Berkshire News Briefs - 7/15/17

With Bank of America's dividend hike, Warren Buffett gets his chance at a $11 billion windfall

[...] Berkshire has warrants to buy 700 million common shares of Bank of America at $7.14 each, or about $5 billion. And Bank of America just did what Berkshire was waiting for: after passing the second of two annual stress tests by the Federal Reserve, it got the go-ahead to hike its annual dividend to 48 cents a share, or 12 cents a quarter, a 60 percent increase.

That is enough for Berkshire to consider exercising those warrants rather than waiting until just before their expiration in 2021. At Bank of America's current share price, the stake would hand Berkshire a tidy $11.7 billion profit, at least on paper. [...]

Berkshire Hathaway makes deal to win PUC approval of Oncor acquisition

Berkshire Hathaway has tentatively agreed with regulators and customer advocates to wall off Dallas-based utility Oncor from risks and debts of its parent company, a step that could help the conglomerate win approval for the $9 billion deal to acquire the largest utility in Texas and Oncor's bankrupt parent.

The move is aimed at protecting ratepayers from incurring costs not related to the distribution of electricity and ensuring that Oncor has the resources to maintain its transmission lines and the reliability of the system. Such concerns led the state Public Utility Commission to reject two earlier bids to buy Oncor and its parent, Energy Future Holdings, out of bankruptcy.

Late Thursday, Berkshire Hathaway Energy, a subsidiary of billionaire investor Warren Buffett's Berkshire Hathaway, said it would pay $9 billion to acquire Energy Future Holdings and Oncor, which provides electricity to 10 million Texans. Oncor owns and operates the grid for most of North Texas. Energy Future Holdings has been in bankruptcy for three years as it has worked to restructure its $40 billion debt.

Berkshire said it values Oncor at $11.25 billion. Another group may bid for Oncor, Bloomberg News reported Friday, citing unnamed sources. [...]

Berkshire Hathaway's Clayton Buys Oakwood Homes

Clayton Properties Group buys Oakwood Homes in a deal that closed Monday, July 3.

Oakwood is Clayton's 4th acquisition of a site-build home building operator, and the largest by far, of the deals, as well as the first one outside the Southeast region. [...]

Oakwood owns 3,000 to 4,000 lots, but has control of 18,000, which allows for continued accelerated growth with the capital access the Clayton deal will provide.

In Oakwood, and with Pat Hamill and his team continuing to run and grow the company, Clayton sees a strong cultural fit as well as a company that can help it on its strategic mission to expand its buyer universe with a price-range sweet spot between its $150,000 top price for its manufactured homes, and prevailing entry-level single-family price points, which tend to exceed $225,000. [...]

Clayton Buys Birmingham's Harris Doyle Homes

Clayton Properties Group will announce today the purchase of home building operator, Birmingham, Ala.-based Harris Doyle Homes.

The Clayton acquisition is the fifth site-build company added to the nation's largest manufactured home builder, whose market share is 50% of the category, which accounts for seven in 10 homes priced below $150,000.

Clayton's Harris Doyle announcement follows last week's closing of a deal to purchase Oakwood Homes, the Colorado-Utah home builder known as one of the most technologically progressed large enterprises. [...]

Sprint executives have engaged Warren Buffett about investment

Sprint Corp. Chairman Masayoshi Son has engaged Warren Buffett and cable mogul John Malone in discussions about participating in a deal with the wireless company, people familiar with the situation say.

The Japanese billionaire met separately with the Berkshire Hathaway Inc. boss and Mr. Malone, whose Liberty Broadband Corp. is one of Charter Communications Inc.'s biggest investors, this week at an annual gathering of CEOs in Sun Valley, Idaho, the people said.

The contours of the deal the parties are discussing are unclear. The talks are at an early stage and may not result in an agreement, the people said, but one possibility would see Berkshire put more than $10 billion into a transaction. [...]

Warren Buffett casts big shadow in banking world

Warren Buffett’s Berkshire Hathaway is now the largest single shareholder of Bank of America — but that’s not the only piece of Wall Street he owns.

Buffett, 86, is also the biggest shareholder of Wells Fargo, with a little under 10 percent of the San Francisco bank, and US Bancorp, a Minneapolis bank that’s among the largest in the country.

In addition to those holdings, he’s also the seventh biggest owner of Goldman Sachs and Bank of New York Mellon — and the eighth largest shareholder of M&T Bank, a Buffalo bank with $16.5 billion in assets. [...]

Berkshire News Briefs - 6/27/17

Berkshire Hathaway extends $1.8B rescue plan for troubled Canadian mortgage lender

Berkshire Hathaway, the conglomerate controlled by Warren Buffett, agreed Wednesday to buy a stake in the troubled Canadian mortgage lender Home Capital Group in a $1.8 billion rescue plan.

Berkshire will pay $300.7 million for a 38.4% stake of the Toronto-based company and extend a $1.5 billion line of credit. [...]

In recent years, Home Capital has repeatedly missed its financial guidance amid weaker loan volumes and declining income. In March, the company also revealed that several executives and directors have received enforcement notices from the Ontario Securities Commission related to its disclosure practices and stock trades. [...]

Buffett's Berkshire Hathaway just became one of the largest shareholders in an obscure real estate firm

Store Capital says Berkshire Hathaway invested $377 million in the company, which represents a 9.8 percent stake in the real estate investment trust.

Berkshire's investment makes the company the third largest holder in Store Capital, after Vanguard Group and Fidelity Management & Research, according to FactSet. [...]

Store Capital has investments in over 1,750 properties in 48 states, according to the company. AMC Entertainment, Applebee's and Ashley Furniture are among its 10 biggest customers, according to an investor presentation. [...]

Texas examines Berkshire Hathaway ownership of RV maker, dealers

In notices of decisions made public last week, the Texas Department of Motor Vehicles recommended revoking the licenses of 30 of Berkshire Hathaway’s auto dealers in Texas and fining them a total of $30,000 because the Omaha-based parent company also owns Forest River, a recreational vehicle manufacturer.

Texas law prohibits direct or indirect ownership of vehicle dealers by vehicle manufacturers, the notices said. The law is intended to protect independent auto dealers from unfair competition by manufacturer-owned dealerships.

The department also recommended a $1,000 fine and revoking the manufacturing license of Forest River, which has a cargo trailer manufacturing facility in Waco, Texas. [...]

Berkshire Hathaway units settle comp dispute with California

Berkshire Hathaway Inc. units have settled with California regulators over alleged "bait and switch" marketing tactics for workers compensation coverage.

According to a statement Thursday by the California Department of Insurance, the insurers have agreed to lower rates for certain coverages and make other changes to coverage terms.

The settlement applies to policies sold by Berkshire units California Insurance Co. and Applied Underwriters Captive Risk Assurance Co.

According to the statement, the insurers "were selling a workers compensation product with illegal side agreements that modified the obligations of the parties under the policy." [...]

Berkshire Hathaway in 3 Charts

Berkshire Hathaway is one of the world's most successful companies. Over the last 52 years -- during which Warren Buffett has been chairman and CEO -- it compounded its investors' wealth at a remarkable rate, turning an original $1,000 investment into nearly $20 million for its earliest investors.

The three charts below explain how Berkshire grew to become as large as it is today, and why the future is likely to yield lower returns for the company's investors going forward. [...]

Berkshire Hathaway Inc.'s Most Brilliant Moves in 2017 So Far

In many ways, Warren Buffett-led conglomerate Berkshire Hathaway has had a rather uneventful 2017. The company hasn't announced any major acquisitions, and other than a few major moves in the stock portfolio, it hasn't really been in the headlines much.

Yet the few major moves Berkshire has made should be good for the company's future. Here's a quick recap of three moves the company has made, why they should be positive long-term catalysts, and the lessons you can learn from each. [...]

The Cost of Lunch With Warren Buffett: $2.68 Million

A bidder pledged $2.68 million to a San Francisco charity in exchange for a lunch date with billionaire investor Warren Buffett.

The winner of the online auction that concluded Friday on eBay Inc.’s website chose to remain anonymous. The final price fell short of last year’s $3.46 million winning pledge, which tied the previous record.

As in years past, the winner gets to bring seven friends to dine with Buffett, 86, at New York’s Smith & Wollensky steakhouse. Proceeds benefit Glide, a San Francisco charity that serves meals to the homeless, hosts support groups through its women’s center for abuse victims and provides treatment for drug addiction. [...]