycling program to include a new Evergreen facility in Ringgold, Ga. The Berkshire Hathaway company will create at least 70 new full-time jobs and invest over $17 million into the facility. [...] The world's largest carpet manufacturer and a leading floorcovering provider, Shaw has recycled more than 700 million pounds of carpet since 2006 via the company's take-back program and an expansive reclamation network. As an addition to Shaw's portfolio of recycling solutions, Evergreen Ringgold will give the company a flexible recycling solution that is capable of recycling nylon and polyester carpet.

Public, stakeholder groups weigh in on proposed AltaLink acquisition (Edmonton Journal)

I could run a full Berkshire News Briefs post with nothing but pro and con editorials and letters to the editor on this subject from newspapers in Alberta, Canada. Here's a more fact-based story.

Eleven individuals, consumer groups and businesses have said they want to take part in the Alberta Utilities Commission’s review of the proposed $3.2-billion sale of AltaLink to Berkshire Hathaway Energy. Berkshire Hathaway Energy announced on May 1 that it intends to purchase AltaLink — Alberta’s largest electricity transmission company — from current owner SNC-Lavalin of Montreal. The deal is expected to close Dec. 31. [...] Some individuals said they oppose the sale because Berkshire Hathaway Energy is American-owned.

Bombardier's Challenger 350 Aircraft Enters into Service with First Delivery to NetJets (WSJ)

NetJets Inc., a Berkshire Hathaway company and the worldwide leader in private aviation, together with Bombardier Aerospace, revealed today the first Signature Series(TM) Challenger 350 aircraft at Westchester County Airport in White Plains, NY. This event marked the official entry-into-service of the Challenger 350 aircraft. Bombardier Business Aircraft President Éric Martel presented the ceremonial keys to NetJets Chairman and CEO Jordan Hansell before unveiling the aircraft to employees and invited guests. NetJets is the worldwide launch customer for the Challenger 350 aircraft and will add eight of the jets to its fleet this year.

Buffett warning unheeded as catastrophe bond sales climb (BusinessDay)

Bond buyers are betting more than ever on the mercy of Mother Nature as they seek to boost yields being suppressed by central banks. Demand for notes linked to insurance against hurricanes and other natural disasters is prompting investors to accept the lowest relative yields in almost a decade for this time of the year, when the Atlantic storm season gets underway. Buyers are speculating that the $22 billion market can continue its streak without an annual loss even as Warren Buffet said last week that Berkshire Hathaway Inc. is avoiding writing hurricane insurance in Florida because premiums have been pushed too low.

Berkshire News Briefs - 3/25/14

Buffett's Berkshire gets its first TV station (CNBC)

For the first time, Warren Buffett's Berkshire Hathaway will directly own a television station. Under terms of an agreement in principle announced Wednesday, Berkshire will get ABC-affiliate WPLG in Miami from Graham Holdings. Graham holds the assets that remained after the Washington Post Co. sold its namesake newspaper to Amazon chief Jeff Bezos for $250 million last August. In the new deal, Graham would swap the station, some Berkshire shares it owns and some cash in exchange for roughly 1.6 million Graham shares now held by Berkshire. [...] The trade would leave Berkshire with just about 100,000 shares.

Media General to buy LIN in US$2.6b broadcast deal (NewsAsia)

US broadcaster Media General said on Friday it will buy LIN Media in a US$2.6 billion deal that creates the nation's second-largest television broadcasting company and a digital media powerhouse. The merged company will own and operate or service 74 television stations across 46 markets, and serve some 26.5 million households, or 23 percent of the US market, Media General said in a statement. [...] Media General, partly owned by tycoon Warren Buffett's Berkshire Hathaway, will form a new holding company that will be named Media General.

Warren Buffett's Warrants Shine in Media General Deal (The Street)

As Media General works to merge with LIN Media, forming the nation's second largest pure-play TV broadcasting company, Berkshire Hathaway continues to make money off of a newspaper deal it cut with Media General in 2012. In May 2012, Berkshire Hathaway bought 63 newspapers from Media General for $142 million in cash and agreed to provide the nationwide TV broadcaster with a $400 million term loan and a $45 million revolving credit line, as the company worked to repair its balance sheet. As part of the newspaper purchase and its loan to Media General, Berkshire also received penny warrants for approximately 4.6 million of Media General's Class A shares, about 20% of its outstanding stock at the time. Berkshire's loans, which carried an interest rate of 10.5%, and its warrants, quickly paid off.

Buffett’s BNSF Leads Locomotive Surge to Ease Railroad Cargo Jam (Bloomberg)

BNSF Railway Co., owned by Warren Buffett’s Berkshire Hathaway Inc., is leading an effort by U.S. railroads to add hundreds of locomotives to ease a cargo jam spurred by bad weather and surging crude shipments. BNSF increased engines by 250 in the last two months and will have another 125 new ones on the tracks in the next two months, the company said. [...] The congestion started with BNSF before the bad weather because of equipment shortages and increasing cargo, then worsened as the snowstorms swept in, said Jason Seidl, an analyst with Cowen & Co. “A lot of business came their way and they sort of got behind the eight ball,” he said. “Then the weather hit and the rest is history as they say.”

Buffett’s Hathaway Compensation Rises to $485,606 (Claims Journal)

Well, OK, I guess he's earned a small raise.

Warren Buffett’s compensation from Berkshire Hathaway Inc. rose 15 percent last year to $485,606, although the billionaire’s salary remained $100,000. The increase came in “other compensation,” which includes company-paid costs for Buffett’s personal and home security. As usual, Buffett reimbursed Berkshire $50,000 for personal costs such as postage and phone calls.

Will This Company Soon Be Warren Buffett's Biggest Holding? (Fool)

Believe it or not, Bank of America could soon become the single largest holding of Warren Buffett's Berkshire Hathaway. Shocking, I know, but the math is really quite simple. Two and a half years ago, Buffett invested $5 billion in Bank of America. In exchange, Berkshire received a corresponding amount of preferred stock that pays a 6% dividend, and warrants to buy 700 million shares of the bank's common stock at an exercise price of $7.14 per share. The warrants expire in September of 2021. At today's price of roughly $17.90, Berkshire has already more than doubled its initial investment -- and that excludes the preferred stake. The common-stock position has been so lucrative, in fact, that it's become, in effect, Berkshire's fifth largest equity holding.

Berkshire Hathaway HomeServices Named ‘Real Estate Agency Brand of the Year’ in 2014 Harris Poll (Business Wire)

Berkshire Hathaway HomeServices, the new real estate brokerage network operated by HSF Affiliates LLC, today announced it was named “Real Estate Agency Brand of the Year” in the 26th annual Harris Poll EquiTrend study. Berkshire Hathaway HomeServices received the highest ranking in the Real Estate Agency category based on consumers’ perception of its brand familiarity, quality and purchasing consideration, among other qualifying elements. The study was based on opinions of more than 40,000 U.S. consumers surveyed online earlier this year.

Buffett Wins NCAA Billion-Dollar Hoops Bet as Brackets Go Bust (Bloomberg)

It took less than two full days of play for Warren Buffett to win his bet that no entrant in a Quicken Loans Inc. contest would predict the winner of each game in the three-week-long National Collegiate Athletic Association men’s basketball tournament. [...] Two upsets -- Dayton’s defeat of Ohio State two days ago, and Mercer’s win yesterday against Duke -- wiped out 99 percent of the entries. When Memphis defeated George Washington last night, the last of the perfect brackets was busted.

In preparing the news briefs post, I found this interesting two-part story on Seeking Alpha about the corporate structure of Berkshire Hathaway. I thought it was more nuts-and-bolts and not general interest news, so I dropped it down to the bottom; if you don't care how the sausage is made, you're welcome to skip over this post.

On The Structure Of Berkshire Hathaway, Part 1 (Seeking Alpha)

Berkshire Hathaway is a unique company. You have a property-casualty insurance giant owning many businesses directly through insurance subsidiaries, including huge businesses like a Class 1 Railroad - BNSF. Yes, National Indemnity owns BNSF in entire, and many other businesses as well. I thought the pre-crisis organization chart of AIG was complex - because of the many industries that it covers, BRK is far more complex.

On The Structure Of Berkshire Hathaway, Part 2: The Harney Investment Trust (Seeking Alpha)

In Omaha, there is Farnam Street. Among value investors, it is well-known, because the small main office of Berkshire Hathaway is located there. Less well known is Harney Street, but from an insurance standpoint it is important, because Berkshire Hathaway's largest insurance subsidiary, National Indemnity, is located there. One of the major assets of National Indemnity is the Harney Investment Trust, of which National Indemnity is the sole beneficiary. [...] Now, if you read through BRK's filings to the SEC, you won't find many mentions of the Harney Investment Trust. You have to read the insurance regulatory documents to find it, and even if you do that, you will still be puzzled.