Berkshire News Briefs - 9/20/14

Vilsack meets with Buffett on rail service issues (Des Moines Register)

Agriculture Secretary Tom Vilsack said Tuesday he met with Warren Buffett last week to press the billionaire investor to make sure his railroad, BNSF Railway, was ready for the expected record corn and soybean harvest this fall. The 45-minute meeting Friday comes as BNSF and Canadian Pacific Railway work to reduce a backlog of grain car deliveries that started last winter and spring. The delays were largely the result of a robust 2013 harvest, higher coal and oil volumes, and the extraordinarily long, cold winter that reduced the size and speed of trains that operated. [...] The White House, lawmakers and the Surface Transportation Board, which oversees the railroads, have said BNSF has taken meaningful strides to reduce its car backlog, while CP has been criticized for moving with less urgency and not being as transparent.

Berkshire Hathaway Specialty Insurance plans to offer life sciences coverage (Boston Globe)

Berkshire Hathaway Specialty Insurance, a Boston-based unit of Berkshire Hathaway Inc., said Thursday that it is expanding its underwriting capabilities to address the risks of the life sciences industry. In a press release, Berkshire Hathaway Specialty Insurance, or BHSI, said that it is “targeting a range of life sciences product liability risks, including medical devices, nutraceuticals, generic pharmaceuticals, compounding pharmacies, and clinical trials.

Berkshire newspaper group buys remaining interest in N.J. publisher (Omaha World Herald)

BH Media Group, a division of Berkshire Hathaway Inc. of Omaha, has announced that it will acquire the remaining 50 percent interest of New Jersey publisher Catamaran Media Co. LLC. Catamaran publishes 12 weekly newspapers in Atlantic and Cape May Counties with a total weekly distribution of more than 93,000. With the purchase of the Press of Atlantic City in August 2013, BH Media Group acquired an initial half-interest in the chain.

Doubling Down on Pot: Buffett Sells Upper Deck, Room to Grow (Bloomberg)

Cubic Designs Inc., a unit of Berkshire’s MiTek business that makes platforms for maximizing usable floor space in warehouses, sent about 1,000 fliers to weed dispensaries in recent weeks, offering to help growers expand the number of plants they cultivate. [...] Cubic Designs spotted the opportunity after a few pot growers approached the firm about its platforms, or mezzanine systems, according to Shannon Salchert, the company’s marketing coordinator. Warehouse space has gotten tight in places like Denver, where growers are looking for facilities to cultivate their product. That demand has allowed landlords to raise prices. “We sold a few mezzanines into that market and decided internally, ‘Why don’t we do some marketing?’” Salchert said today in a phone interview.

Berkshire Hathaway Inc. Chairman Buffett Sees Small Business Saving Detroit (Insider Monkey)

Berkshire Hathaway Inc. Chairman Warren Buffett believes Detroit is on the road to recovery, and that small businesses will be the driving force paving the way. [...] Berkshire Hathaway Inc. has some direct involvement and vested interest in the bankruptcy proceedings, as Buffett’s bond insurance firm Berkshire Hathaway Assurance Corp. insured more than $380 million of Detroit’s secured sewer debt.

Buffett’s Salty Steak Draws Warning From Wells Fargo CEO (Bloomberg)

Wells Fargo & Co. Chief Executive Officer John Stumpf, telling the story of his first meal with Warren Buffett in Omaha, Nebraska, said the billionaire investor’s eating habits came as a shock. Stumpf, responding to a question about Buffett at the National Press Club in Washington today, said the world’s third-richest person dined on a T-bone steak cooked medium rare, a side of chicken parmigiana, mashed potatoes and a Cherry Coke. Buffett, 84, runs Berkshire Hathaway Inc., the largest shareholder in San Francisco-based Wells Fargo.

Warren Buffett: 'I'm Having More Fun At 84 Than I've Ever Had' (Business Insider)

In an interview on Bloomberg TV, Warren Buffett made clear he doesn't really want to leave his post at Berkshire Hathaway. Bloomberg's Erik Schatzker asked Buffett about his future at Berkshire Hathaway, and Buffett — who turned 84 on Aug. 30 — said, "I'm having more fun at my job at 84 than I've ever had."

Berkshire News Briefs - 9/25/13

Berkshire Hathaway Enters Detroit Bankruptcy Case (Bond Buyer)

Warren Buffett's bond insurance firm made its first appearance in the Detroit bankruptcy case with a brief court paper filed Saturday. [...] Attorneys for Buffet's Berkshire Hathaway Assurance Corp. on Saturday filed a court notice of appearance and request for service. [...] BHAC has about $400 million in exposure to Detroit's debt, mostly in sewer revenue bonds. All the BHAC insurance is a wrap on top of an original guarantee from Financial Guaranty Insurance Co. In addition to $384 million of sewer debt, the insurer also wraps a piece of the city's defaulted pension certificates, though the amount is uncertain.

Colorado Properties joins Berkshire Hathaway HomeServices (Vail Daily)

Berkshire Hathaway HomeServices, the new real estate brokerage network operated by HSF Affiliates LLC, announced on Monday that Colorado Properties is the network’s first resort-brokerage signee. Colorado Properties will begin operating as Berkshire Hathaway HomeServices Colorado Properties in October. [...] Colorado Properties, a full-service brokerage founded in 1971, operates six offices with 85 sales professionals and one of the area’s largest vacation rental companies. The company ranks among Prudential Real Estate’s Top 50 companies nationwide and is a top firm in the Vail Valley.

Prudential California Realty Becomes Berkshire Hathaway HomeServices California Properties (San Diego Business Journal)

Prudential California Realty became the first company to operate as a member of the new Berkshire Hathaway HomeServices network, and was renamed Berkshire Hathaway HomeServices California Properties, the company said. [...] Berkshire Hathaway HomeSevices California Properties has about 3,200 sales associates in 62 offices in Southern California and the Central Coast. It is one of the top five brokerages in the nation, the company said. Last year its agents closed nearly $11 billion in sales and more than 14,000 transactions.

Air Force Contracts Worth $97 Million Awarded Monday (Fool)

$19.9 million: going to Berkshire Hathaway subsidiary FlightSafety Services Corp to exercise a seventh option year on a contract to support Aircrew Training Systems for the McDonnell Douglas KC-10 aerial refueling tanker. FlightSafety will be both supplying and supporting all KC-10 training devices used in the Air Force's Operation and Training System Support Center through Sept. 30, 2014.

Rail Traffic Reaches Record Level (Seeking Alpha)

Total N. American rail traffic last week leaped to the highest levels in the 5 years I began tracking the series here. At 733k carloads it passed the previous highs despite both oil/chemical shipments and coal shipments falling slightly. Strength was seen in intermodal, auto, metals and stone products. The metal and stone product categories sit at or just below multi year record levels. [...] As for the carriers, Burlington Northern [merged with Berkshire Hathaway and Canadian National Railway Company saw their traffic also reach the highest level since I began tracking the series.

Buffett’s 9% Heinz Dividend Means 3G Cutting Jobs, Mini-Fridges (Bloomberg)

Since taking over at the Pittsburgh-based ketchup maker, Hees eliminated hundreds of jobs, grounded corporate jets and pulled the plug on mini-fridges at the office. Savings will help pay down $12.6 billion in borrowing supporting the deal. [...] The management turnover contrasts with Berkshire’s normal approach. When Buffett buys a company, he typically leaves senior employees in place and commits to holding the business forever. The practice makes Berkshire a buyer of choice for many sellers, he’s said.

Warren Buffett Offering Options For MN’s Famous Dairy Queen Manager (WCCO 4 Minnesota)

Joey Prusak saw a woman steal $20 from a blind customer at the Dairy Queen where he works. So he gave the guy his own cash. [...] “Warren Buffet called me this morning and we talked for about 10 minutes,” Prusak said. One of the world’s richest people was calling over a $20 bill. “I go, ‘What I would like to know is why you’re calling here?’ He goes ‘I just wanted to call and thank you for all that you did. It means a lot to me,’” Prusak said. Buffet’s company owns Dairy Queen, and Buffett said he’s planning future talks with Prusak.

Berkshire News Briefs - 7/21/13

The Press of Atlantic City to be purchased by Warren Buffett's BH Media Group (Press of Atlantic City)

The Press of Atlantic City will be sold to Warren Buffett’s BH Media Group by ABARTA, a private holding company based in Pittsburgh, Pa., interim Publisher James W. Hopson announced Thursday. [...] The Press of Atlantic City is a 67,000 daily and 77,000 Sunday circulation newspaper that serves Atlantic, Cape May, Cumberland and Ocean counties. The newspaper’s Web site, pressofAtlanticCity.com , reaches 700,000 unique visitors each month. The Bitzer/Taylor family, owners of ABARTA, has owned The Press since 1951.

The Not-So-Dirty Secret Behind Warren Buffett's Recent Buy (Fool)

Back in late May, MidAmerican Energy, a subsidiary of Warren Buffet's Berkshire Hathaway, made a $5.59 billion offer to buy NV Energy. On the surface, this seems like the prototypical Warren Buffett kind of acquisition. If you dig deeper, though, there is one lesser known area that could make this purchase an even bigger win. [...] The biggest upside for the NV Energy lies not in its current customers or its generation capacity, but in the other market that it could serve: California.

Buffett’s Tulsa World Is Latest Berkshire Newspaper to Cut Staff (Bloomberg)

Warren Buffett’s Berkshire Hathaway Inc., acquirer of more than 25 daily newspapers in the last two years, is eliminating about 50 jobs at the Tulsa World in Oklahoma after making cuts at other publications. A dozen positions in the administrative, information technology and production departments were cut immediately, according to a report posted today on the newspaper’s website. The World announced other changes including the creation of distribution centers where carriers will pick up newspapers, eliminating transportation costs for the company.

Berkshire Hathaway HomeServices brand announces first 9 affiliates (Inman News)

Berkshire Hathaway HomeServices, the new HomeServices of America franchise brand, has announced the first nine Prudential Real Estate affiliates that will transition to the brand this fall. The nine firms joining Berkshire Hathaway HomeServices this fall represent about 20 percent of the roughly 50,000 agents currently affiliated with the Prudential brand. Under the terms of a 2011 sale of the Prudential Real Estate brand to Brookfield Asset Management, the brand is slated to fade away when the last rights expire to it in the late 2020s.

Berkshire Hathaway to End India Insurance-Distribution Deal (WSJ)

Two years after Berkshire Hathaway Inc. launched an online insurance-distribution business in India, it is stopping sales of the only products it had been dealing with in the country. [...] Berkshire had launched its India insurance venture, Berkshireinsurance.com, in March 2011, with a big splash by timing it with Chairman Warren Buffett's first visit to India. Berkshire didn't underwrite insurance, but sold mostly vehicle- and travel-insurance policies of Bajaj Allianz, via the website.

What's Behind Berkshire Hathaway Inc's Big DaVita Buy? (Minyanville)

Berkshire has been building a position in DaVita since the fourth quarter of 2011. The stage was set for Berkshire's latest big purchase, however, on July 1, when the Centers for Medicare & Medicaid Services (CMS) unexpectedly announced a proposed rule to cut payments to large dialysis companies by as much as 12% starting in 2014. If approved, the move could close the doors of some smaller dialysis facilities. After the announcement, many DaVita shareholders headed for the exit. By July 2, its share price had dropped by 6% from the day earlier, and by about 13% from the yearly high reached in May. That day, Berkshire portfolio manager Ted Weschler, known for finding value in distressed companies, moved to buy another 639,400 shares of DaVita, boosting its stake to 14.8%, for a total transaction value of $73.37 million.

Warren Buffett sees 'betrayal' as hospital drains big endowment (CNBC)

Donald and Mildred Othmer made a lot of money investing with Warren Buffett. When they died, they wanted their Buffett profits to be given back to the community. They probably never imagined what would happen next. In what it calls a "cautionary tale for wealthy investors who hope their gifts will make a long-term impact," The Wall Street Journal reports on the destruction of a $135 million hospital endowment created less than 20 years ago by the Othmers. Buffett tells the Journal that if the donors were alive, "I would think...they would feel betrayed."

Special Section: Berkshire's Exposure to Detroit Bankruptcy

Buffett Insurer Wrap Firms Up Detroit Debt (Bond Buyer)

In the sea of junk-rated Detroit debt trading for 30 to 40 cents on the dollar, a small piece of the city’s defaulted pension certificates continue to see retail bids of nearly 90 cents on the dollar. The higher valued debt features an insurance pledge from Berkshire Hathaway Assurance Corp., the government bond insurer controlled by financier Warren Buffett. [...] Though Buffett has repeatedly expressed caution about insuring tax-exempt bonds, BHAC has about $400 million in exposure to Detroit’s tainted debt, most of which is sewer bonds. All the BHAC insurance is a wrap on top of an original guarantee from Financial Guaranty Insurance Co. BHAC’s secondary insurance gives additional comfort to investors and means BHAC would only have to pay if the issuer defaults and then the original insurer can’t meet the obligation — a scenario not too far off for Detroit creditors.

Detroit's bust could ripple back to Berkshire (Omaha World-Herald)

Detroit has filed for bankruptcy to reduce its debts, and Berkshire Hathaway Inc. of Omaha insures about $700 million worth of Detroit's sewer and water bonds. It's unclear whether the bankruptcy case would let Detroit default on the bonds or pay only part of what it owes, which could prompt the bond holders to file insurance claims against Berkshire. [...] The bonds insured by Berkshire are being repaid from sewer and water fees, not city taxes pledged to Detroit's “general obligation” bonds. Detroit is seeking to pay only a portion of its general obligation bond debt, along with other debts the city owes. Revenue bonds, such as the sewer and water bonds insured by Berkshire, generally are repaid as long as the revenue continues, and sewer and water fees generally are regarded as a steady source of money. That difference might be enough to prevent a claim against Berkshire.

Special bonds have better chance of being paid (Crain's Detroit Business)

While Detroit's bondholders will be hat-in-hand fighting for owed debt, holders of the city's special revenue bonds have a better prospect of payment through the Chapter 9 process. Detroit's special revenue bonds, including the $5.9 billion bond debt of the Detroit Water and Sewerage Department, are protected under Section 922 D of the U.S. Bankruptcy Code. Payments on a special revenue bond are guaranteed solely from revenue generated from an entity -- such as the water department -- rather than from taxes, as is the case with other bonds. [...] But legal arguments will be raised and those payments will be attacked by other bondholders, said Timothy Wittebort, a partner at Howard & Howard Attorneys PLC in Royal Oak. Wittebort said Detroit's pensioners will argue that the Michigan Constitution protects their pensions and go after the revenue-generating assets.