Berkshire Hathaway News Briefs - 8/8/17

Berkshire Hathaway: Insurance Losses Drag Down Second-Quarter Operating Earnings

Berkshire Hathaway reported that operating earnings, a figure which excludes volatile investment gains and derivative fluctuations, declined 11% to $4.1 billion in the second quarter compared to the year-ago period. Net income, which includes investment gains, fell 15% to $4.3 billion. A drop in insurance underwriting profit led the decline in operating earnings and net income.

Berkshire Posts Mixed Results as Expenses Rise

Wide-moat-rated Berkshire Hathaway released second-quarter results that were more mixed than we had expected, with the company reporting solid top-line but weaker bottom-line results. We do not expect to change our $290,000 ($193) per Class A (B) share fair value estimate.

Second-quarter (first-half) revenue increased 6.0% (15.3%) to $57.5 ($122.7) billion. Excluding the impact of investment and derivative gains (losses), second-quarter (and first-half) revenue increased 7.3% (and 16.5%). With expenses increasing at a higher rate than revenue during the second quarter, operating earnings declined 10.6% during the period, leaving first-half operating earnings down 8.0%. Net earnings, which includes the impact of investment and derivative gains (losses) were down 14.8% and 21.4% during the second quarter and first half of the year, respectively.

That said, we remain impressed with Berkshire's ability to increase its book value per Class A equivalent share--which rose 14.3% year over year to $182,816 (better than our own estimate of $182,525)--aided primarily by the strong performance of its equity investment portfolio during 2017. The company closed out the second quarter with $99.7 billion in cash on its books, up from $96.5 billion at the end of March and $86.4 billion at the end of 2016.

Berkshire Hathaway Energy Earnings Up on Solar Rebound

Berkshire Hathaway Energy reported a $38 million increase in earnings for the second quarter over a year earlier, largely because of improved performance of BHE Renewables.

The renewable unit saw net income increase $39 million due primarily to higher generation at the Solar Star projects, which were hobbled by transformer-related forced outages in 2016. It also benefited from earnings from tax equity investments reaching commercial operation and additional wind and solar capacity placed in service. [...]

Warren Buffett's Old Retail Businesses Are Oddly Doing Well as Amazon Runs Over Everyone

While bricks-and-mortar retail is largely a disaster, billionaire investor Warren Buffett seems to have struck gold again—in Berkshire Hathaway Inc.'s retail businesses. [...]

Berkshire, too, reported, within its retail segment, that revenue from its home-furnishing retailers [such as Star Furniture and Jordan's Furniture], online kitchen and cooking supplies seller Pampered Chef and candy maker See's Candies, rose in the second quarter. [...]

Berkshire's retailers are set up primarily as standalone stores or are online, and are not tied to malls, which makes the business less exposed to the downturn in the industry. [...]

With e-commerce hurting malls, See’s Candies seeks way forward

[...] Nearly half of See's 240 stores are located in malls, a format suffering from dwindling traffic and the financial stress of anchor tenants like department stores. [...]

The company does not release financial results, but CEO Brad Kinstler tells me See's annual sales typically grow in the mid-single digits. IBISWorld research firm estimates that See's generated about $485.3 million in revenue last year, representing 5 percent annualized growth rate over the past 5 years.

The synergies between making and selling chocolate, combined with low cocoa prices, affords See's with robust profit margins, IBISWorld says. The firm estimates that See's controls about 31.4 percent of the specialty chocolate retail market, far ahead of Godiva (18.4 percent) and Lindt & Sprungli (10 percent). [...]

Kinstler insists that See's draws its own traffic, independent of the mall anchors. But he does acknowledge that the struggles of malls pose potential problems for his company.

"It’s a tough time to operate a business inside a mall," Kinstler said. "It will take a while before we know what indoor malls look like in the future." [...]

Berkshire Hathaway sets up specialist insurer in Dublin

Berkshire Hathaway has established a speciality insurance business in Ireland aimed at winning a share of the commercial insurance market here . The company will target larger business clients in sectors such as commercial property, general commercial liability, healthcare liability and finance. [...]

BHSI [Berkshire Hathaway Specialty Insurance] is part of the global empire of Berkshire Hathaway, the giant US company led by Warren Buffett, which has stakes in major businesses worldwide. The move to Ireland is an expansion of its existing European speciality insurance business, run from London, which provides commercial property, casualty, executive and professional lines, including cyber and healthcare liability insurance. [...]

Paxton shoots down loophole for Buffett’s Texas dealerships

Texas Attorney General Ken Paxton is declining to come to the rescue of Warren Buffett’s automobile dealerships in the state.

In an opinion issued late Monday afternoon, Paxton essentially said that legal semantics are unlikely to be successful in helping Buffett’s Berkshire Hathaway conglomerate maneuver around a Texas law that appears to prohibit it from owning dealerships in Texas because it also owns an Indiana-based manufacturer of recreational vehicles. [...]

Buffett's Profit From This Paint Company Has Been Almost Wiped Out

Warren Buffett’s profits from a 2015 investment in Axalta Coating Systems Ltd. have been fading.

Axalta, the maker of paint for autos, plunged 7.9 percent Thursday in New York to $29.25. That compares with the $28 price that Buffett’s Berkshire Hathaway Inc. agreed to pay two years ago for 20 million shares, for a total of $560 million. His Omaha, Nebraska-based company acquired the stock from affiliates of Carlyle Group LP. [...]

Berkshire was the largest investor in the coatings company as of Dec. 31, with a stake of more than 9 percent, according to a filing from Philadelphia-based Axalta. [...]

Berkshire Hathaway Inc. Stock Is Increasingly Less About Buffett

Berkshire Hathaway was so big, and commanded so much capital, that many of his ideal picks might only end up as a rounding error on the book value of the stock. So he changed course. He hired two “young guns,” as he called them, and turned over two small portions of Berkshire Hathaway’s capital to manage.

Todd Combs and Ted Weschler continue to out-gun their boss, not by being particularly better, but rather by doing what Buffett used to do when Berkshire Hathaway was new and small. They bought stocks that were classic Buffett. And since their funds were relatively small — at a billion dollars or so — they could at least make an impact on their portion of Berkshire’s stock value. [...]

But now, Buffett as well as Combs and Weschler are changing course. The new course will be to de-emphasize stock selection and in turn run the company as a collection of its operating businesses. This will effectively make Berkshire Hathaway more of a traditional big conglomerate company rather than a stock-picking investment company. [...]

Berkshire News Briefs - 6/27/17

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

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

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

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

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

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

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

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

Texas examines Berkshire Hathaway ownership of RV maker, dealers

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

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

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

Berkshire Hathaway units settle comp dispute with California

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

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

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

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

Berkshire Hathaway in 3 Charts

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

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

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

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

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

The Cost of Lunch With Warren Buffett: $2.68 Million

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

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

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

Berkshire News Briefs - 6/5/17

Why Warren Buffett Took Out an Ad on the Same Page as One for a Strip Club

The billionaire took out a fine-print ad in the New York Daily News to say he’s seeking permission from the Federal Reserve to hold as much as 25 percent of the credit-card issuer’s shares. The notice appeared alongside listings for a Brooklyn co-op, a $2,500 Honda Accord and a liquor license application, plus a quarter-page ad for a strip joint.

Of course, Buffett was just obeying the law. Federal regulations require that shareholders seeking to boost their stakes in banks above certain thresholds publish announcements in “a newspaper of general circulation” in the community where the financial institution is based. (AmEx has its headquarters in lower Manhattan.) Still, in an era when so much information flows to investors through online feeds, the back pages of a metro can feel like a place to bury rather than reveal news. [...]

Berkshire Hathaway buys stake in Lanxess

Warren Buffett (Trades, Portfolio)’s Berkshire Hathaway disclosed a stake in Germany’s Lanxess AG on May 19, worth roughly $179.85 million on the date of filing, a small fraction of his $96.5 billion cash hoard. [...]

Lanxess’ chemicals are used in an array of everyday and industrial products, such as biodiesel, spare wheels, paint pigments, leather manufacturing, white sugar, red wines and tires. Through a partnership with Saudi Arabian oil company Saudi Aramco, it also produces synthetic rubber.

The company has a 6.2 billion euro market cap, with revenue exceeding $7.6 billion in 2016, though revenue had been in decline for four straight years. On April 21, Lanxess completed the acquisition of U.S. company Chemtura, which produced 1.5 billion euro in annual sales, to stabilize the company, increase profitability and expand its footprint in the growth market of North America. [...]

Warren Buffet’s GenRe reinsurer gets India approval

General Re, which is a part of business guru Warren Buffett’s Berkshire Hathaway family of companies, has been given the final approval, called R3 from the Insurance Regulatory and Development Authority of India.

In a report, ieBusiness said that this is Berkshire’s second attempt to capture the Indian market. Berkshire’s initial venture was an online distribution that closed a couple of years after it launched in 2013.

Gen Re is different in that it will "deliver underwriting and risk management expertise locally rather than cross-border. It will facilitate an optimal business model," according to the report.

Gen Re’s area of interest is primarily on the life and health sector. It plans to expand in this segment but will also be looking to grow its presence in the property/ casualty reinsurance market in India which is a huge business opportunity. [...]

Meet Warren Buffett's 2 Trusted Stock Pickers

For much of the time Buffett has been at the helm of Berkshire Hathaway, he has managed the company's stock portfolio all by himself. However, that has changed in recent years with the hiring of two investment managers, Todd Combs and Ted Weschler, who were hired in 2010 and 2011, respectively.

Both men are hedge fund veterans with impressive track records. For example, Weschler's fund delivered 1,236% in gains in just 11 years before he closed it -- roughly 9 times the gain of Buffett's stock portfolio during the same time frame. [...]

Buffett’s Berkshire Hathaway could face fines over Texas dealership law

The billionaire’s holding company – Berkshire Hathaway Inc. – could be liable for civil fines in the range of $350,000 a day if an ongoing investigation by the Texas Department of Motor Vehicles determines it to be in violation of Texas law prohibiting the owner of an automobile manufacturer from also owning automobile dealerships in the state.

Berkshire Hathaway owns Berkshire Hathaway Automotive, which is based in Irving and operates 35 new-car dealerships in Texas, and it also owns Forest River Inc., an Indiana-based manufacturer of recreational vehicles. Owning both businesses potentially puts Berkshire Hathaway in violation of the Texas occupations code preventing ownership of a motor vehicle manufacturer and ownership of dealerships under a single corporate umbrella, even if the vehicles aren’t of the same type. [...]

Warren Buffett's cigar butt lesson: seeing value that others miss

While working in New York City, 20-something-year-old Buffett adopted Benjamin Graham’s practice of spotting companies that were slightly undervalued, such as having more in the bank account than they were worth on the stock market.

Anything with a bit of value that a smart investor could grab. In cigar terms, a mostly used butt ignored by others but with a few risk-free puffs left.

Looking beyond the unsavory image of smoking a used stogie (“The stub might be ugly and soggy,” Buffett once wrote), investors can embrace the idea of cigar butts as a lesson in recognizing value that others miss. Buffett used that ability to build up his personal investments in the 1950s before returning to Omaha and forming the partnerships that led to Berkshire. [...]

Two '90s Fan Favorites are Back at DQ

‘90s trends are in. Fashion, jewelry, shoes, toys and even hairstyles popular during that decade are part of a nostalgic revival taking place in 2017.

The Dairy Queen® system has now added treats to that list. The treat category leader, a Berkshire Hathaway company, is bringing back two popular fan favorites treats with Treatzza Pizza® on May 22 and Misty Slush® on June 26.

"There is an obvious resurgence in everything '90s and both Treatzza Pizza and Misty Slush were fan favorites from that era," said Barry Westrum, Executive Vice President of Marketing for American Dairy Queen Corporation (ADQ). "Those two treats were loved by fans from day one. They asked us to bring them back and we delivered." [...]

Warren Buffett lunch bidding quickly hits $1 million

An auction for well-heeled fans of Warren Buffett to eat lunch with the billionaire in support of a San Francisco charity that helps the homeless and impoverished got off to a fast start, with bidding quickly hitting seven figures.

The top bid was $1 million as of 1 p.m. EDT (1700 GMT) on Monday, and had been made within two minutes of the auction's Sunday night launch.

Bids often surge near the end of the eBay auction, which concludes on Friday at 10:30 p.m. EDT (230 GMT Saturday).

Buffett, the chairman of Berkshire Hathaway Inc, has raised $23.6 million in 17 years of auctions for Glide. [...]

Berkshire News Briefs - 5/17/17

Berkshire’s Earnings Hit Speed Bump on Insurance Businesses

Warren Buffett’s Berkshire Hathaway Inc. hit a speed bump in the first quarter as insurance units posted an underwriting loss, overshadowing gains at the company’s railroad and energy business. [...]

First-quarter operating profit slipped 4.8 percent to $3.56 billion, the company said Friday in a statement. [...]

Berkshire’s war chest totaled $96.5 billion at the end of the first quarter, a record. [...]

Book value, a measure of assets minus liabilities that’s closely tracked by investors, rose 3.5 percent in the first quarter to $178,073 per share. [...]

Berkshire Hathaway press release on 1Q17 Earnings

Berkshire Cuts 21st Century Fox Stake, Adjusts Airline Bets

Warren Buffett’s Berkshire Hathaway Inc. spent the first quarter fine-tuning its investments in airlines and technology companies, and retreating from 21st Century Fox Inc.

In a filing Monday detailing its stock portfolio at the end of the quarter, Berkshire no longer listed Fox. Holdings in American Airlines Group Inc. and Southwest Airlines Co. increased, while a stake in Delta Air Lines Inc. was reduced. Buffett previously disclosed that he boosted a bet on Apple Inc. in the first quarter as he pulled back from International Business Machines Corp. [...]

The new 13F filing is here. Berkshire Hathaway's updated stock holdings in an easy to read format from Dataroma is here.

5 Key Takeaways From Today's Berkshire Hathaway Meeting

So, what would prompt Berkshire to start putting its cash to work? Essentially, Buffett said that Berkshire wants to acquire businesses that will have a competitive advantage over the next five to 10 years, whose management teams are strong, and that are offered at a fair price. [...]

Buffett also said that if there's a persistent shortage of attractive investment opportunities, Berkshire may eventually choose to increase its buyback criteria of 120% of book value or less, but he is still optimistic about finding ways to deploy Berkshire's capital. [...]

Here's the best wit and wisdom from Warren Buffett at this year's Berkshire Hathaway annual meeting

Buffett and long-time business partner Charlie Munger spoke for hours at the Berkshire Hathaway annual meeting Saturday in Omaha.

The pair frequently elicited laughter from the crowd of 40,000 by answering questions from shareholders and journalists with their usual folksy sense of humor and wisdom. [...]

A Comparison of Berkshire Hathaway Class A and Class B Shares

[...] From these tables, institutions and mutual fund holders own only 27% of the A shares, but 64% of the B shares. That can be explained by insiders and 5% owners holding 41% of the A shares and less than 1% of the B shares. According to Berkshire’s Notice of Annual Meeting of Shareholders May 6, 2017, Warren Buffett beneficially owned 38.3% of the A shares as of March 8, 2017. The insiders primarily accumulated their shares in the 1960’s and 1970’s when Berkshire traded at less than $100 per share.

It should be noted, however, that these tables imply that individuals (other than insiders) hold about 31% of the A shares and 35% of the B shares. [...]

Clayton Homes unveils new tiny home series

Clayton, a Berkshire Hathaway company and a builder of manufactured, modular and site-built homes, introduced its new tiny homes collection Saturday at the Berkshire Hathaway’s Annual Shareholders Meeting in Omaha, Nebraska. [...]

The homes are just 464 square feet and offer 270 degrees of window views. They have vaulted ceilings to give the homes a larger feel, and the master bedroom fits a queen-size bed and a full-height closet. [...]

Even in Texas, sometimes the billionaires lose

A bill that would carve out a loophole for Buffett’s chain of auto-dealerships in Texas — put on the fast track last month right after the billionaire’s meetings with Gov. Greg Abbott and Lt. Gov. Dan Patrick — ran into a wall of opposition from prominent Tea Party activists. They burned up the phone lines at the Capitol and publicly criticized what they saw as special treatment for the wealthy and connected.

Not long after those activists spoke out against the carve-out legislation in an open letter to the billionaire, Patrick pulled the “Buffett Bill” off the Texas Senate agenda, effectively killing it for now [...]

John Oliver eviscerates one of Warren Buffett's favorite companies

One of Warren Buffett's favorite stocks has just been attacked by HBO comedian John Oliver.

DaVita operates dialysis centers, and Buffett's Berkshire Hathaway owns a nearly 20% stake in the company. It was the subject of a scathing 24-minute long segment on Sunday's "Last Week Tonight."

Oliver accuses DaVita of pushing patients to continue receiving long and expensive dialysis treatments instead of having kidney transplants, which could eliminate the need for dialysis.

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 - 6/18/16

Anonymous bidder pays $3.46 million for Warren Buffett lunch (Reuters)

Buffett has only revealed that the winning bidder was a woman this year.

An anonymous bidder agreed at auction to pay $3,456,789 to eat lunch with Warren Buffett, tying the record for the right to dine with one of the world's most admired investors.

Money will go to Glide, a San Francisco charity that provides food, health care and other services to people who are homeless, poor or struggling with substance abuse.

Warren Buffett’s Dicey Power Play (Bloomberg)

When Warren Buffett’s Berkshire Hathaway bought Nevada’s main utility, NV Energy, three years ago, it inherited a lucrative customer base: the neon-lit, air-conditioned casino-hotels on the Las Vegas Strip. Now they’re in the midst of a costly split. Lured by the prospect of cheaper, cleaner energy elsewhere, two of the Strip’s biggest power users, MGM Resorts International and Wynn Resorts, told regulators in May they’re willing to pay millions in fees to ditch NV Energy’s services. [...]

Berkshire Energy Units Barred From Selling Power at Market Rates (Bloomberg)

Units of Warren Buffett’s Berkshire Hathaway Inc., including PacifiCorp and NV Energy, were barred from selling power at market rates and must instead set prices based on the cost of running their plants.

More than a dozen Berkshire Hathaway power suppliers serving consumers in the West failed to prove they couldn’t exercise market power, according to an order from the U.S. Federal Energy Regulatory Commission late Thursday. The companies must revise rates from Jan. 9, 2015, to April 9 and provide refunds within 30 days of the order, according to the filing. [...]

Quicken founder and Warren Buffett have ties beyond Yahoo deal (Reuters)

The connection between Quicken Loans Inc founder Dan Gilbert and billionaire magnate Warren Buffett became evident last month with news that Buffett was backing Gilbert's surprise bid for Yahoo Inc.

But the two men have another business connection that hasn't been reported: an exclusive mortgage-purchasing agreement between Quicken and a subsidiary of Buffett's conglomerate Berkshire Hathaway Inc. [...]

Warren Buffett: I’m looking to invest more in women (Independent)

Warren Buffett, chairman and CEO of Berkshire Hathaway, told the audience at the first ever United State of Women summit in Washington DC that he currently invests in six companies with female CEOs and is "looking for more”.

He also has three women on the board of Berkshire Hathaway and wants to up that number too.

Billionaire Warren Buffett’s Berkshire Hathaway buys North Park Toyota (My San Antonio)

Billionaire Warren Buffett’s Berkshire Hathaway Automotive Inc. has purchased a controlling stake in North Park Toyota — the company’s first dealership in the San Antonio area.

Jeffrey Rachor, president and CEO of Berkshire’s automotive group, signed a 20-year lease for the dealership’s 23.7-acre property on April 4, with an option to buy.

Berkshire Hathaway Group’s Specialty Insurance Operation Opens German Office, Makes Executive Appointments in Northern Europe (Business Wire)

Berkshire Hathaway Specialty Insurance Company (BHSI) in coordination with its affiliate Berkshire Hathaway International Insurance Limited (BHIIL), today announced that it has established its office in Düsseldorf, Germany, and filled key executive roles in Northern Europe. [...]

Vestas scores massive order for Warren Buffett-backed wind farm (Denver Business Journal)

Vestas Wind Systems, with four manufacturing plants in Colorado, has reached a conditional agreement to supply up to 1,000 wind turbines to a massive wind farm in Iowa.

It's the largest order ever for a U.S. wind farm and believed to be one of the largest orders in the world, according to industry experts.

The buyer is MidAmerican Energy Co., a subsidiary of Berkshire Hathaway Energy [...] With the investment in Wind XI, MidAmerica expects wind farms will provide 85 percent of the energy it delivers to its Iowa customers.

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)

+++

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 - 4/3/15

Buffett: Tesla doesn't threaten me (CNBC)

Warren Buffett and Larry Van Tuyl appeared on CNBC this week, with lots to say about the auto business. Buffett went on to talk about a number of other topics (Kraft, the Euro, Iran, interest rates, etc.), far more than I could squeeze into this excerpt.

Warren Buffett's new auto dealership business isn't under any threat from Elon Musk or his Tesla distribution model, the billionaire said Tuesday. [...] Buffett said he did not anticipate much of a threat from the electric car company's direct-to-consumer model because of Tesla's relatively small market. [...] Buffett also dismissed the notion of an near-term takeover of self-driving cars, saying "I think it's a long way off and I don't think everybody will adopt it." The billionaire said that he would bet there is less than a 10 percent penetration rate for self-driving cars by 2030. He did admit, however, that "if it's a safer way of driving, it's good for society and it's bad for our insurance business." Buffett also revealed Tuesday that he has big plans for his newly acquired unit, and that it is already on the prowl for new deals. "I'd be very surprised if five years from now we aren't a whole lot bigger," he said.

Full transcript of the interview here.

Berkshire Hathaway Automotive targets growth, possibly abroad (Automotive News)

Another perspective on the news from a different source.

Its chairman, Larry Van Tuyl, and Berkshire Hathaway Inc. CEO Warren Buffett spoke today on CNBC’s “Power Lunch.” Van Tuyl said the company is interested in buying dealerships “in the U.S. primarily,” leaving open the option for some foreign investments. Van Tuyl went on to list what he is looking for in future acquisitions: “We look for throughput and volume, high-volume dealerships that are reasonably priced and owned by somebody who wants to put it in good hands.” The company wants to buy the real estate, too, where available, he added.

The mobile-home trap: How a Warren Buffett empire preys on the poor (Seattle Times)

But until informed recently by a reporter, they didn’t realize that the homebuilder (Golden West), the dealer (Oakwood Homes) and the lender (21st Mortgage) were all part of a single company: Clayton Homes, the nation’s biggest homebuilder, which is controlled by its second-richest man — Warren Buffett. Buffett’s mobile-home empire promises low-income Americans the dream of homeownership. But Clayton relies on predatory sales practices, exorbitant fees, and interest rates that can exceed 15 percent, trapping many buyers in loans they can’t afford and in homes that are almost impossible to sell or refinance, an investigation by The Seattle Times and Center for Public Integrity has found.

Berkshire Hathaway's media business buys two Virginia newspapers (Chicago Tribune)

Berkshire Hathaway Inc. has purchased two Virginia newspapers as the company run by billionaire Warren Buffett adds to its stable of publications. Berkshire's BH Media Group acquired a daily, the Martinsville Bulletin, and the tri-weekly Franklin News-Post from closely held Haskell Newspapers, according to a statement issued Tuesday. The papers have a combined circulation of 17,350. Terms weren't disclosed.

BNSF Slows Oil Trains Up to 30% to Boost Safety After Accidents (Bloomberg)

BNSF Railway Co. is cutting the speed of oil-carrying trains in some urban areas to as slow as 35 miles per hour, a 30 percent reduction, to improve safety following crude-by-rail accidents this month. BNSF, owned by Warren Buffett’s Berkshire Hathaway Inc., implemented the slower train speeds and measures to inspect tracks and rail cars more closely on March 25, Mike Trevino, a spokesman, said on Monday. The reduction trims the speed from the 40 mph (64 kilometers per hour) in high-risk areas that railroads, including BNSF, last year voluntarily installed in 46 urban areas. In some cases, the cut is from 50 mph for cities with populations of at least 100,000, the Fort Worth, Texas-based rail company said.

POSCO shares drop following media reports on Warren Buffet's stake sale (Korea Herald)

POSCO shares fell sharply on Wednesday following media reports that Berkshire Hathaway Inc., led by U.S. billionaire investor Warren Buffet, has sold its entire stake in the steelmaking giant, raising speculation that the sell-off might have been prompted by concerns over the South Korean steelmaker's cloudy business outlook. [...] The drop comes after Maeil Business Newspaper and other local media reports showed that Berkshire Hathaway unloaded 4.5 percent, or nearly 4 million shares, of POSCO during the second quarter of last year, citing an analysis by a global financial information provider.

Kraft Deal Boosts Buffett (Barrons)

The merger deal announced last week between Kraft Foods Group and H.J. Heinz is a good deal for Kraft shareholders, who will get a nice premium, but it’s a far better one for 3G Capital and Berkshire Hathaway, which took Heinz private nearly two years ago in a leveraged buyout. [...] By our calculation, 3G and Berkshire have more than tripled their original $8.5 billion equity investment in Heinz in less than two years, which amounts to a private-equity type score on a deal that originally looked like it was fully priced. Heinz was taken private at about 20 times forward earnings. We estimate that Berkshire and 3G are each sitting on more than $10 billion in profits from their investments in Heinz.

Regulator accuses Iowa governor of appeasing MidAmerican (Lincoln Journal Star / AP)

An outgoing member of the Iowa Utilities Board bluntly told Gov. Terry Branstad in a letter that his decision to remove her is improper and is being done to placate a powerful energy subsidiary of Warren Buffett's Berkshire Hathaway. Sheila Tipton told the governor in the March 18 letter that his move to replace her and demote board chair Elizabeth Jacobs is an inappropriate attempt to influence future decisions to favor utilities and "appease MidAmerican Energy." The company had complained about a ruling requiring the company to use some proceeds from a $280 million wind energy investment to reduce customers' rates.

Warren Buffett sees no weakness in economy, but too many 'are left behind' (Omaha World Herald)

Investor Warren Buffett says the economy continues to grow steadily, but too many people continue to miss out on the American dream. Buffett told CNN Thursday that he doesn't see any real sign of weakness in the economy. Buffett looks at reports from the more than 80 businesses his Berkshire Hathaway conglomerate owns for insight. But Buffett reiterated his concerns about income inequality in this country while the super-rich continue to thrive. He said that America should be able to do more to help people who are struggling do better.

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.