Berkshire News Briefs - 1/10/18

Berkshire Hathaway Inc. News Release

On January 9, 2018, Berkshire Hathaway Inc.’s Board of Directors voted to increase the number of directors comprising the entire Board of Directors from twelve to fourteen. Gregory E. Abel and Ajit Jain were then elected to serve as Directors to fill the resulting vacancies on the Board of Directors. In connection with their election to the Board of Directors, Warren E. Buffett, Berkshire Hathaway’s Chairman and CEO, appointed Mr. Abel to be Berkshire Hathaway’s Vice Chairman – Non-Insurance Business Operations and Mr. Jain to be its Vice Chairman – Insurance Operations. [...]

Warren Buffett: 'I feel terrific,' and moves toward succession are not related to my health

Warren Buffett told CNBC on Wednesday the appointment of two new vice chairs at Berkshire Hathaway is "part of a movement to succession over time," and has nothing to do with any change in his health. [...]

"They are the key figures," Buffett said. "They both have Berkshire in their blood."

"There is not a horse race at all," he added. "They both have their areas of specialty."

Buffett and his 94-year-old longtime partner, Charlie Munger, are staying in their respective positions as chairman and CEO and vice chairman. [...]

Speculation had centered on Abel and Jain as possible successors, and Buffett told CNBC that elevating them would have also made sense five years ago. He said he decided about six weeks ago to make the move, saying to himself, "why not now." [...]

It was Munger's idea for Abel, Jain, and himself to all have vice chair titles, Buffett said. [...]

Warren Buffett wins $1M bet against hedge funds and gives it to girls' charity

In 2007, the famed billionaire investor made a $1 million bet that an S&P 500 stock index fund would outperform a basket of hedge funds over the course of a decade.

The index fund returned 7.1% compounded annually over the 10-year period, easily beating the 2.2% average return of a basket of funds picked by asset manager Protégé Partners, according to The Wall Street Journal.

Buffett promised to give the prize money to his local affiliate of Girls Inc., a non-profit organization that provides programs designed to inspire "all girls to be strong, smart and bold." [...]

Berkshire Hathaway could gain $37 billion from GOP tax cuts

Berkshire Hathaway, the conglomerate led by Warren Buffett, stands to gain an potential $37 billion from the GOP's tax cuts, according to new research from Barclays.

"We now estimate Berkshire Hathaway's 4Q book value could be boosted by about $37 billion resulting from the US corporate tax reform due to a decline in its deferred tax liability," analysts at the firm wrote in a report on Monday.

The authors also said the reduction in the corporate tax rate could lift the company's earnings power by as much as 12 percent "in 2018 and beyond," and it could repatriate some foreign profits and use it for investment. [...]

Warren Buffett Shares the Secrets to Wealth in America

I have good news. First, most American children are going to live far better than their parents did. Second, large gains in the living standards of Americans will continue for many generations to come. [...]

This game of economic miracles is in its early innings. Americans will benefit from far more and better "stuff" in the future. The challenge will be to have this bounty deliver a better life to the disrupted as well as to the disrupters. And on this matter, many Americans are justifiably worried. [...]

Warren Buffett's Love for Burger Joints Is Landing Him Billions of Dollars

The financing deal gives RBI the option to redeem some, or all, of Berkshire's preferred stock. It indicated it would fully redeem the stake, plus dividends that have accrued from it. The redemption rate alone is 9.9%, which means Buffett is getting an effective interest payment of $297 million on the original $3 billion in financing.

On top of that are the dividends, which are hefty at 9% per year. This adds $810 million onto his return, which doesn't factor "an additional amount, if necessary, to produce an after-tax yield as if the dividends were paid by a U.S.-based company," according to a recent Berkshire regulatory filing.

On top of that, Buffett's investment vehicle still owns that RBI stake derived from the warrant. At the most recent closing stock price, that holding would be worth over $523 million, even after we net out the exercise price. [...]

Brooks Needs Runners Who Hate to Run

Within a few years of Weber taking over, Brooks became the best-selling brand at specialty stores. Then Fruit of the Loom Inc., which is owned by Berkshire Hathaway Inc., bought the company in 2006. Brooks flew under Berkshire’s radar for a couple of years until Todd Combs, one of Warren Buffett’s investment managers, brought it to his attention. Combs is a triathlete; Ted Weschler, another top Berkshire investment manager, is a marathoner. Buffett may not have realized it, Combs said, but this random shoe company was doubling in size every three years.

Soon after, Buffett met with Weber, who explained his all-­running-only-running strategy. Buffett liked the idea of focusing on a niche market. “He thinks long-term,” Weber says of Buffett, who told him: “Whatever you do, just make the brand stronger.”

So that’s what Weber did. Buffett was so pleased by Brooks’s success that in 2012 he spun it off from Fruit of the Loom, which didn’t have footwear experience. As Berkshire holdings go, Brooks is small, accounting for a sliver of the $24 billion it made in 2016. But for Buffett, it appears to be a source of pride. [...]

Q&A with Lubrizol’s Eric R. Schnur

Q: There are numerous references in company literature to values handed down from its founders. What are those values?

A: Fundamentally, our corporate philosophy comes down to three things. It’s about people and how important they are. I talk to employees at all of our major locations and ask them about the company, its culture and what they would never want to change. The first answer always is our focus on people. They feel the company really cares about people. This is something I felt walking through the door that first day at the pilot plant. There is a focus on safety. You cannot care deeply about people and expect them to work in an unsafe environment. We operate chemical plants. Those can be unsafe environments if you don’t invest in them and have policies and procedures. The last is business and corporate ethics.. Never do anything illegal. When you have thousands of people around the world, that doesn’t mean everyone is acting perfectly every single moment of the day. But we are vigilant about it. We do things the right way. It isn’t just a slogan. We want to move faster and drive quicker decision making, all the things companies our size talk about. But the focus always is on people, ethics and safety. [...]

Berkshire Hathaway subsidiary to remove idle crude oil rail tankers from New York forest preserve after governor's objections

A Berkshire Hathaway subsidiary has decided to remove its idle crude oil rail tankers from a New York forest preserve after the state’s governor objected to their storage there.

Chicago-based Union Tank Car said Tuesday that all 65 cars it has in the Adirondack Forest in northeast New York will be removed by mid-January. [...]

Russell Brands announces layoffs

A total of 75 permanent employees of Russell Brands LLC were notified Friday that they would be laid off. [...] The reduction in force is expected to drop the number of people employed at what is now primarily a distribution center down to around 250 people. [...]

Just six years ago, Russell Brands still had 750 employees in Alexander City. Earlier this year when it was announced that the company would cease manufacturing of athletic team uniforms, company officials said it was unclear how the move would impact the estimated 500 Russell employees who were working in Alexander City at that time. [...]

Oriental Trading CEO who turned company into profitable part of Berkshire dies at 56

Sam Taylor, who guided Oriental Trading Co. from bankruptcy into one of Berkshire Hathaway Inc.’s local success stories, died more than a year after being diagnosed with a lethal form of brain cancer. He was 56. [...]

Taylor came to Omaha with his family — wife Stephanie and daughters Ashton, Celine and Mallory — in May 2008 to take over the troubled company, which had been saddled with high debt through a series of buyouts and refinancings. [...]

With the turnaround underway, in 2012 Taylor successfully pitched Oriental Trading to Berkshire CEO Warren Buffett, explaining how its La Vista distribution system, catalogs, online sales system and staff could become a profitable part of Berkshire. [...]

Berkshire News Briefs - 4/22/17

Berkshire Cuts Wells Fargo Stake to Get Below Fed's Limit

Warren Buffett’s Berkshire Hathaway Inc. is cutting its stake in Wells Fargo & Co. to less than 10 percent after the Federal Reserve told the billionaire’s company that remaining above that threshold would limit its ability to do business with the bank.

Berkshire sold 7.13 million shares of Wells Fargo this week and plans to divest an additional 1.87 million in the near future, the Omaha, Nebraska-based company said Wednesday in a statement. Buffett’s company oversaw about 500 million shares as of Dec. 31, valued at more than $27 billion at the time, according to Berkshire’s annual report. [...]

Buffett likely voted shares to back Wells Fargo board

Wells Fargo & Co's largest investor, Warren Buffett, has likely already voted his shares to support the bank's recommendations at its contentious annual shareholder meeting next week, a representative told Reuters on Wednesday, which include reinstating most of the board's directors. [...]

Now the board, whose members include new CEO Tim Sloan, is facing opposition in the shareholder vote next week after proxy advisers recommended rejecting many of them.

Buffett's assistant, Debbie Bosanek, told Reuters that Buffett supports management and the board, and that he has likely voted shares held by him and Berkshire to reflect that view. [...]

As Tesla bills stall, Lege weighs loophole for Buffett

The latest effort by Tesla Inc. to sell the electric cars that it makes directly to Texas consumers appears to have stalled in the Legislature, even as a bid by Warren Buffett’s Berkshire Hathaway Inc. to win an exception to the strict regulations preventing automobile manufacturers from also owning dealerships is racing forward.

Senate Bill 2279 — filed Tuesday by state Sen. Kelly Hancock, R-North Richland Hills — would allow manufacturers to own dealerships “so long as the vehicles they sell or service are not the same type of motor vehicle that they manufacturer or distribute.” It has been scheduled for a Thursday Senate committee hearing.

Berkshire Hathaway Automotive, which has 85 dealerships in 10 states and is based in Irving, needs the exception to avoid violating existing Texas law because its parent company owns recreational-vehicle maker Forest River Inc., as well as a large stake in Chinese electric-car maker BYD Co. [...]

Apple and the Airlines in Buffett and Munger's Own Words

Munger on Apple and airlines during the 2017 Daily Journal Corp. meeting: [...]

"Now it may work out to be a good idea for the same reason that our railroad business turned out to be a good idea, but there’s some chance that it might not. He’s changed, and I think he’s changed when he buys his airlines, and he’s changed when he buys Apple. Think of the hooting we’ve done over the years about high tech – we just don’t understand it. It’s not in our circle of competency. The worst business in the world is airlines. What do we appear in the press with? Apple and a bunch of airlines. I don’t think we’ve gone crazy; I think the answer is we’re adapting reasonably to a business that has gotten very much more difficult. I don’t think we have a cinch in either of those positions. I think we have the odds a little bit in our favor. And if that’s the best advantage we can get, we’ll just have to live on the advantage we can get. I used to say you have to marry the best person that will have you. And I’m afraid that’s a rule of life and you have to get by in life with the best advantage you can get. And things have gotten so difficult in the investment world that we have to be satisfied with the type of advantage that we didn’t used to get. On the other hand, the thing that caused it to be so difficult was we got so enormously rich. That’s not a bad trade off." [...]

When Warren Met Jorge Paulo: Buffett and Lemann Recall Their First Deal

The billionaire investors Warren Buffett and Jorge Paulo Lemann have teamed up to engineer some of the biggest and boldest mergers and acquisitions in recent years, but they have rarely appeared in public together.

On Saturday night, however, the two appeared on a stage in Cambridge, Mass., to be interviewed by the dean of the Harvard Business School, Nitin Nohria. [...]

Mr. Lemann and Mr. Buffett got to know each other when both were on the board of Gillette. Around that time, Mr. Lemann was selling Banco de Investimentos Garantia, an investment bank of which he was a founder in Brazil. [...]

But it was not until 2013 that they first did a deal together. Then, Mr. Lemann’s 3G Capital and Mr. Buffett’s Berkshire Hathaway teamed up to acquire H.J. Heinz for $23 billion. Two years later, 3G Capital, again together with Mr. Buffett, merged Heinz with Kraft Foods. [...]

kathy ireland® Worldwide Partners with Berkshire Hathaway's Larson-Juhl and The Buffalo Works to Launch Art and Wall Décor Line in 2017

kathy ireland® Worldwide (kiWW®) has inked an agreement to design a wide-ranging collection of branded art and wall décor for the home with Larson-Juhl and The Buffalo Works. The Buffalo Works will work with kiWW® to curate, develop and market the art program, partnering with Larson-Juhl as the exclusive supplier for the branded program. [...]

[Kathy Ireland, kiWW's Chair, CEO and Chief Designer:] "Larson-Juhl is a member of the Berkshire Hathaway business family. We began our kathy ireland® Home collection with a Berkshire Hathaway flooring company. Our first retail client was Irv Blumkin and Nebraska Furniture Mart, still clients and dear friends, all these years later. To join Larson-Juhl and The Buffalo Works means we are collaborating with some of the Berkshire Hathaway best! We will celebrate together at the Annual Berkshire Hathaway Shareholders Meeting where our new artwork will be on display," she adds. [...]

Established more than a century ago, Larson-Juhl is the global leader in custom picture frame design, manufacturing and distribution. The company also provides high quality conservation products to museums, galleries, and libraries and serves the framing market with a full range of solutions, from art printing and volume framing to wall decor. A Berkshire Hathaway company headquartered in Norcross, GA, Larson-Juhl operates 54 facilities in 17 countries around the world. [...]

Why Warren Buffett Loves Dividends, but Doesn't Pay Any

Despite Buffett's love of dividends, Berkshire Hathaway has never paid one to its shareholders, nor does Buffett plan to start implementing a dividend anytime soon. This may seem like a big contradiction -- as Buffett himself said in his 2012 letter to Berkshire shareholders, "It puzzles them [some of Berkshire's shareholders] that we relish the dividends we receive from most of the stocks Berkshire owns, but pay out nothing ourselves." However, Buffett's reasoning makes perfect sense. [...]

Berkshire News Briefs - 5/14/15

What Is Berkshire Hathaway? (WSJ Moneybeat)

A good overview if you're new here.

At one time, Berkshire made linings for men’s suits. Now, its various 100%-owned subsidiaries make cowboy boots, floor enamel and Ginsu knives; sell ear-piercing tools, diamond rings and encyclopedias; rent topiaries, candelabras and refrigerated trailers; provide insulated bags for pizza-delivery men, uniforms for police officers and shoulder pads for football players… and much, much, much more.

If Berkshire’s wholly-owned companies were independent, nine of them would be among the Fortune 500.

Is 3G Capital Dragging Berkshire Hathaway Over To The "Dark Side"? (Fool)

Warren Buffett was forced to defend his association with 3G Capital from the beginning of the ritual Q&A session at the Berkshire Hathaway Annual Meeting last Saturday, as a shareholder said that "he cannot make a moral case" for the Brazilian investment firm's aggressive cost-cutting programs at acquired companies. Given that Berkshire Hathaway's partnership with 3G Capital is more likely to expand than shrink over the next decade, Berkshire shareholders ought to understand its nature. In fact, 3G's methods are not inconsistent with Mr. Buffett's approach to business, which is, well, all business.

BNSF Extends Rail-Service Upgrades After ‘Substandard’ Performance (WSJ)

Burlington Northern Santa Fe Corp. is extending its operating improvement plans as the railroad seeks to recover from “significant service-related challenges” that the carrier and its customers have struggled with over the past year.

Berkshire Hathaway Inc., the railroad’s parent, said BNSF has seen its network operate more smoothly lately as it has boosted capacity by expanding lines, adding locomotives and bringing in new hires. “We plan to continue our capital expansion and operational improvement initiatives in 2015 in order to meet customer demand and improve and maintain service levels,” the Berkshire said in its first-quarter 10-Q filing late Friday.

Berkshire’s BNSF to Pave Way for Long-Distance Drone Flights (Bloomberg)

BNSF Railway Co., owned by Warren Buffett’s Berkshire Hathaway Inc., will be among the first companies to operate a commercial drone over hundreds of miles in a U.S. research program to test the safety of pilot-less flights.

A camera-equipped drone will fly as far as 400 miles (640 kilometers) along tracks in rural areas to inspect rails, BNSF said. The Federal Aviation Administration also chose CNN and Precision Hawk USA Inc. to make flights beyond the visual line of sight of an operator in unpopulated areas, a practice that is currently banned.

The use of drones “increases the frequency of inspection. We have some very remote areas,” Gary Grissum, BNSF’s assistant vice president of telecommunications, said in an interview. “We’re looking to be able to detect very small defaults in the rail.”

North Dakota town evacuated after oil train derails (CNBC)

A tiny central North Dakota town has been evacuated after the derailment of an oil train.

The incident displaced residents of Heimdal, sheriff's officials told local media. The accident involved a BNSF Railway train with 109 cars, five of which were burning. Six to seven cars derailed and the cause of the event is unknown, according to officials.

Buffett defends Berkshire Hathaway's manufactured home unit, addresses other investments (Minneapolis Star Tribune)

Investor Warren Buffett again defended Berkshire Hathaway's manufactured home unit Monday and praised some of his company's biggest investments.

Buffett discussed Clayton Homes' lending practices, interest rates, Berkshire's investments and other topics during an interview on CNBC Monday. Over the weekend, he answered questions in front of more than 40,000 people at Berkshire Hathaway's annual meeting.[...]

Berkshire Hathaway subsidiary to build wind farm project (Omaha World Herald)

A subsidiary of Warren Buffett’s Berkshire Hathaway Inc. will announce Thursday that it plans to build the Grande Prairie Wind Farm, which would be Nebraska’s largest wind-powered electric generating plant and increase the state’s wind energy capacity by nearly 50 percent.

BHE Renewables, a subsidiary of Berkshire Hathaway Energy, purchased Grande Prairie from Geronimo Energy of Edina, Minnesota, which had acquired it from a Chicago developer in 2013. The other companies arranged leases, got permits and completed other development steps.

Construction is to start this summer on the 400-megawatt project, located about 12 miles northeast of O’Neill, and be completed in 2016, adding to the state’s existing 810-megawatt wind energy capacity.

Berkshire Hathaway Banking on Midwest Solar? (RTO Insider)

Buffett’s Berkshire Hathaway Energy disclosed that it recently acquired a site for solar generation development in MISO’s central region. The “site” consists of 74 individual “locations” not to exceed 1 MW each, according to the company’s quarterly property acquisition report. [...]

The company did not disclose exactly where the site is located. The company is not ready to make an announcement on the project, spokesman David Caris said. MISO is a new locale for the company’s solar portfolio. [...]

Berkshire Hathaway’s planned solar expansion in MISO’s coal-dependent central region — which includes Indiana, Michigan, Wisconsin and parts of Illinois — appears designed to take advantage of increased demand for renewables as a result of federal environmental regulations.

PacifiCorp buying output from Oregon solar farm (Argus)

Berkshire Hathaway utility PacifiCorp will procure renewable generation from a 7MW solar installation in Oregon by the end of 2015. [...]

PacifiCorp expects that the plant will supply power to about 1,000 residents in the town of Bly, Oregon. The company serves 1.8mn customers across Utah, Oregon, Wyoming, Washington, Idaho and parts of northern California.

The 7MW plant will be built on a former 40-acre lumber mill site, with 20,000 solar panels, and will become PacifiCorp's largest operational solar facility in Oregon.

Forest River to break ground this week on Michigan manufacturing facility (Elkhart Truth)

Forest River will break ground this week on a new manufacturing facility in Michigan.

The Elkhart-based company announced plans in January to build three 100,000-square-foot facilities in White Pigeon and create 396 jobs in the next three years. [...]

Forest River is investing more than $7 million in the project and is receiving substantial incentives from state and local governments.

Nebraska Furniture Mart officially opens in The Colony (Ft. Worth Star-Telegram)

Nebraska Furniture Mart executives told hundreds of local dignitaries, employees and others attending a ribbon-cutting Thursday that the store is finally ready to take on the throngs of shoppers it was built for. [...]

Blumkin said the Omaha-based retailer, a unit of billionaire Warren Buffett’s Berkshire Hathaway, had several locations to choose from, but decided on the spot along the Sam Rayburn Tollway and Plano Parkway partly because of the cooperation from local entities. It has its own exit from the tollway, for example.

Due to illness, Noel steps aside for Sivley at Berkshire Hathaway (Travel Weekly)

John Noel, president of Berkshire Hathaway Travel Protection (BHTP) and founder of Travel Guard International, MyAssist and Insure America, today is moving to an executive advisory role after being diagnosed with early stages of Lewy Body Disease.

He will be succeeded as president by Dean Sivley, who had served as president of Travel Guard–Americas and was chief e-business officer of Travel Guard’s global operations after Noel left that company in 2009, three years after selling it to AIG. Sivley most recently served as CEO of the car service GroundLink.

Part of Warren Buffett's sugar empire is getting healthier, just slightly (Fortune)

Dairy Queen, according to a letter written by one of its executives that was released by an advocacy group, is pulling soft drinks from its kids menu. The letter, which is dated May 11, says the company along with its franchisees had voted to make the switch. The ice cream chain said the change would take place as soon as September 1 because that’s how long it would take the company to change its restaurant menu boards. After that, only water and milk will be the only beverages on the kid’s menu at Dairy Queen restaurants.

Start saving, Warren Buffett to auction off another lunch (Telegraph)

Billionaire investor Warren Buffett has once again agreed to have lunch with the winner of an upcoming auction to benefit a San Francisco charity.

The 16th annual auction to benefit Glide, which provides food and services to the poor and homeless, will be held on eBay from May 31 to June 5, the charity said.

Past auctions have raised about $17.8m, including a record $3,456,789 from an anonymous bidder in 2012. Last year's winner, Andy Chua of Singapore, bid $2,166,766.

Warren Buffett’s Neighbors Selling House, Asking 10 Berkshire Hathaway Shares (Inquisitr)

Billionaire investor Warren Buffett is famous for his frugality, living in the same Omaha home he purchased in 1958 for $31,500, yet his neighbors across the street have a slightly higher, and slightly tongue-in-cheek, asking price in mind for their five-bedroom house.

Homeowner Phil Huston says that though the property has been recently valued at $866,000, he and his wife are asking for 10 Class A shares of the company their famed neighbor has helmed for half a century, Berkshire Hathaway. While at first glance, this may not seem like a lot, Warren Buffett has famously never split Berkshire Hathaway’s stock, as Yahoo Homes points out. This means that each individual share of the conglomerate currently sells for $215,800 as of closing Friday, making the asking price of Huston’s home $2.158 million.

See Warren Buffett singing Coke's song (Fortune Video)

Warren Buffett is smiling about Coke again, and singing about it.

The billionaire investor made a special guest appearance at Coca-Cola’s annual shareholder meeting on Wednesday. Buffett was introduced with a video of him singing, ukulele in hand, “I’d like to Teach the World to Sing” from Coke’s classic hilltop commercials.

Berkshire News Briefs - 4/11/15

Berkshire takes 8.7 pct stake in Carlyle-controlled Axalta (Reuters)

Paint maker Axalta Coating Systems Ltd said Berkshire Hathaway Inc would buy an 8.7 percent stake in the company from controlling shareholder Carlyle Group for $560 million. [...] Warren Buffett's Berkshire is buying 20 million shares at $28 per share, a slight discount to the stock's Monday closing. [...] Axalta, the Dupont unit which Carlyle bought for $4.9 billion in February 2013, makes liquid and powder coatings for the automotive and transportation industries.

+++

One of the biggest news stories of the week was the Seattle Times investigation into Clayton Homes. It was included in last week's News Briefs post, but the story ran over into this week too.

Here's the back and forth:

• The mobile-home trap: How a Warren Buffett empire preys on the poor (Seattle Times)
• Clayton Homes statement on mobile-home buyer investigation (Omaha World Herald)
• A look at Berkshire Hathaway’s response to mobile-home investigation (Seattle Times)

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Brazilian investors help Buffett to big share of food industry pie (Omaha World Journal)

Jorge Paulo Lemann, Brazil’s richest man with a net worth estimated at $26 billion, built his business empire on beverages, using a series of mergers to create AB InBev. The company brews about 20 percent of the world’s beer, including global brands Stella Artois, Corona and Budweiser. [...] Lemann, 75, was born in Brazil to Swiss parents. He is a former Davis Cup tennis player and a graduate of Harvard University. In acquisitions, he and partners Marcel Telles and Alberto Sicupira deploy “cost killer” managers who eliminate non-productive spending so that savings can be reinvested in marketing and innovation, a 3G spokeswoman said.

We were taking a bet on what the global economy would do, but we weren’t lucky, we were right (Yahoo Finance UK)

Within seconds of climbing the short stairs into the gleaming Bombardier 6000, it’s clear why so many billionaires, Hollywood A-listers and sporting megastars choose to do their globe-trotting this way. [...] In fact, NetJets liked it so much that it was one of several new models on a list of 670 assorted jets that the company ordered in 2010 at a cost of $17.6bn, the largest single purchase ever made in private aviation. With the global economy in the throes of recession, it was a staggeringly bold move that stunned the industry, particularly as NetJets had only recently been saved from bankruptcy by its famous benefactor, Warren Buffett.

Buffett extends a hand to dealers -- 'If we shake hands, we've got a deal' (Automotive News)

With the deeper pockets of Berkshire Hathaway Inc. now backing it, the former Van Tuyl Group intends to add dealerships going forward. "In the next couple of years, we're likely to make a number of acquisitions," Berkshire Hathaway Chairman Warren Buffett told the NADA/J.D. Power Automotive Forum here last week. Buffett then made a pitch of sorts to the room full of dealers and other auto industry representatives: "We always do what we say. If we shake hands, we've got a deal. We've always got the money. We don't renegotiate ever in the last minute like some people do. Manufacturers are likely to approve us. So we will make more deals."

The Dairy Queen System Announces Jordan as the Latest Country Outside of North America that will expand the DQ brand (Marketwatch / BusinessWire)

The Dairy Queen® system, global retail treat category leader and international (quick-service restaurant) QSR fan favorite, part of Berkshire Hathaway , announced that SKM Franchise Co. Ltd., a subsidiary of El Rancho Group in Garland, Texas, has signed a multi-unit agreement to develop DQ Grill & Chill® and DQ® Treat locations throughout the country of Jordan. These will be the very first locations in Jordan for the Dairy Queen system. SKM Franchise Co. LTD plans to open a minimum of 10 DQ locations within the first five years of the long-term agreement. The company’s first of five DQ Grill & Chill restaurants will open later in 2015.

Is Berkshire Hathaway Becoming More Private Equity Than Conglomerate Under Buffett? (24/7 Wall St)

Warren Buffett and his team may be gradually making changes to how they operate Berkshire Hathaway Inc. (NYSE: BRK-A). The changes have been subtle in recent years, but the way in which Berkshire Hathaway makes acquisitions and takes stakes being taken is becoming rather unique, compared to other conglomerates. It might be easier to argue that Berkshire Hathaway is becoming more like a public private equity shop, rather than being a conglomerate. The good news here is that Berkshire Hathaway is unlikely to lose its conglomerate status. Still, the influence and dealings with private equity are becoming easier to see.

Buffett Answers Student Questions (Ben Graham Investing)

Q: What are some common traits of good investors?

A: A firmly held philosophy and not subject to emotional flow. Good investors are data driven and enjoy the game. These are people doing what they love doing. It really is a game, a game they love. They are driven more by being right than making money, the money is a consequence of being right. Toughness is important. There is a lot of temptation to cave in or follow others but it is important to stick to your own convictions. I have seen so many smart people do dumb things because of what everyone else is doing. Finally good investors are forward looking and don’t dwell on either past successes or failures but rather look toward the future. Just look at history to see how bad things have been. We had World War 2 and a Civil War. This Country works!

Warren Buffett, strumming his ukulele, is star attraction at Nebraska Furniture Mart’s charity gala in Texas (Omaha World Herald)

There's a 22 minute video of the Q&A session, but sadly it doesn't include the ukulele number.

Warren Buffett treated Texans to investment advice — and a ukulele rendition of “Deep in the Heart of Texas” — in support of a Dallas-area charity Wednesday at Berkshire Hathaway’s new Nebraska Furniture Mart-Texas store. Gala guests expected a speech from the Berkshire chairman and chief executive officer but applauded when Buffett said he would take their questions instead.

Warren Buffett-themed Brooks running shoes: A sneak peek (CNN Money)

The latest version of the Warren Buffett commemorative sneakers are about to be unveiled, and Brooks, the running shoe company that is owned by Berkshire Hathaway, has just given us a sneak peek. The shoe will be introduced on May 2, in conjunction with the conglomerate's annual investor meeting held in Omaha, Nebraska.

Berkshire News Briefs - 3/27/15

Buffett's HJ Heinz to merge with Kraft Foods (CNBC)

Kraft Foods Group stock surged Wednesday after the company announced a merger deal with H.J. Heinz financed in part by Warren Buffett. Buffett told CNBC that his Berkshire Hathaway company will have $9.5 billion worth of common stock in the newly merged H.J. Heinz-Kraft Foods company. It will be headed by Heinz Chief Executive Bernardo Hees. [...] Under the terms of the deal, Heinz will return to the public market with a 51 percent ownership of Kraft. Current holders of Kraft stock will own 49 percent of the company.

We'll have $9.5B in new Kraft-Heinz: Buffet (CNBC)

The deal to create the third-largest food and beverage company in the North America—announced hours before Buffett's interview on CNBC's "Squawk Box"—was in the works for about four weeks, the billionaire investor said. "It moved along quite promptly," he said, but stressed he's in it for the long haul. [...] "The short term doesn't make much difference to us, because we will be in this stock forever," Buffett said. "This is a business with us. It's not really a stock. It's a company that we'll own 26 and a fraction percent of."

3G Capital: Warren Buffett's Favorite Partner in Deals Worth Billions (NY Times)

Warren E. Buffett has made a habit of criticizing ruthless Wall Street bankers and rapacious private equity firms over the years. As recently as last month, he railed against both in his annual letter to his shareholders at Berkshire Hathaway. Yet for Mr. Buffett, a genteel billionaire who has managed to put a friendly face on big business, one private equity firm stands apart from the rest. 3G Capital, the Brazilian private equity firm co­founded by the billionaire financier Jorge Paulo Lemann, has in recent years emerged as Mr. Buffett’s preferred business partner in striking multibillion­dollar deals.

Buffett’s ‘German scout’ on the hunt (Omaha World Herald)

Zypora Kupferberg started her own investment business after leaving a larger company because she wanted to be “closer to the customer.” Now the 48-year-old is “Warren Buffett’s German scout,” scanning the European business landscape for businesses Buffett would buy [...] “She knows what we are looking for and we hope we will hear more from her,” Buffett told Handelsblatt.

How Warren Buffett Wins From Bank of America's Capital Plan (Fool)

Warren Buffett has a sizable stake in Bank of America, even if it's hidden from plain view. Berkshire Hathaway owns warrants that entitle it to purchase 700 million Bank of America shares for $7.14 each at any time before 2021. [...] By holding the warrants, Buffett is reducing his downside risk. If he exercised the warrants, Berkshire Hathaway would have $5 billion in additional capital at risk in Bank of America in exchange for only $140 million in incremental dividend income each year. Exercising the warrants gives Berkshire very little upside for a tremendous amount of additional downside.

Nebraska Furniture Mart begins stocking shelves for customers (Dallas Business Journal)

After promises that shelves would begin to be stocked at Nebraska Furniture Mart's new North Texas store in The Colony, work began Wednesday on filling the 560,000-square-foot retail showroom with appliances, furniture and electronics. The retail showroom will anchor the $1.5 billion, 433-acre Grandscape development and is part of the larger 1.9 million-square-foot Nebraska Furniture Mart, which includes a distribution center.

Justin Brands Inc. to close distribution facility, give 68 workers the boot (Dallas Business Journal)

Berkshire Hathaway-owned Justin Brands Inc. will lay off 68 employees and close an entire distribution facility in Forth Worth. [...] However, it may not be the end of the road for the affected workers. Justin Brands plans to turn over its distribution operations to logistics company GENCO, and the employees will have a chance to apply for jobs there. "Justin is just getting out of the distribution business because it's not our core competency," Lisa Albert, Justin Brands' senior communications manager, told the Dallas Business Journal.

Are Oil Refiners Putting Profits Over Safety in Lawsuit Against Buffett's BNSF Railways? (Fool)

(Commentary on this lawsuit, which was originally mentioned in the 3/16 News Briefs post.)

The reality is, this is about both profits and safety, and it looks like both the railways and petrochemical companies are trying to establish the balance of responsibility. And while BNSF's parent stands to benefit from the surcharge and the potential for more updated tanker cars being bought by refiners, that doesn't mean it's not still beneficial to public safety. At the same time, AFPM has an obligation to its members to challenge this surcharge if it feels it is illegal or unfair, and frankly, whether their motivation is the regulatory precedent, or purely the bottom line, really doesn't matter.

North American Railroads Caught by Speed of Crude-Oil Collapse (Bloomberg)

BNSF Railway Co., the railroad owned by Warren Buffett’s Berkshire Hathaway Inc., posted a 4.5 percent drop in petroleum products in the last four weeks after a gain of 12.4 percent last year. BNSF’s network runs through North Dakota, making it the largest hauler of Bakken oil production. [...] Demand for Bakken crude from U.S. East Coast refineries may decline as the price premium for imported Brent crude narrows. It costs about $2 to $3 a barrel to ship Brent by boat while hauling Bakken crude by train adds as much as $14 a barrel [...]

Is This Warren Buffett's Next Cinderella Story? (Fool)

(Commentary on the acquisition of Van Tuyl Automotive. Terrible headline.)

Operating dealers at scale -- in big groups -- has long been a way for local entrepreneurs to turn modest income streams into fortunes. Bigger dealer groups can get more operating efficiencies around everything from financing to employee benefits, lowering costs and helping to boost those thin margins. Buffett clearly sees this business as one where Berkshire's scale and entrepreneurial values can bring more of those kinds of efficiencies. He also sees it as a business likely to endure for many decades.

First trailer rolls out of new manufacturing plant (PE)

With the sounds of drilling, hammering and sawing in the background, the first trailer has rolled out of Forest River’s new Hemet manufacturing plant. [...] Forest River has hired 80 employes, with hopes to more than double that. [...] Forest River Inc., a Berkshire Hathaway company, bought the Hemet plant in December to open its 67th assembly plant in the nation. [...] Miller said Forest River spent more than $1 million to retrofit the two buildings on the 18-acre site [...]

Should I bet it all on Buffett? (CNN Money)

(Beware the auto-playing video)

I don't think it's a good idea to invest too much of your retirement savings into Berkshire. As a rule, it's not wise to concentrate more than 10% or so of your stock holdings in the shares of any single company. Assuming you have an otherwise well-diversified portfolio, I suppose you could make a case for pushing that percentage to 20% or so for a unique company like Berkshire Hathaway. But I wouldn't go beyond that.

Warren Buffett’s most common misunderstood pieces of advice (Omaha World Herald)

With a net worth of about $71 billion, Berkshire Hathaway Chairman and CEO Warren Buffett is undeniably the most successful investor in history. People often ask him for advice, and he is never short of blunt and witty tidbits. But with all of these pieces of investment advice floating around, many of them without additional context, it can be easy for someone to misconstrue his words. So before you rush out and start taking the Oracle of Omaha’s comments to heart, here is a list of his most common misunderstood pieces of advice.

Nutritionists warn diners to be wary of Warren Buffett's 'junk-food' portfolio (Reuters)

Following Warren Buffett's investment advice may be smart but nutritionists say that eating too many of the "junk-food" products made by companies he has invested in isn't quite as wise. His move on Wednesday to inject Velveeta cheese, Jell-O, Lunchables, Oscar Mayer wieners, and Kool-Aid into his portfolio, stuffs an already amply supplied larder. [...] He told Fortune magazine last month that he's talked to the management of Utz, the Pennsylvania-based snack maker, about potentially buying the company. And with Kraft now under his belt, Buffett could decide to literally drink his own Kool-Aid and push ahead with more such acquisitions.

Airbnb contest: Stay at Warren Buffett's childhood home during Berkshire Hathaway meeting (San Jose Mercury News)

Some fortunate Berkshire Hathaway investors at this year's annual meeting will get the chance to sleep in the same bedroom Warren Buffett did as a boy. The home-sharing service Airbnb is offering a free three-night stay at the Omaha home around the May 2 meeting as a way to promote its services. Shareholders who want to stay at the three-bedroom house must submit short essays and prove they own Berkshire stock.

Berkshire News Briefs - 3/16/15

This week's post broke down clearly into BNSF and non-BNSF news, so I broke up the post accordingly.

BNSF News

Berkshire's railroad revamps service with billions, fewer cars (Reuters)

Stung by customer backlash over last winter's patchy service, Berkshire Hathaway's BNSF Railways invested billions in shoring up its operations. But in addition to hiring more than 7,000 new workers and spending $5.5 billion on improvements to its 32,500-mile network, the railway also has done something unexpected: it pulled thousands of rail cars off its lines. The strategy appears to have paid big dividends this winter, helping ease congestion on tracks and speed up traffic [...]

CN Rail, BNSF Tackle Accidents as Group Seeks Ban on Oil Trains (Bloomberg)

The accidents bring to four the number of oil train wrecks in North America in the past three weeks, according to the Center for Biological Diversity. The environment group is calling for a halt to transport of oil by rail, which has surged since 2009 with the boom in crude production from shale. [...] North American oil producers have increased their reliance on rail as new pipelines failed to keep pace with a surge of production from shale. The typical rail car carries about 700 barrels of oil, according to data posted on BNSF’s website. The number of oil carloads rose more than 40-fold from 2009 through 2013, when 435,560 carloads were shipped, and kept climbing last year to an estimated 500,000, according to the Association of American Railroads.

Oil refiners resisting BNSF's surcharge on tank cars (Lincoln Journal Star)

The nation's oil refiners are suing BNSF Railway for adding a $1,000 surcharge to crude oil shipments in standard tank cars, to force shippers to switch to safer jacketed cars that are not yet required by federal regulators and are not yet available, according to the lawsuit. [...]

Judge revives railroad collusion suit against Union Pacific, BNSF (Omaha World Herald)

A judge in U.S. District Court for the District of Columbia ruled late last month that the 2011 suit by the Oxbow group of mining companies — owned by billionaire Bill Koch — can proceed after being dismissed in 2013. The original complaint was dismissed for failing to state sufficient facts. [...] “They allege that U.P. and BNSF engaged in anti-competitive conduct ... that harmed plaintiffs,” U.S. District Judge Paul Friedman wrote in the opinion. “In short, plaintiffs allege that defendants conspired to fix prices above competitive levels through a uniform fuel surcharge and allocate certain markets to each other, granting U.P. a monopoly in at least one region.” Texas-based BNSF said it will “aggressively defend itself” against Oxbow’s complaint.

Everything Else

Buffett Follows ‘Avarice’ Warning by Keeping $100,000 Salary (Bloomberg)

Buffett, 84, stuck with a $100,000 salary in 2014, as he has for decades, his Omaha, Nebraska-based company said in a regulatory filing Friday. On Feb. 28, in his annual letter, he said the next CEO needs to avoid being greedy. [...] The billionaire has also shown a willingness to provide Wall Street-sized compensation to reward growth at operating units such as insurers and the utility subsidiary. Greg Abel, the chairman and CEO of Berkshire Hathaway Energy, was paid $27.6 million in 2014, including an $11.5 million cash bonus and $12 million from an non-equity incentive plan. [...] Chief Financial Officer Marc Hamburg, the only executive whose pay is listed in the proxy other than Buffett or Munger, saw his salary rise about 9 percent to $1.23 million in 2014. [...]

Warren Buffett Just Predicted the Next 50 Years for Berkshire Hathaway (Fool)

Buffett said that the chance of permanent capital loss with Berkshire is the lowest among any single-company investment. But he added a caveat: If the company's valuation is high, say approaching two times book value (it's at about 1.5 times book value now, so not too far off), it could be years before investors realize a profit. In other words, Berkshire has never been, and will never be, a good "traders' stock." The company has one of the most shareholder-friendly business models in the world, but it is geared exclusively toward long-term investors. As a result, Buffett recommends that investors should look elsewhere for investment options if they plan to hold their shares for less than five years.

Berkshire Hathaway completes Van Tuyl acquisition (Automotive News)

Berkshire Hathaway Inc. has completed its purchase of the Van Tuyl Group, the largest dealership acquisition in industry history. All aspects of the sale were finalized Monday, and the company has been renamed Berkshire Hathaway Automotive, headquartered in Dallas. The new Berkshire Hathaway Automotive now is the fifth-largest dealership group in the U.S., based on 2013 new light-vehicle retail sales. It has more than $9 billion in annual revenue, the company says. [...] Jeff Rachor, who had been president of Van Tuyl Group, will be CEO of Berkshire Hathaway Automotive.

33 Amazing Numbers From Bershire Hathaway's Golden Anniversary Shareholder Letter (Fool)

$18.3 billion: Berkshire Hathaway's increase in net worth during 2014. That gain in book value is greater than the book value of more than four-fifths of the companies in the S&P 500. 9 1/2: Number of Berkshire-owned businesses that would be listed on the Fortune 500 if they were independent -- the "1/2" refers to H.J. Heinz, which Berkshire owns with 3G Capital. ("That leaves 490 1/2 fish in the sea. Our lines are out.")

Buffett's $1 billion NCAA bet goes bust (CNN Money)

Don't even think about winning $1 billion picking the perfect NCAA bracket this year. And it's not because the odds of winning are infinitesimal. But because the companies behind the contest are too busy suing each other to organize another one this year. [...] The squabbling started last year when a small sweepstakes company called SCA Promotions sued Yahoo for allegedly backing out of a deal to put on the perfect bracket contest. Yahoo counter sued, alleging that SCA spilled the beans when it went to Berkshire to buy insurance that would pay $1 billion in the unlikely event that someone won the contest. In February, Yahoo sent subpoenas to Berkshire seeking information about its dealings with SCA, including all communication between Buffett and SCA about the contest, according to court documents.

Berkshire News Briefs - 1/30/15

Berkshire's NetJets Defeats $500 Million IRS Tax Claim (Business Insider)

NetJets Inc, the private jet-sharing company owned by Warren Buffett's Berkshire Hathaway Inc , has defeated a U.S. Internal Revenue Service lawsuit attempting to recoup more than $500 million of unpaid taxes, penalties and interest. [...] The dispute arose from a series of IRS and federal court decisions over nearly two decades, on when and how Columbus-based NetJets should pay federal excise taxes.

Nearly 400 jobs coming to St. Joseph County as RV maker Forest River Manufacturing expands (MLive)

Astute readers may recall a similar story about Forest River also opening a new plant in California two weeks ago. The RV business seems to be booming.

Forest River Manufacturing LLC will spend $7 million to build its first recreational vehicle production site in Michigan over the next three years. The expansion into Michigan, from the company's headquarters in Elkhart, Ind., is expected to mean 396 new jobs over the next five years. [...] According to the Michigan Economic Development Corporation, which announced the project as one of two expansions just approved for Michigan Strategic Fund grants, Forest River is launching new products and plans to build the three facilities in the Village of White Pigeon to house each line.

BNSF expanding Bakken rail capacity (The Bakken Magazine)

BNSF’s North Region has experienced the most rapid growth in recent years and is a destination point for materials that support the production of crude oil in the Bakken. BNSF plans to invest approximately $700 million in the North Region to expand rail capacity and continue the implementation of Positive Train Control technology.

Port labor dispute is big concern for railroads Union Pacific, BNSF (Omaha World Herald)

With rail network congestion improving in some of the nation’s grain belt, Union Pacific Railroad and BNSF Railway are facing another prospective headache: a shutdown of the port complex of Los Angeles and Long Beach, the country’s largest. [...] BNSF spokeswoman Amy Casas said Friday that "unresolved labor issues" at the port complex of Los Angeles and Long Beach have the potential to cut into business at its intermodal terminals in both Los Angeles and San Bernardino. Cranes at the two make 1.5 billion container lifts a year.

MidAmerican earns top J.D. Power ranking (Quad City Business Journal)

Business customers rated MidAmerican Energy Co. the highest for overall satisfaction for the second year in a row, according to the J.D. Power Electric Utility Business Customer Satisfaction Study. The 2015 study measures satisfaction among business customers of 101 U.S. electric utilities. [...] MidAmerican took top honors again among 13 companies in the Midwest Region-Large Segment. Its overall satisfaction index score of 718 was up 21 points from last year, and 13 points ahead of the runner-up.

Berkshire Hathaway moves into Canadian insurance market (Toronto Star)

Commercial insurance company Berkshire Hathaway Specialty Insurance is expanding into Canada and bringing with it big coverage rates set to shake up the industry. The company’s Canadian foray comes just 21 days after it entered the U.S. market. In the past two months, it picked up licenses to operate in Hong Kong and Singapore, signalling an ambitious expansion effort by the insurer, owned by business magnate Warren Buffet and known for its predilection for taking risks and growing quickly. [...] Pete Karageorgos, the director of the Insurance Bureau of Canada, said the expansion is "positive and growth is always good," but he warned that the Canadian insurance market has more regulatory oversight and different coverage levels than that of the U.S.

Buffett-Backed Heinz Sells $2 Billion of Bonds to Pay Down Loans (Bloomberg)

H.J. Heinz Co., the ketchup-maker owned by Warren Buffett’s Berkshire Hathaway Inc. and 3G Capital Inc., sold $2 billion in bonds to repay a portion of its term loans, the company said in a statement. The 10-year second-lien notes were sold at par to yield 4.875 percent, according to data compiled by Bloomberg. [...] "Heinz is a household name with a tremendous history, stable products, they have been cutting costs, and in the end there is a Buffett premium priced in that helped the deal,” said Matthew Duch, a money manager at Calvert Investments in Bethesda, Maryland, which oversees more than $13 billion in assets. “The pricing was fair, and people are going in looking to park cash here."

Warren Buffett Bets on These Top Stocks for 2015 (Fool)

At the end of the third quarter, Berkshire Hathaway -- Warren Buffett's company -- disclosed it had a $17 billion stake in Coca-Cola, a $13.4 billion position in IBM, and roughly $5 billion in Wal-Mart. All signs indicate Buffett will continue to hold them into 2015 and well beyond.

Warren Buffett Stocks: 3 Dividend Aristocrats From Berkshire Hathaway's Portfolio (Fool)

To be considered a Dividend Aristocrat, a company must boast a history of at least 25 consecutive years of uninterrupted dividend growth. Coca-Cola, Procter & Gamble, and Wal-Mart are not only part of that select group, they are also included in Warren Buffett's Berkshire Hathaway portfolio.

Berkshire News Briefs - 5/13/14

Greg Abel: The Next Oracle of Omaha? (Bloomberg)

For years, Abel worked in the shadow of his business partner, David Sokol, who was widely thought to be in the race until he resigned in 2011 amid a stock trading scandal. Abel is not in the shadows now. He led Berkshire’s second-biggest acquisition last year, paying $5.6 billion for Nevada’s largest electric utility, NV Energy. And he was named to the board of ketchup maker H.J. Heinz, which Berkshire took private with partners in a $23.3 billion deal in 2013.

NRG Energy Inc. and MidAmerican Energy Announce Completion of World's Largest Solar Farm (Fool)

Clocking in at 290 MW, the NRG Energy, and MidAmerican Energy Agua Caliente joint venture is a new record -- the largest fully operational solar photovoltaic facility in the world. [...] The Arizona solar facility spans 2,400 acres between Yuma and Phoenix, and is capable of powering 230,000 homes at peak capacity. As is most often the case with utility-scale solar projects, all electricity has already been sold to PG&E under a 25-year power-purchase agreement.

Berkshire to Buy SNC’s AltaLink in Buffett Energy Wager (Bloomberg)

Berkshire Hathaway Inc.’s energy unit agreed to buy SNC-Lavalin Group Inc.’s AltaLink for about $C3.2 billion ($2.9 billion) in cash to expand in electricity transmission in western Canada. The deal adds 280 substations and about 12,000 kilometers (7,500 miles) of transmission lines, according to a statement yesterday from the power unit at Warren Buffett’s Berkshire. [...] Founded in 2002, AltaLink owns more than half the transmission grid in the Canadian province of Alberta and serves 85 percent of its population. Net income for the unit was C$161.6 million on revenue of C$534 million last year, according to a regulatory filing. AltaLink said in a separate statement that it will operate under its current name within the Berkshire business and continue to be based in Calgary.

1 Warren Buffet Business Just Revealed How Utilities Can Unlock the Power of SolarCity (Fool)

Even on a good day when utility executives are in a chipper mood, they will probably still describe SolarCity as a "nuisance". The company is the most visible representation of the distributed solar movement, and for many utilities it is a disruption of the business model they have become accustomed to over many years. Several utilities have taken up opposition to distributed solar, but one of Warren Buffets recent acquisitions, NV Energy, is welcoming SolarCity in to Nevada with open arms -- but not for the reason you may think. Let's take a look at what this Berkshire Hathaway subsidiary is doing to go against the grain and explore why this may be happening.

10 Great Buffett Quotes From Berkshire Hathaway Inc.'s Annual Meeting (Fool)

Habits are such a powerful force in everyone's life, including good financial habits. Digging yourself out of the holes that financial illiteracy can cause can take a lifetime. ... A big problem is adult financial literacy. It's harder to be smarter unless the schools intercede. A lot can be done on TV and the Internet, but it is really important to have good financial habits, and anything the school system can do will help.

It's Time to Break Up Buffett's Berkshire Hathaway: The Parts Are Worth More Than the Whole (Fool)

If Warren Buffett announced a program of spinning off and distributing most of his operating companies to shareholders, Berkshire stock would soar in value. As Buffett has noted, the fair value of Berkshire is much higher than it's book value. Spinning off the conglomerate's many subsidiaries would bring this value into the light of day.

1 Overlooked Secret to Warren Buffett's Phenomenal Success (Fool)

What's interesting when you study Buffett's portfolio is while he may not like paying dividends, he sure likes receiving them. Buffett's eight largest holdings all together pay Berkshire more than $1.8 Billion in dividends. [...] Scale matters in total returns, IBM's share price has not done all that much in the short time Berkshire has owned its stake, but I think $258 million (and growing) yearly dividend income gives at least some comfort back in Omaha. Berkshire earns over $1 Billion each year from Wells Fargo and Coca Cola alone. That is almost $3m each day. Dividends add life to your portfolio.

Heinz Factory Severance Cost Rises to $93 Million (Bloomberg)

HJ Heinz Co., the ketchup maker taken private by Berkshire Hathaway Inc. and 3G Capital, projected severance cost from factory closures will climb to $93 million as the company shutters two European plants. The new figure was disclosed in a first-quarter regulatory filing today and compares with the $63 million sum listed in the annual report for 2013. Heinz said in February that it was planning shutdowns in Seesen, Germany, and Turnhout, Belgium, after last year announcing closures in Florence, South Carolina; Pocatello, Idaho; and Leamington, Ontario.

EcoWater Systems expands green product portfolio (Water Technology)

EcoWater Systems®, a Marmon Water/Berkshire Hathaway Company, has announced the expansion of its commercial business product line through the acquisition of the Controlled Hydrodynamic Cavitation (CHC) technology and operations from VRTX Technologies of Schertz, Texas, according to a press release. CHC is a proven environmentally-friendly water treatment technology used in HVAC, process cooling and refrigeration systems to effectively control scale, biological growth and corrosion without the use of chemicals, the release reported. Adding CHC technology to a cooling tower saves energy, reduces water consumption and maintenance costs and minimizes or eliminates sewer discharge volume, noted the release.

Dairy Queen CEO: 'People Need To Be Paid A Fair Wage' (HuffPost)

“People need to be paid a fair wage,” Dairy Queen CEO John Gainor told CNN’s Poppy Harlow. [...] And in a clue to his own thinking about the controversy, Gainor told CNN that low wages made it hard to keep good employees. “It takes a lot of time to train people,” he said, speaking at a convention for Dairy Queen parent company Berkshire Hathaway, the conglomerate owned by Warren Buffett. “You want to make sure you’re paying a very good wage, otherwise you have a lot of turnover.”

Berkshire Subsidiary Briefs - 4/29/14

How Brooks Reinvented Its Brand (Inc.)

It is hard to believe that Brooks, known for is brand ethos 'Run Happy,' was on the brink of bankruptcy in 2001. A white-hot brand in the '70s and '80s, Brooks made shoes and apparel for a variety of sports including basketball, tennis, and football, until 2001 when Jim Weber came on as CEO. With the company losing money on many of its product lines, Weber decided to undertake a massive strategy change. He narrowed Brooks's focus to running, cutting products that produced $30 million in annual revenue. The move paid off. According to Weber, in the last 13 years the Seattle-based company has grown 18 percent compound, and is expected to crack $500 million in revenue this year.

NetJets Nearing Official Launch in China (Business Wire)

NetJets Inc., a Berkshire Hathaway company and the worldwide leader in private aviation, announced today that it is hiring employees in China, partnering with vendors and positioning aircraft in the market so it can quickly begin operating its NetJets China business once government approval for the operating certificate is finalized – expected mid-year in 2014. [...] The company is also expanding relationships with key vendors, such as Savoya, one of the world’s finest chauffeured ground transportation service providers and the industry leader in applying technology to deliver precise and reliable service to every passenger.

New Heinz Co. owners offer buyouts to all HQ workers (Dallas News / AP)

The new owners of H.J. Heinz Co. have offered buyouts to all workers in Pittsburgh, where the ketchup-and-food giant has been based for decades, but insist the offer doesn’t signal a plan to move the company’s headquarters. Instead, Heinz officials said the buyout is being offered because the new owners Berkshire Hathaway and Brazilian investment firm 3G Capital recognize the company’s new culture might not be “the perfect fit” for longtime Pittsburgh-based employees. Heinz officials said any workers who quit will be replaced, leaving the company with the same number of workers in Pittsburgh. The buyout offers, which begin at six months’ severance pay and increase depending on years of service, were sent out last week to all 775 Pittsburgh employees.

Google Signs Renewable Energy Deal With MidAmerican Energy (RTT News)

Google Inc. has signed a renewable energy deal with MidAmerican Energy Holdings Co., the two companies said Tuesday. Under the deal, MidAmerican Energy, a unit of billionaire Warren Buffett's Berkshire Hathaway Inc. will supply up to 407 megawatts of wind-sourced energy to Google's data center in Council Bluffs, Iowa. The deal with MidAmerican represents Google's seventh and largest renewable energy purchase to date, bringing the total amount of renewable energy that the company has contracted for to over one gigawatt, or 1,000 megawatts. The wind power for the Iowa data center will come from several wind projects that are part of MidAmerican Energy's Wind VIII program, an initiative under which that company will bring 1,050 megawatts of new Iowa wind power online by the end of 2015.

Warren Buffett Thinks This is The Most Important Business in Our Economy (Fool)

BNSF carries about 15% (measured by ton-miles) of all inter-city freight, whether it is transported by truck, rail, water, air, or pipeline. Indeed, we move more ton-miles of goods than anyone else, a fact establishing BNSF as the most important artery in our economy's circulatory system. Its hold on the number-one position strengthened in 2013.

N2Power Announces Agreement with TTI Europe, Inc. to Partner as N2Power’s Master Distributor for Europe(BusinessWire / MarketWatch)

N2Power, a division of Qualstar Corporation, is pleased to announce its distributor agreement with TTI Europe, Inc. (TTI). TTI will handle all coordination of orders, shipments, and inventory of all N2Power products throughout Europe to better serve our European distributor and customer base, as well as promoting the adoption of N2Power products in new designs. [...] TTI, Inc., a Berkshire Hathaway company, is the world’s leading specialist distributor of passive, connector, electromechanical, discrete and power components.

Johns Manville Announces Expanded Mineral Wool Availability in Canada (BusinessWire / MarketWatch)

Johns Manville (JM), a Berkshire Hathaway company and leading building products manufacturer, has added commercial and residential mineral wool to its full spectrum of insulation products, giving Canadian customers more options, security and flexibility when sourcing mineral wool to meet project demands. JM mineral wool insulation offers a variety of performance benefits in both commercial and residential construction. With a high melting point in excess of 109C, mineral wool can help delay fire spread, create quieter buildings and homes, increase privacy between rooms and reduce heating and cooling costs by keeping structures warm in winter and cool in summer.

R.C. Willey opens largest store in Draper (Furniture Today)

Even before today’s grand opening, R.C. Willey’s new and largest store here got off to a quick start. The Salt Lake City-based Top 100 retailer, part of Berkshire Hathaway’s furniture division, soft-opened the 160,000-square-foot store a couple of weeks early “to make sure we get all the bugs worked out,” said President Jeff Child, and it immediately exceeded expectations. Sales over the first four days of the soft opening approached $1.5 million, he said, adding that R.C. Willey is hoping the store will do $65 million to $70 million in annual sales. That would be more than double the volume of its nearby Taylorsville location, which closed with the Draper opening.

Future Metals Opens Dayton, Ohio Service Center (BusinessWire / Yahoo) Thanks to writing these news posts for over two years, I can now spot a Berkshire Hathaway subsidiary from 500 yards away. But even I can't begin to keep track of every sub-subsidiary that Marmon owns. This one is new to me.

Future Metals, a worldwide specialty metals distributor to the aerospace manufacturing and maintenance industry, recently opened its ninth metals service center. [...] The new Dayton facility, which officially opened its doors in January 2014, provides aerospace manufacturing and aftermarket customers in the Midwestern United States with localized inventory and just-in-time deliveries. Products being carried include stainless, nickel, titanium and aluminum tubing as well as extrusions, sheet and bar products. [...] Future Metals and its affiliate companies, including Marmon/Keystone LLC, are Marmon Distribution Services/Berkshire Hathaway companies and members of The Marmon Group [...]

Berkshire News Briefs - 2/28/14

Berkshire Seen Reporting Record Profit as U.S. Rebounds (Bloomberg) http://www.bloomberg.com/news/2014-02-27/berkshire-seen-repo...

If you're reading this after Saturday, note that this was a pre-earnings prediction...

Berkshire Hathaway Inc. will probably post record full-year profit showing how Chairman Warren Buffett’s five decades of acquisitions positioned his company to benefit from a rebounding U.S. economy. Net income was at least $18 billion in 2013, according to analysts at Nomura Holdings Inc. and Keefe Bruyette & Woods. That compares with $14.8 billion in 2012, the previous record. Omaha, Nebraska-based Berkshire said it will release its annual report March 1 at about 8 a.m. New York time.

Warren Buffett Just Bought Another Million Shares of This Company (Fool)

Twelve months ago, Berkshire held zero shares of Exxonmobil. Phillips 66 and ConocoPhillips -- at about $1.4 billion each -- were Berkshire's largest energy holdings. After last year's spending spree, ExxonMobil now stands as Berkshires sixth-largest stock position, in a statistical tie with long-held Procter and Gamble as 4% of Berkshire's stock portfolio. During the same period, Buffett largely sold out of ConocoPhillips, with Berkshire now holding 11 million shares versus more than 80 million held in 2008. Most of the remaining stake in Phillips 66 -- largely received when the company was spun out of ConocoPhillips in 2012 -- will also disappear from Berkshire's portfolio this year, when they're traded back to Phillips 66 in exchange for the company's flow enhancer business.

BNSF to move into tank car ownership with safer oil fleet (Reuters)

BNSF Railway Co plans to move into tank car ownership and buy its own fleet of up to 5,000 new crude oil tank cars with safety features that exceed the latest industry standards, the unit of investor Warren Buffett's Berkshire Hathaway Inc. said on Thursday. The unusual step by one of the largest U.S. railroads aims to reduce the risks of moving crude by rail after several recent accidents, including one involving a BNSF train in North Dakota in December.

Berkshire Investors Lacking Data Take Buffett on Faith (Bloomberg)

For years, chemical maker Lubrizol filed annual reports with securities regulators that ran 80 pages or more, detailing everything from its inventory to pension obligations. Today, investors would have to do math to figure out the company’s earnings in public filings. The difference is that Warren Buffett’s Berkshire Hathaway Inc. bought Lubrizol in 2011 for about $9 billion and now lumps together the results with those of several other manufacturing businesses. [...] The disclosure is “sufficient for his shareholder base at the moment,” said Jeff Matthews, a Berkshire investor and author of books about the company. “Once he’s gone, people are going to say, ‘What’s here? What do I really own?’”

Business Wire Halts Direct Feeds to High-Speed Traders (Bloomberg)

Business Wire, the distributor of press releases owned by Warren Buffett’s Berkshire Hathaway Inc., will stop letting high-speed trading firms purchase direct access to its service. After consulting with Buffett, a billionaire known for holding onto investments for decades, Business Wire decided to avoid the reputational hit from an association with high-frequency traders, who often enter and exit positions in less than a second.

Buffett Toy Bet Expands to Dentists With SmileMakers Deal (Bloomberg)

Warren Buffett’s Berkshire Hathaway Inc. agreed to buy SmileMakers from Staples Inc., adding a provider of toys to dentists, doctors and teachers. SmileMakers will be acquired by Omaha, Nebraska-based Berkshire’s Oriental Trading Co. unit, which sells party and craft supplies, the business said today in a statement. [...] Taylor said Spartanburg, South Carolina-based SmileMakers will offer products from Oriental Trading. The target firm is credited with creating the “treasure box” concept to reward children for enduring dental procedures, according to the statement, which didn’t disclose terms. Oriental Trading said the deal is expected to be completed by the middle of April.

Oriental Trading's offer for SmileMakers wins out in the end (Omaha World-Herald)

Same story, interesting take (as always) from the Omaha World-Herald...

When Staples Inc. put SmileMakers up for sale last October, Oriental Trading CEO Sam Taylor told The World-Herald, he put together a presentation, including a price range, for Oriental Trading Chairwoman Tracy Britt Cool to discuss with Buffett, CEO of Berkshire, Oriental Trading’s parent company. Buffett quickly OK’d a price toward the low end of the range, and Taylor made the offer, which has not been disclosed. The investment banker who was brokering the deal soon called to say that several private equity funds had bid significantly higher. Taylor’s group was out of the deal even before he got to meet SmileMakers’ managers. [...] But a few days after Thanksgiving, the banker called again. Seems some of the private equity investors had dropped out and the others had lowered their bids to Berkshire’s level or below. Was Oriental Trading still interested? “Absolutely,” Taylor told him, at the original Buffett-approved price.

Shaw departing area rug business (Home Accents Today)

Shaw Industries is exiting the area rug business, the company announced in early January. In conjunction with the announcement, the Dalton, Ga.-based company, which is wholly owned by Berkshire Hathaway Inc., revealed plans to convert its Ringgold, Ga., rug facility into a state-of-the-art luxury vinyl tile manufacturing facility. "The economics of the rug business today simply do not allow for future growth or encourage further investment," said Vance Bell, chairman and CEO in a statement. [...] Shaw plans to invest more than $100 million in its new luxury vinyl tile manufacturing facility and when complete, the investment is expected to generate 200 new jobs in the Ringgold area. This investment follows $250 million in other recent expansion announcements by Shaw in carpet tile, hardwood flooring, yarn extrusion, and distribution.

Heinz to close two plants (Just Food)

Heinz has announced plans to close two plants in Europe as the US food giant continues to restructure its business after last year's sale to 3G Capital and Berkshire Hathaway. The ketchup manufacturer has set out proposals to shut a factory in Turnhout in Belgium and a site in Seesen in Germany. [...] The company, which said the closures would lead to the loss of around 350 jobs, would "consolidate manufacturing and eliminate excess capacity".

Pampered Chef restructures, lays off workers (Daily Herald)

Addison [Illinois]-based The Pampered Chef, which sells kitchenware, said Monday it has laid off workers and restructured its office and distribution center. A spokeswoman at the company, owned by Warren Buffett’s Berkshire Hathaway Inc., did not provide layoff numbers or when the restructuring occurred. [...] It is one of the largest branded kitchenware companies and direct sellers of housewares nationwide, according to Omaha, Neb.-based Berkshire Hathaway, which acquired the company in 2002.

BofA Reaches Deal With Buffett on Preferred Stake (Bloomberg)

Bank of America Corp., the lender that turned to Warren Buffett in 2011 for a capital injection, reached a deal with the billionaire’s company to change terms so the investment is treated more favorably by regulators. The amendment would allow the bank to count preferred shares with a $2.9 billion carrying value as Tier 1 capital [...] The amendment would force Bank of America to wait at least five years from its approval to redeem the preferred stock. Under the 2011 deal, the bank was able to redeem the preferred stake at any time as long as it paid a 5 percent premium. Berkshire gets 6 percent annual interest on the securities. Under the revised deal, Buffett agreed to give up a dividend provision that gave him the right to recover missed payments.

RSA’s Hester Taps Buffett, Unveils Share Sale to Rebuild (Bloomberg)

After less than a month on the job, RSA Insurance Group Plc Chief Executive Officer Stephen Hester announced a stock sale and tapped Warren Buffett for reinsurance to help strengthen the insurer after its scandal in Ireland. [...] RSA also bought a 550 million-pound reinsurance policy from Buffett’s Berkshire Hathaway Inc. It’s now “very hard for them to downgrade us,” Hester said on a conference call today. [...] Buffett, 83, and his reinsurance chief Ajit Jain have assumed obligations from other insurers including CNA Financial Corp. and American International Group Inc. seeking to cut risk or narrow their focus. The contracts give Berkshire more funds to invest and make acquisitions.

Allstate Fights Back Against Geico With Esurance and Clever Marketing (The Street)

Allstate has seen customers come and go over the years to rivals like Geico, a unit of Berkshire Hathaway. Geico, known for its clever commercials, is now seeing competition for online customers from its competitor Allstate. [...] Geico has long been known for its catchphrase: "15 minutes could save you 15% or more on car insurance." This motto and an aggressive advertising campaign powered Geico to be one of the leaders in online care insurance. Berkshire Hathaway bought Geico in 1996 and has controlled it ever since. To compete in the same online market, Allstate decided to also go the acquisition route. In 2011, Allstate bought Esurance for $1 billion. The largest publicly traded U.S. home and auto insurer, Allstate is now using Esurance to take on Geico directly.

Berkshire News Briefs - 10/29/13

Ketchup changeup: McDonald's dropping Heinz after CEO change (Reuters)

McDonald's Corp on Friday said it plans to end its 40-year relationship with ketchup maker H.J. Heinz Co, since that company is now led by Bernardo Hees, the former chief executive of hamburger rival Burger King Worldwide Inc. "As a result of recent management changes at Heinz, we have decided to transition our business to other suppliers over time," McDonald's said in a statement.

Buffett's Berkshire cuts Tesco stake by $485 million (Chicago Tribune / Reuters)

I think the Tesco sale is related to Marmon's IMI purchase... Berkshire keeping UK money in the UK to avoid the tax issues of moving money to and from the US.

Billionaire Warren Buffett's Berkshire Hathaway Inc has slashed its stake in Britain's Tesco by 300 million pounds ($484.75 million), weeks after the world's No.3 retailer posted disappointing half-year results. [...] Berkshire, a Tesco shareholder since 2006, cut its holding to 3.98 percent from 4.98 percent on October 16, filings on the London Stock Exchange website showed. However it still remains one of its biggest investments outside the United States. Berkshire's Marmon Group had announced on the same day that it had agreed to buy two businesses from British engineering company IMI for 690 million pounds.

Buffett: Why I didn't buy the Washington Post (CNN / Fortune)

As the Graham family exits emotionally from the Washington Post newspaper, and new owner Jeff Bezos stays mum about his plans, some fresh details about who did not buy the paper have emerged. Participating in a Q&A last week at Washington's Metropolitan Club, Warren Buffett, 83, spoke of his long-term affection for the paper and said he had "briefly" considered buying it when it went on sale earlier this year. But he then decided the purchase wouldn't work.

MidAmerican Energy Holdings Company Earns No. 1 Spot in Industrial Customer Satisfaction Among U.S. Electric Utility Companies (Business Wire)

MidAmerican Energy Holdings Company ranks No. 1 in the U.S. for overall customer satisfaction among large commercial and industrial customers of electric utility holding companies, according to 2013 data released this week by TQS Research, Inc. The company’s ongoing emphasis on customer satisfaction and sharing of best practices resulted in all three of MidAmerican Energy Holdings Company’s U.S. utilities – MidAmerican Energy Company, Pacific Power and Rocky Mountain Power – contributing to the top ranking. MidAmerican Energy Company, based in Des Moines, Iowa, earned a very satisfied rating of 95.4 percent from the large commercial and industrial customers included in the survey.

Jain feeds Buffett’s hunger (Insurance Insider)

This story is really "inside baseball" about the insurance industry, and very heavy on the metaphor, which you can see from the intro.

People are starting to worry about him. The changes in diet. The idiosyncratic decisions. The silence. He isn't quite the man he used to be, isn't quite himself. Everyone is talking about it: speculating about his motives, glossing his actions, promulgating theories, kvetching about its implications. Which is to say that Ajit Jain, the softly spoken, smiling carnivore par excellence of the reinsurance world has of late taken up omnivorous habits. Where Jain was previously notorious for holding aloof until he scented blood, then attacking ferociously and making off with hefty chunks of red meat in his mouth, the last two years have seen him extend his diet in surprisingly catholic ways.

Willis to Allocate Risks to Insurers Including Berkshire (Bloomberg)

Willis Group Holdings Plc, the third-largest insurance broker by market value, agreed to allocate as much as 25 percent of premiums from the London corporate specialist market to pre-selected insurers. Underwriters in the group include Warren Buffett’s Berkshire Hathaway Inc., People’s Insurance Company (Group) of China Ltd. and Hiscox Ltd., said Colleen McCarthy, a spokeswoman for the London-based broker. [...] Aon Plc, the second-largest broker, announced a similar deal with Omaha, Nebraska-based Berkshire in March to shoulder risks from the Lloyd’s of London market. Berkshire agreed to provide Willis’s clients additional coverage for oil drilling following BP Plc’s 2010 spill in the Gulf of Mexico.

Johns Manville expands micro glass fibre nonwoven capacity in Germany (Innovation in Textiles)

I'm mostly including this link because I don't find opportunities to talk about Johns Manville very often.

Johns Manville, a Berkshire Hathaway company and a leading manufacturer of premium-quality building, specialty and filtration products, has completed an expansion of its micro glass fibre nonwoven production for air filtration media in its plant in Wertheim, Germany. The company’s micro glass fibre nonwovens are used as top-performance media in HVAC filtration applications and also as aircraft insulation. The company also recently announced an additional investment of EUR 32 million in a state-of-the-art PET spunbond line for filtration products at its production site in Berlin.

Also, the nationwide rebranding of "Prudential Real Estate" into "Berkshire Hathaway Real Estate" continues on, with Austin and Kansas City the major markets making the switch in the past week. I gave up on posting all the press releases from all the real estate brokerages and all the small-town newspaper business section stories, but this story is still in progress.

The Buffetts on Charity, Succession, and TV (Bloomberg Video)

Berkshire Hathaway chairman/CEO Warren Buffett, board member Howard G. Buffett and Howard W. Buffett, executive director at Howard G. Buffett Foundation, talk with Betty Liu about their book “40 Chances,” their philanthropic endeavors, succession at Berkshire Hathaway and Warren Buffett’s love of the TV show “Breaking Bad.” They speak on Bloomberg Television’s “In The Loop.”

Warren Buffett shows off his ukulele skills (Today)

"Now, here it is, your moment of zen..."

Warren Buffett — business mogul, investor, philanthropist ... ukulele player? The 83-year-old financial legend stopped by TODAY with son Howard G. Buffett and grandson Howard W. Buffett to discuss their new book "40 Chances" but also showed off his lesser known talents in the Orange Room: singing and playing the ukulele. As if the billionaire doesn't have enough going for him. He said he learned to play in college for an age-old reason. "I play off and on, but I just wanted to impress a girl I was keen on," Buffett said. "It didn't work."