Berkshire News Briefs - 2/3/18

Amazon, Berkshire Hathaway, and JPMorgan are creating a new healthcare company to tackle the 'hungry tapeworm' of rising costs

Amazon, Berkshire Hathaway, and JPMorgan Chase are creating a new business designed to lower healthcare costs for US-based employees in a move that could shake up the managed-care industry.

The companies were not specific about what kind of enterprise they aim to create, noting only that they wanted to improve employee satisfaction while reducing costs, according to a joint release. Still, the news was enough to send shares of managed-care providers lower. [...]

Berkshire Hathaway Utility Unit Shuffles Top Executives

Berkshire Hathaway is shuffling the executives in charge of its utility unit after promoting Greg Abel to oversee all of Berkshire's non-insurance businesses.

Abel's promotion to vice chairman of Berkshire Hathaway was announced Wednesday. Following that move, Berkshire promoted MidAmerican Energy CEO William Fehrman to replace Abel at Berkshire Hathaway Energy. [...]

Berkshire Hathaway Energy includes MidAmerican, PacifiCorp, NV Energy and several other utilities.

With Fehrman moving up to oversee Berkshire Hathaway Energy, Des Moines, Iowa-based MidAmerican promoted Adam Wright to be its new CEO. [...]

Ajit Jain Reports $109 Million Stake in Berkshire Hathaway

One of Warren Buffett’s top deputies has amassed a stake in Berkshire Hathaway Inc. valued at more than $100 million.

Ajit Jain, the insurance executive who was named a vice chairman of Buffett’s conglomerate earlier this month, disclosed the holdings in a regulatory filing on Thursday. A large portion of the stake is held by a foundation and trusts in his family’s name, and his wife also owns some of the shares. Jain directly controls about $22 million of the stock. [...]

Potential Buffett Heir Reveals What May Be Just the Start of His Berkshire Stake

[...] A regulatory filing on Friday shows Abel indirectly holds about $2.1 million of stock in the Omaha, Nebraska-based company. But a separate disclosure last year noted an agreement that could catapult his holdings higher. That filing showed he could convert a stake in Berkshire’s energy business into more than $400 million of stock in the conglomerate.

The new filing was triggered by his promotion last week to vice chairman for non-insurance operations at Berkshire, a position that will put him in charge of businesses ranging from BNSF Railway to Dairy Queen. [...]

Warren Buffett’s Berkshire Hathaway had an amazing 2017. 2018 isn’t looking too bad, either.

[...] The Jain and Abel ascension followed a momentous 2017 for Berkshire Hathaway that saw the company’s “A” shares break $300,000 per share. It closed at $320,000 on Thursday, but you can still buy the Berkshire “baby B” shares for $213.

Also last year, Berkshire’s cash-on-hand surpassed $100 billion as Buffett/Munger scurried to find new investments. The Republican tax plan that became law late last month gifted a one-time, $37 billion windfall to Berkshire shareholders, which helped raise the stock price.

Not least of all, Buffett won a $1 million, decade-old bet with a hedge-fund bigwig. Buffett said he could do better than a portfolio of hedge funds by investing in boring, index fund over 10 years. Buffett gave the money to Girls Inc., one of his favorite charities.

So where does Berkshire Hathaway go from here? [...]

Iscar Wants to Expand Galilee Factory, but It Can’t Find Workers

Iscar, the Israeli maker of machine tools owned by U.S. billionaire investor Warren Buffett, wanted to build an additional plant at its headquarters in the Galilee town of Tefen. Eli Cohen, the minister of economy and industry, was there to help with an offer of a 50-dunam (12.5-acre) site at no cost.

Cohen wanted to ensure that as Iscar grows, it grows in Israel, rather than just overseas. But it doesn’t look like the plant will be built after all, and that’s because there aren’t enough skilled workers to hire, sources close to the company told TheMarker. [...]

New headquaters, expanding workforce at Guard

Berkshire Hathaway Guard Insurance, having moved its headquarters to downtown Wilkes-Barre’s Public Square, is now in the process of filling about 170 jobs it says have been made possible by the move.

The project, which began late last year, is well underway with many departments having moved to the building at 39 Public Square, which Westguard Insurance Co. purchased for just over $5 million in November, according to Guard officials. [...]

GUARD’s annual sales have grown sixfold to approximately $1.2 billion since 2007, and the insurer had run out of space for its more than 675 employees, most of them working in five different spots in the downtown.

Wilkes-Barre, wanting to retain the company, facilitated a $1 million Local Share Account grant to help the project. The state added another $855,000 grant. [...]

Your Next Running Shoes Will Be Custom-Built for You

[...] biomechanical assessment, part of a service and philosophy that Brooks calls Run Signature, has long been in use by the company to help guide its customers to the best-fitting shoe in its arsenal. But the options so far have been limited to what Brooks can sell off the shelf.

Now Brooks, the top brand in specialty running with 25% of the shoe market, according to the NPD Group, wants to take that a step further. The company is working with tech stalwart HP to marry a runner’s gait information with a three-dimensional foot scan generated by HP’s new FitStation device. HP’s technology can measure pressure along the foot as it lands in each stride. The data help Brooks determine how much polyurethane to inject in a shoe’s sole to achieve the right density for as many as 30 zones of your foot.

At a time when Adidas, Nike, and other sportswear companies limit footwear customization to color and material, Berkshire Hathaway–owned Brooks seeks to create running shoes with customized performance elements as well as build data-rich digital customer profiles. [...]

Philanthropist Susie Buffett to help launch Navy's newest littoral combat ship into fleet

The Navy's newest Independence-class littoral combat ship will join the nation's fleet Saturday with a commissioning ceremony in San Diego, and the future USS Omaha has close ties to the family of Berkshire Hathaway Chairman and CEO Warren Buffett.

Susie Buffett, an Omaha philanthropist and the billionaire's daughter, is serving as the ship's sponsor. [...]

Warren Buffett is expected to attend along with other prominent leaders from Nebraska. [...]

Back in 2015, she formally christened the future USS Omaha at the Austal USA shipyard in Mobile, Alabama, with a bottle of bubbly. [...]

Berkshire News Briefs - 8/30/17

Happy 87th Birthday, Warren Buffett! (August 30, 1930)

The 2nd Quarter 13-F statement is out, showing what stocks Berkshire Hathaway bought and sold last quarter. Dataroma has the best format for visualizing the changes.

Warren Buffett's Berkshire Hathaway builds stake in Synchrony Financial, trims GE position

Billionaire investor Warren Buffett built a new position in consumer finance company Synchrony Financial and boosted his holdings of Bank of New York Mellon by more than 50% in the second quarter of 2017, according to a regulatory filing Monday from Berkshire Hathaway.

Buffett's financial moves are closely watched by Wall Street. In the April-thru-June quarter, Buffett's Berkshire Hathaway also dumped the rest of its stake in General Electric (GE), selling the rest of its roughly 10.6 million share position. [...]

Buffett Nears a Milestone He Doesn't Want: $100 Billion in Cash

It’s a milestone Warren Buffett probably wishes he weren’t approaching.

Berkshire Hathaway Inc., the conglomerate he’s run for more than five decades, reported Friday that it held just shy of $100 billion in cash at the end of the second quarter.

While that figure highlights the staggering money-making ability of the businesses he’s collected over the years, it’s also a burden. Because Berkshire doesn’t pay a dividend and rarely buys back its own stock, Buffett is on the hook to find ways to invest those funds.

Bankrupt utility company abandons $9 billion Warren Buffett deal

Bankrupt Texas utility Energy Future Holdings will abandon a deal to sell power transmission company Oncor to Warren Buffett's Berkshire Hathaway for $9 billion and will accept a $9.45 billion bid for Oncor by Sempra Energy instead, people familiar with the matter said.

The development represents a rare blow for Buffett, who avoids bidding wars for companies and had swooped in two months ago to buy Oncor after two previous attempts by Energy Future to sell it were blocked by Texas regulators. [...]

Buffett wouldn’t negotiate for Oncor. He lost the deal — and a $270 million termination fee

Warren Buffett got oohs and aahs when people thought he’d bagged a $270 million breakup fee after his Berkshire Hathaway Energy was outbid for Oncor by Sempra Energy, which won the company with a $9.45 billion offer. [...]

But, it seems, Berkshire didn’t get far enough along in its bid for Oncor to qualify for the fee.

Even if Berkshire could have claimed the full $270 million, some of that would have been offset by the costs — think lawyers, accountants, analysts, bankers — incurred by pursuing Oncor in the first place. [...]

Buffet's Oncor Failure Is No Failure at All

Reading headlines such as, "Buffett's Latest Dealmaking Flop," and "Buffett Encounters Rare Miss," might make some Berkshire investors wonder if the Oracle of Omaha has lost his touch. Adding insult to injury, the deal fell through too quickly for Berkshire to qualify for its $270 million breakup fee, so Buffett and Berkshire will walk away with nothing. [...]

While Berkshire shareholders (and, I'm sure, Buffett himself) may be disappointed, they should take comfort in Berkshire sticking to its principle of not getting involved in a bidding war. Bending on that principle this time could cause potential acquirees to negotiate harder in the future -- and those could be even larger deals. One wonders if 2015's $32 billion acquisition of Precision Castparts -- a deal 3.5 times bigger than Oncor -- would have happened on attractive terms had Buffett not stuck to his "one offer" policy.

As longtime Berkshire shareholder Steve Walman said in a recent Bloomberg article, "the minute he starts negotiating, he becomes everyone's favorite stalking horse and ends up as 'bid 'em up Buffett.'" Since Berkshire is built on acquisitions, cultivating a reputation for bending on price is not something Buffett wants to do. As he himself once said, "The smartest side to take in a bidding war is the losing side." [...]

Warren Buffett Likes Solar, but Not the Price Tag

Warren Buffett has called global warming a “major problem” and put his company’s money where his mouth is, spending billions to develop solar and wind power. Yet he’s no hero to some renewable energy proponents. Their beef: They say the utility arm of Berkshire Hathaway Inc., his conglomerate, has been trying to undermine an almost 40-year-old law intended in part to promote the growth of cleaner energy. Berkshire, they say, is effectively stifling solar projects to protect utilities it owns, such as PacifiCorp, based in Portland, Ore. [...]

Berkshire Hathaway Energy says it’s not so simple. The company, which owns several utilities using conventional and renewable power sources, is the second-largest owner of clean-energy assets in the U.S. But along with other utilities, it argues that the law is outdated, often raises costs for its customers, and forces utilities to buy more electricity than needed.

The law is called the Public Utility Regulatory Policies Act, or Purpa. Congress enacted it after the 1970s OPEC oil embargo to draw new players into the utility-dominated business of generating power. It required some utilities to buy power from certain power providers if doing so was less expensive than building new plants themselves. The idea was to boost the then-emerging natural gas industry—and perhaps spur renewables including solar.

The act worked—too well, from the standpoint of the utilities. As solar panel prices plunged in recent years, developers deluged utilities with projects to sell them power. Utilities complain the law is producing a surplus of power. Moreover, utilities say the contracts with developers, whose terms are generally set by state utilities regulators, often lock them in for years at high prices that don’t necessarily reflect the current market. [...]

Home Capital had two PE suitors but chose Buffett's bid to secure 'greatest acceptance' from markets

Alternative mortgage lender Home Capital Group Inc. fielded acquisition offers from two different private equity firms in June — one of which raised its bid even after the Toronto company decided to take Warren Buffett’s white-knight deal, according to a proxy circular released on Friday.

The two firms were not named in the document released ahead of a special meeting of shareholders next month, but sources familiar with the process say Home Capital’s two suitors were Onex Corp. and Brookfield Business Partners. [...]

After some consideration, Home Capital’s board rejected the sweetened offer, it said.

“The Board determined that the revised acquisition proposal was inferior to the (Berkshire) Transaction and that the Transaction was in the best interests of the Corporation and continued to provide Shareholders with the best combination of transaction certainty and the potential for enhanced Shareholder value, while meeting the need for strong sponsorship and lower cost standby debt financing,” it said. [...]

Larsen & Toubro sells unit to IMC International for Rs174 crore

(Larsen & Toubro is based in Mumbai, India. Rs174 crore is equivalent to around $27.2 million USD.)

Engineering major Larsen & Toubro Ltd (L&T) on Wednesday said it has agreed to sell its entire stake in its unlisted unit L&T Cutting Tools Ltd to IMC International Metalworking Companies BV, owned by Berkshire Hathaway Inc., for Rs174 crore.

L&T Cutting Tools, incorporated in 1952, manufactures fabricated metal products. [...]

Salton Sea geothermal plant canceled by Warren Buffett's Berkshire Hathaway Energy

It's been 14 years since California officials first approved the Black Rock power plant, which would have tapped a powerful geothermal reservoir along the shore of the Salton Sea and generated enough climate-friendly electricity to power about 200,000 homes. [...]

CalEnergy, which is owned by Warren Buffett's Berkshire Hathaway Energy, asked the California Energy Commission earlier this summer to terminate the license for Black Rock. The company had requested and received extensions of the construction start deadline in 2007, 2011 and 2014, but this time decided to move on rather than pay a $27,678 annual compliance fee that would have been due at the end of June. [...]

"Berkshire Hathaway is big. They've got a lot of wind, they've got solar, they've got other areas. (Geothermal is) a complicated thing to do," Kaspereit said.

Warren Buffett’s Best Advice...and Why He Doesn’t Own Gold

On what he looks for in businesses: "I want a very valuable castle, with a duke in charge of it who is very honest and hardworking and able. Then I want a moat around that castle."

On what he looks for in managers: "We look for three things: intelligence, energy, and integrity. If they don’t have the latter, then you should hope they don’t have the first two either. If someone doesn’t have integrity, then you want him to be dumb and lazy."

On why he doesn’t invest in gold: "You could take all the gold that’s ever been mined, and it would fill a cube 68 feet in each direction. For what that’s worth at current gold prices, you could buy all—not some—of the farmland in the U.S. Plus, you could buy 16 Exxon Mobils, plus have $1 trillion of walking-around money. Or you could have a big cube of metal. Which would you take? Which is going to produce more value?" [...]

Billionaire Warren Buffett serenades Gold Jacket Dinner

Warren Buffett and Paul Anka did it their way.

The billionaire investor and the crooner serenaded this year’s class of Pro Football Hall of Fame enshrinees with Anka’s song, “My Way,” at the Gold Jacket Dinner Friday night.

Anka sang a few lines of the song he wrote for Frank Sinatra before pausing to bring his friend, Buffett, to the Memorial Civic Center stage. [...]

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 - 8/1/17

Berkshire and Blue Chip Stamps

Rick Guerin, an early partner of Buffett and Munger's, realized Blue Chip shares were quite attractive (at this time, the market cap was approximately $40 million). It is worth noting Blue Chip Stamps was already in decline by the late 1960s. From 1970 to 1980, revenues would decline by more than 85%. [...] Despite the significant drop-off in revenues mentioned above, float only declined by around 30% (cumulatively) from 1970 to 1980. Pabrai estimates the “permanent float” at Blue Chip was somewhere around $60 million.

But the float was of limited value in the wrong hands. Buffett, Guerin and Munger thought it was being mismanaged. One way to effect change was to effectively take control of the company: between 1967 and 1970, they invested $24 million in Blue Chip – good for 60% ownership [...]

Now they had roughly $60 million to work with. In 1972, they took $25 million and bought 99% of See’s Candies. In 1973, they took another $25 million and bought 80% of Wesco Financial. Finally, in 1977, they took another $35.5 million and bought the Buffalo Evening News (with roughly 70% of the purchase price funded with the retained earnings from See’s Candies). [...]

Warren Buffett is building up a 'recession resistant' energy powerhouse

From California to the Midwest, billionaire investor Warren Buffett is steadily building an energy powerhouse.

Buffett’s Berkshire Hathaway Energy subsidiary has gobbled up utilities and natural gas pipelines and tapped into clean energy production, including from Southern California’s abundant geothermal resources. [...]

Berkshire Hathaway appears to be doing all it can to counter a purported death spiral of economic harm that power companies face because of growing energy efficiency regulations, consumers generating their own power with rooftop solar panels and the advent of electricity storage options in homeowners’ garages. [...]

Berkshire Is in Talks to Buy a Stake in IRB Brasil Resseguros

Berkshire Hathaway Inc., the firm run by billionaire investor Warren Buffett, is in talks to buy a stake in Latin America’s biggest reinsurer, IRB Brasil Resseguros SA, after an initial public offering of stock, according to two people with direct knowledge of the matter.

No deal is likely to be completed before July 27, IRB’s IPO pricing date, the people said, asking not to be named because the discussions are private. The acquisition could be made through Berkshire’s General Re unit, they said. JPMorgan Chase & Co. is advising Rio de Janeiro-based IRB, according to the people. [...]

Home Capital repays $2 billion line of credit from Berkshire Hathaway

Home Capital Group, the Toronto-based alternative mortgage lender that was on the verge of collapse earlier this year, says it has repaid a $2-billion line of credit from Berkshire Hathaway.

The company was given the financial lifeline last month by Berkshire Hathaway, which is headed by Warren Buffett, as it was trying to regain investor confidence following a run on deposits from customers.

When it provided the line of credit, Berkshire Hathaway also bought a $400 million stake in Home Capital. [...]

Berkshire’s Clayton Homes division expanding into $250,000-and-under housing market

Berkshire Hathaway’s Clayton Homes division, known for its factory-built houses, is expanding into the site-built, $250,000-and-under housing market.

Since October 2015 Clayton has acquired homebuilders in Atlanta; Nashville, Tennessee; Kansas City; Denver; and, earlier this month, Birmingham, Alabama, and is building homes on-site at a rate of 2,500 to 3,000 a year.

Clayton isn’t choosing cities and then looking for homebuilders to buy [...] the idea is to identify builders with the right management and culture, and then check out their growth potential. The acquired builders keep their managements and names.

Walsh said Berkshire’s financial strength and Clayton’s buying power — imagine the lumber needed for 45,000 factory-built homes each year — are advantages that can give the acquired companies an edge over the competition. [...]

Elliott Tries a Texas Charm Offensive to Outdo Berkshire's Oncor Bid

While Elliott Management Corp. tries to cobble together enough money to beat Berkshire Hathaway Inc.’s $9 billion bid to buy one of America’s largest transmission operators, it has another problem to deal with: the state of Texas.

The New York hedge fund run by billionaire Paul Singer is trying to convince Texas stakeholders that its deal to buy their biggest power distributor, Oncor Electric Delivery Co., will be superior to Berkshire’s. [...]

Duracell to close South Carolina battery plant by end of 2018

Duracell has filed a notice with labor officials that it will close a South Carolina battery plant sooner than projected.

The shutdown of the Lancaster factory was announced one year ago, a few months after the company after being acquired by Warren Buffett’s Berkshire Hathaway conglomerate. [...]

The Lancaster factory manufactures AA batteries. Duracell is consolidating North American production of those to LaGrange, Ga. [...]

Keeping Tabs on the Billions and Billions That Warren Buffett Is Giving Away

In 2006, Warren Buffett famously pledged to give away most of his Berkshire Hathaway stock, saying that the bulk of those holdings would go to the Bill and Melinda Gates Foundation and the rest to the four foundations controlled by his three children.

Since then, Buffett has given away 40 percent of the Berkshire Hathaway shares that he held in 2006, gifts worth about $27 billion. Buffett’s annual gifts to the five foundations, announced this week, were worth a record-breaking $3.17 billion. [...]

[...] while many people are under the impression that all of Buffett’s fortune is earmarked for the Gates Foundation, the gifts to his children’s foundations have turned out to be enormous in their own right—and are bankrolling a wide array of grantmaking both in the United States and abroad. This year, according to Forbes, Buffett sent around $2.4 billion worth of stock to the Gates Foundation. The other $800 million or so went to the family foundations—the Susan Thompson Buffett, Sherwood, Novo, and Howard Buffett foundations. [...]

Also, a story about a different Buffett's charity work:

Howard Buffett's millions help jump-start Decatur's recovery

[...] Nevertheless, the Howard G. Buffett Foundation has given or pledged $55.1 million in the city and surrounding Macon County over the past two decades to help stanch the area's hemorrhaging population. Dozens of grants, including those paying for a new lakefront amphitheater and a law enforcement training facility, aim to help make the area a better place to live.

"The bottom line is, what can you do to make a community more attractive to younger people, and how do you make it attractive so the people that are here stay here?" Buffett said. "A lot of our contributions, if you cut down to the bottom of it, that's what they do." [...]

Berkshire News Briefs - 7/15/17

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

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

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

Berkshire Hathaway makes deal to win PUC approval of Oncor acquisition

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

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

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

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

Berkshire Hathaway's Clayton Buys Oakwood Homes

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

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

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

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

Clayton Buys Birmingham's Harris Doyle Homes

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

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

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

Sprint executives have engaged Warren Buffett about investment

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

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

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

Warren Buffett casts big shadow in banking world

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

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

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

Berkshire News Briefs - 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 - 4/10/17

CC BY-SA 3.0, Link

Berkshire insurance unit sues Goodyear over asbestos claims

Berkshire said Goodyear claimed to have in 2008 exhausted a policy from another insurer for the asbestos claims, but waited until November 2015 to seek reimbursement from Berkshire for "several millions of dollars" under an "excess" policy.

It also said Goodyear had never asked for help in defending against the claims prior to November 2015.

About 62,000 claims are pending against Goodyear in states including Florida, Maryland, New York, Pennsylvania and Texas over alleged exposure to asbestos-containing products as floor tiles, furnace hoses, gaskets and heat shields, Berkshire said.

Berkshire Hathaway affiliate buys Prism Plastics

Precision automotive molder Prism Plastics Inc. has been sold to a subsidiary of Marmon Engineered Components Co., according to an announcement from Altus Capital Partners, the investment firm that had owned Chesterfield, Mich.-headquartered Prism along with its founders since June 2014.

Marmon is an affiliate of Berkshire Hathaway Inc., the publicly traded conglomerate headed by Warren Buffett.

Under Altus ownership Prism has undertaken several growth initiatives, including the June 2016 acquisition of Tech Molded Plastics Inc. of Meadville, Pa. That move doubled Prism’s size and added in-house toolmaking capabilities. [...]

Berkshire subsidiary on renewable energy push across the West

PacifiCorp, a division of Berkshire Hathaway Energy, issued a three-year, $3.5 billion plan for its renewable energy system from Wyoming to California.

The six-state plan will add 900 megawatts of capacity by upgrading generators with larger blades and new technology, build a 140-mile-long power line in Wyoming and add 1,100 megawatts of new wind projects. [...]

The plan includes adding another 1,000 megawatts of solar generators in the states by 2036. [...]

Berkshire Hathaway's Media Group Cuts 289 Newspaper Jobs Nationwide

BH Media Group, the newspaper division of Warren Buffett’s Berkshire Hathaway Inc., announced yesterday that it was cutting 289 jobs at its newspapers across the country yesterday. The cuts included the elimination of 108 jobs that currently are vacant.

The reasons for the job losses are depressingly familiar in the newspaper industry: loss of circulation and advertising revenue, lagging revenue from the digital side of the business.

Terry Kroeger, president and CEO of BH Media, sent a memo to employees yesterday. "While more readers than ever turn to our digital products, our digital revenue is not growing fast enough yet to offset print revenue losses from both advertising and circulation," he wrote. "Therefore, we need to cut our expenses." [...]

The Buffett Series – Thinking About Competitive Advantage

A key requirement for a company to earn high returns on capital over a long period of time is to have a competitive advantage, commonly referred to as a 'moat'. Mr Buffett addresses the issue of competition in his 1993 letter where he talks about the Nebraska Furniture Mart, a businesses he acquired from Rose Blumkin [aka Mrs B.] in 1983. Under the motto "sell cheap and tell the truth," she worked in the business until age 103.

Nebraska Furniture Mart is a pretty simple business, it sells furniture, flooring and home appliances. It's easy to understand and it's unlikely to be subject to a lot of change. In ten years time it will still be selling furniture. [...]

Berkshire Hathaway: An In-Depth Look At Normalized Return On Equity

How much would you pay for a $298 billion perpetual bond with an 8.5% coupon and $66 billion of additional cash? While this seems like an odd question, I would argue it is the one you're trying to answer when choosing to invest, or not invest, in Berkshire Hathaway. No, Berkshire common stock is not a bond; however, as I will try to demonstrate, while Berkshire's stated GAAP earnings are volatile, its underlying return on shareholders' equity is highly consistent, not entirely dissimilar to a bond coupon. This analysis will disaggregate Berkshire's constituent assets and liabilities in its various business segments and the earnings attributable to those segments. Doing so will allow us to uncover what I will term a "steady-state" return on equity. With that return in hand, we can then determine the "yield" and subsequent value to assign our "bond."

Steelworker wins $100,000 in Buffett's March Madness bracket

[Dwayne] Johnson, who works in a steel factory in Huntington, West Virginia, was sitting on his couch Saturday afternoon when Buffett called to tell him that, with 31 out of 32 correct predictions in his March Madness bracket, he'd be winning $100,000 of the billionaire's money. (If Johnson had correctly called South Carolina's victory over Marquette, he would've received a cool $1 million.) [...]

Johnson says the $105,000 in winnings - which include an additional $5,000 from his employer, Precision Castparts - will help him pay off credit card debt and buy a new car. He also plans to save six months' worth of expenses in case he loses his job, something he says he has worried about in recent months after widespread layoffs at the steel mill where he has worked for nearly 10 years. He makes $21.13 an hour as a welder at the company, which Buffett's Berkshire Hathaway purchased two years ago for nearly $32 billion. [...]

Cherry Coke, China and Warren Buffett: 'He's selling well'

People in China are coming face to face with Warren Buffett's love for Cherry Coke.
A cartoon rendering of the billionaire investor is appearing on special edition Cherry Coke cans all over the world's most populous nation.
Buffett is helping Coke launch the flavored soda in China, a sugary drink the 86-year-old claims is his secret to staying young. [...]

Berkshire News Briefs - 2/22/17

Berkshire Hathaway released its 4Q 2016 13-F filing last week, revealing the contents of its investment portfolio as of December 31, 2016.

Here's the updated portfolio on Dataroma:

Holdings | Changes

More Commentary:

Massive Changes for Berkshire Hathaway and Warren Buffett Stocks in 2017

Warren Buffett just dropped Walmart and signaled the death of retail as we know it

Warren Buffett's Huge Stake in Apple: What He May See In AAPL

Buffett's Berkshire Hathaway reveals stake in Monsanto

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On Monday he ate through one Apple. But he was still hungry!

For longtime Buffett watchers, these new investments are not so much of a shock as they might appear to more casual observers. Because what Buffett loves more than anything in the world is paying a fair price for a business with huge barriers to entry. In the parlance of stockpickers, we call these moats (as in the defensive ring of water that surrounded the medieval castles of yore). A good moat means sustainable profit margins and a defensible business model that allows for an investment holding period of (hopefully) forever. [...]

Berkshire Hathaway jumps into wearables with a smart jewelry line

This spring, the jewelry manufacturer and distributor is launching a smart jewelry line called Ela. Starting with wristwear, Ela is the Richline Group's first foray into wearables, which should eventually extend into multiple product categories like rings and earrings.

Using Bluetooth Low Energy, Ela connects to both iOS and Android devices. It has a step-tracking feature that syncs with Apple Health and Google Health Kit. However, the company was interested in producing something better than just a "prettier step tracker," Cliff Ulrich, product innovation manager for the Richline Group, explained to ZDNet. The wearable also connects to the Ela app, through which you can create and share photos and other "memories" like special songs or a voice recording. The memories can be pre-loaded when giving it as a gift to someone else. A user can also create alerts -- the gem on the device will softly glow and vibrate when someone on your alert list is trying to contact you. Users can set the device to glow a certain color for specific contacts or groups. [...]

(Note this news article from last summer: Buffett’s Richline Acquires Wearables Maker Viawear (6/7/16))

Warren Buffett explains why he's investing in a risky tech sector: wearables

"Jewelry is a centuries-old business that isn't going anywhere, so it's a safe bet," [Buffett] told CNBC in an emailed statement. "With the addition of technology, we're simply updating something everyone knows and loves to better fit our modern age."

Richline Group product and innovation manager Cliff Ulrich explained, "We've designed Ela to be jewelry first. As a jewelry company, we understand jewelry retailers and consumers, what they want to carry and buy. They want to create an emotional connection, whether your giving Ela as a gift or buying it for yourself because you just got a bonus. Ela allows you to save memories in your jewelry, like a modern day locket." [...]

Warren Buffett’s late play for electricity distributor Endeavour Energy

The NSW government is heading towards another bumper ­result for its electricity privatisation scheme with Warren ­Buffett’s Berkshire Hathaway believed to have entered the auction for distribution business ­Endeavour Energy.

The Australian’s DataRoom column yesterday revealed Berkshire Hathaway is said to be part of a fourth consortium looking to buy the last and smallest of the electricity grid businesses being sold by the Berejiklian government for up to $US3 billion in a process that has attracted strong international attention. [...]

Warren Buffett – How Charlie Convinced Me To Break My Cigar-Butt Investing Habit

My cigar-butt strategy worked very well while I was managing small sums. Indeed, the many dozens of free puffs I obtained in the 1950s made that decade by far the best of my life for both relative and absolute investment performance. [...]

But a major weakness in this approach gradually became apparent: Cigar-butt investing was scalable only to a point. With large sums, it would never work well.

In addition, though marginal businesses purchased at cheap prices may be attractive as short-term investments, they are the wrong foundation on which to build a large and enduring enterprise. [...]

It took Charlie Munger to break my cigar-butt habits and set the course for building a business that could combine huge size with satisfactory profits. [...]

Warren Buffett selling home in Laguna Beach's Emerald Bay for $11 Million

Berkshire Hathaway CEO Warren Buffet has put his six-bedroom house in Laguna Beach’s Emerald Bay on the market for $11 million. [...]

Buffett, 86, has owned the ocean-view home since 1971, when he paid $150,000 for it. He’s used the house for family vacations for the past 46 years, Dolby said. [...]

Berkshire Subsidiary Briefs - 1/5/17

There was a lot of news last month, and I fell behind on posting, so there are three posts this time. This is part 2, with news about Berkshire Hathaway's subsidiary companies.

(Part 1 - General Business | Part 3 - Miscellaneous)

The Dairy Queen® System Announces Plans to Develop 50 DQ Grill & Chill® Locations in Korea Over the Next Five Years

International Dairy Queen, Inc. today announced the signing of a multi-unit development agreement to expand into the Republic of Korea with plans to open 50 DQ Grill & Chill locations within the next five years. [...]

(On a tangentially related note, did you know you could ask DQ staff to add coffee to a Blizzard? I can't believe I didn't know about this "secret menu" item before last week.)

Fruit of the Loom names Melissa Burgess-Taylor CEO

Fruit of the Loom, a Berkshire Hathaway Inc. unit, said it named Melissa Burgess-Taylor as the chief executive officer and chairman, following the death of Rick Medlin.

Medlin, who had held the top post at the apparel company since 2010, died on Sunday of natural causes, the company said. [...]

Burgess-Taylor, who has been with the company for more than 17 years, is currently senior vice president of brand management and sales for Fruit of the Loom and Vanity Fair Brands.

Lubrizol names Schnur as CEO

Global thermoplastic polyurethane leader Lubrizol Corp. has named company veteran Eric Schnur as chairman, president and CEO.

Schnur has been with Wickliffe, Ohio-based Lubrizol for more than 27 years. He’s held the roles of president and chief operating officer since June. Prior to that move, Schnur served as president of the firm’s Advanced Materials unit — including TPU — for eight years.

The move was effective Jan. 2. Schnur replaces James Hambrick, who’s retiring after a 38-year career with Lubrizol. [...]

Nebraska Furniture Mart COO Ron Blumkin’s successor named

Nebraska Furniture Mart President and Chief Operating Officer Ron Blumkin will leave his position as part of the company’s long-term succession planning, the company said Friday.

Tony Boldt, director of the Mart’s Kansas City store, will take the role of president and COO. Blumkin will serve as chairman, and Irv Blumkin will remain chief executive. [...]

Berkshire Hathaway Unit Acquires Snappy Company

Berkshire Hathaway company unit MiTek Industries, Inc. announced that its subsidiary, M&M Manufacturing, has acquired Snappy Company.

Snappy is a leading supplier of metal duct systems for the residential HVAC market, with manufacturing facilities in Detroit Lakes, MN; Medina, NY; and corporate offices in Marietta, GA.

Snappy will complement M&M Manufacturing, a leading producer of sheet metal products, primarily servicing the air distribution and ventilation markets. [...]

OCI Solar Power seeks to sell Alamo 6 solar farm to Warren Buffett-owned company

San Antonio-based solar developer OCI Solar Power is seeking state approval to sell its Alamo 6 solar farm to a subsidiary of Warren Buffett's multinational holding company Berkshire Hathaway. A sale price has not been disclosed but OCI Solar Power officials confirmed that the company signed a purchase agreement to sell the West Texas solar farm. Located in Pecos County, Alamo 6 remains under construction but once complete it will supply 110.2 megawatts of electricity to San Antonio's municipally-owned utility company CPS Energy. [...]

The sharing economy brings tycoon lifestyles within reach of some

Tycoon living begins with a private jet. Whereas yachts are dispensable (not everyone wants to float around for weeks with the same dinner companions) private jets are necessities for the aspiring billionaire. [...]

No longer do you need a net worth in the hundreds of millions of dollars to have one. With 700 jets, NetJets is now the fifth-largest airline by number of planes, after Southwest Airlines, and it has access to thousands of private airports. Its main innovation was to apply the principle of fractional ownership, or time-sharing, to the ultimate executive tool. Customers buy a share in a jet which entitles them to, say, 200 hours of travel a year. [...]

Berkshire News Briefs - 7/28/16

Buffett Buys $1.8 Billion ‘Gem’ of a Medical Insurer in N.Y. (Bloomberg)

Berkshire Hathaway Inc. agreed to buy Medical Liability Mutual Insurance Co., extending Chairman Warren Buffett’s leadership in the business of protecting doctors against lawsuits.

The target company is the largest underwriter of medical professional liability insurance in New York and will convert from a policyholder-owned to a stock business, Omaha, Nebraska-based Berkshire’s National Indemnity unit said Monday in a statement that didn’t disclose terms. Policyholder surplus, a measure of assets minus liabilities, was $1.8 billion as of Dec. 31, according to the statement. The deal is expected to be completed in the third quarter of 2017, pending regulatory and customer approvals. [...]

Berkshire Hathaway Wants to Insure Your Doctor (Fool)

There are two broad types of insurance companies: stock insurers and mutual insurers. Stock insurers are institutions owned by investors seeking to earn a return on their investment. Mutual insurers are owned by their policyholders. Mutual insurers are to insurance what credit unions are to banking.

MLMIC is a mutual insurer. But Buffett's acquisition isn't just altruistic; Berkshire Hathaway is obviously buying MLMIC to make money. Thus, for the deal to go through, MLMIC will have to convert to a stock insurance company. Its policyholders will then receive a payout that MLMIC currently estimates to be roughly equal to premiums paid to the company during the 3-year period from July 2013 to July 2016. [...]

Buffett Says Earnings Guidance Can Lead to Corporate Malpractice (Bloomberg)

Warren Buffett, who is among business executives pushing for improved corporate governance, said that the practice of telling Wall Street what to expect from quarterly earnings can distort management’s priorities.

“Guidance can lead to a lot of malpractice,” the billionaire chairman of Berkshire Hathaway Inc. said Thursday on CNBC. “It doesn’t have to, but I think if the CEO goes out and says, ‘We’re going to earn $1.06 next quarter,’ I think that if they’re going to come in at $1.04, there’s a lot of attempts to find a couple extra pennies some places.” [...]

Lawsuit over Acme Brick retirement plans to move forward (Ft. Worth Star-Telegram)

A lawsuit challenging reduced retirement benefits at Acme Brick can move forward after a federal appeals court ruled that parent Berkshire Hathaway acted improperly.

The suit, filed in 2014 by Acme’s former chief financial officer Judy Hunter, who oversaw the plans, alleged that Berkshire, the Nebraska-based conglomerate run by billionaire Warren Buffett, used “strong-arm tactics” to force the Fort Worth-based brick company to reduce retirement plan benefits. [...]

There's Nothing 'Surprising' About Geico's New Campaign (Advertising Age)

Geico has tapped a big name for a spot in its newest campaign—Marco Polo, the Middle Ages explorer famous for traveling Asia. In a humorous ad that stays true to the insurer's quirky humor, an actor appears as Mr. Polo in an outdoor swimming pool as children play the popular Marco Polo discovery game. Mr. Polo continues to say "Si, scusi," as he believes the kids are looking for him. A voice-over says, "Playing Marco Polo with Marco Polo? Surprising. What's not surprising? How much money Amanda and Keith saved by switching to Geico," as the camera shows real-life Geico customers holding a sign asserting $645 in savings. Meanwhile, a llama noses around the pool. [...]

Berkshire Hathaway Takes on Texas' Three-Tier System (Wine Business)

In another potentially historic case, McLane Company Inc., which has sold food products in Texas sine since the 1980s through the AmeriServ and McLane Foodserice trademarks, has called into question Texas’ “One Share Rule,” by filing a complaint with the Texas Alcohol Control Board (TACB) in Austin. Its parent company, Berkshire Hathaway Inc., owns a two-percent share in Walmart and doesn’t believe that this is a justifiable reason for McLane not to be able to distribute alcoholic beverage in Texas. [...]

How Warren Buffett & Elon Musk Both Compete and Contrast on Energy (Fortune)

Musk and Buffett see the energy and transportation sectors changing in similar ways, and, over the past few years, their companies have increasingly competed with each other over both solar energy and electric cars. [...]

That two of the world’s savviest business minds seem to disagree over how key parts of how the clean energy sector will develop are reflects how the world’s energy transformation is still in its early days. Their opposing viewpoints about fossil fuels also highlight Musk’s entrepreneurial vision-driven spirit with Buffett’s down-to-earth profit-driven investment strategy. [...]

Warren Buffett's Latest Utility Challenge in Nevada (Fool)

When Nevada regulators agreed earlier this year to allow MGM Resorts, Wynn Resorts, and Las Vegas Sands to leave NV Energy, one of Berkshire Hathaway's largest utility assets, it opened a slew of problems for the utility. Not only could the utility lose 7% of its demand if all three casino companies left, but data company Switch has now also challenged why it wasn't allowed to leave the utility a year ago. [...]

Berkshire's Duracell to close South Carolina plant, affecting 430 workers (Reuters)

Duracell said it plans to close a battery-making plant in South Carolina that employs 430 people, making the announcement fewer than five months after being acquired by Warren Buffett's Berkshire Hathaway Inc.

The shutdown of the Lancaster, South Carolina, plant, which made AA batteries, will begin in March and should be completed by the middle of 2019, Duracell said in a statement dated Wednesday.

Duracell is consolidating its North American production of AA and AAA batteries into a plant in LaGrange, Georgia. [...]

Purchases by auction are not really Buffett's style (Omaha World-Herald)

Pardon us if it seems like Berkshire Hathaway Inc. may not be bidding to acquire Oncor Electric Delivery Co., the Texas electricity distribution company that is coming out of bankruptcy.

Sources are telling Texas newspapers that Berkshire Hathaway Energy is a bidder in a high-profile auction for the company after an earlier $18 billion purchase fell through. [...]

But Berkshire CEO Warren Buffett has been so adamantly opposed to auction-style purchases that it could be the Berkshire rumors are being floated to keep other buyers interested and bidding as much as possible. [...]

Berkshire News Briefs - 7/14/16

Berkshire applies to boost Wells Fargo stake above 10 percent (Business Insider)

Warren Buffett's Berkshire Hathaway Inc has applied to increase its ownership stake in Wells Fargo & Co above 10 percent, the Federal Reserve said on its website on Friday.

Boosting the stake above 10 percent could mean increased federal scrutiny over the investment. [...]

CEOs relish 'unique' benefits of being a Buffett-owned business, despite some downsides (Omaha World Herald)

Donegan, during a visit to Omaha this spring for the annual meeting of Berkshire shareholders, estimated that since he became a Berkshire CEO, he can devote 15 percent more of his days to actually running Precision Castparts.

That’s a substantial gain in perhaps the most valuable of economic commodities — time — and an example of how business life inside Berkshire is different from business life outside. [...]

Billionaire Warren Buffett doing energy pilot program in Hawaii (Pacific Business News)

Warren Buffett’s energy company has started doing a pilot program for a residential property manager in Hawaii, a spokeswoman for one of his companies confirmed to Pacific Business News this week.

Iowa-based MidAmerican Energy Services LLC, a Berkshire Hathaway Energy company which was recently registered as a new business in Hawaii, is doing an energy management pilot that uses a technology platform to help clients manage the performance of the heating, ventilation, air conditioning and electric water heater systems at their property sites.[...]

Buffett may be interested in buying Hawaiian Electric Co. if Florida-based NextEra Energy Inc.’s proposed $4.3 billion deal to purchase the Honolulu utility falls through. A decision by Hawaii regulators on the NextEra-HECO sale is expected to come soon.

Precision Castparts neighbors sue, demand company to stop polluting (Oregon Live)

Four Southeast Portland residents who say their homes have been smothered with heavy metals and other pollution by a nearby Precision Castparts manufacturing plant are asking a judge to order the parts maker to stop polluting.

In a suit filed last week, the residents also are asking a Multnomah County Circuit judge to force Precision Castparts to clean up millions of pounds of nickel, chromium, arsenic and other toxic pollutants that they say have settled upon their neighborhoods and increased their chances of cancer and other health problems -- and even put children at risk of lower IQs. [...]

Gen Re Seeks to Add Brokerage Business Through Hookup with TransRe (Insurance Journal)

General Re, the unit of Warren Buffett’s Berkshire Hathaway Inc. that appointed a new chief executive officer in May, struck a deal with a rival reinsurer to help revive sales.

Alleghany Corp.’s TransRe will share revenue and risks on property/casualty reinsurance business that it underwrites through brokers and intermediaries for the next five years, the companies said Tuesday in a statement. The partnership gives TransRe, with the backing of Gen Re, the ability to take on twice as much risk for clients, the Alleghany unit said in a separate document listing facts about the deal.

Gen Re CEO Kara Raiguel is seeking new sources of premium revenue after being named to take over for Franklin “Tad” Montross. [...]

Buffett's Brooks branches out to attract gym generation (Channel NewsAsia)

Brooks, the running brand owned by Warren Buffett's Berkshire Hathaway Inc, believes that the U.S. marathon boom has peaked and it is looking to broaden its appeal to a younger gym generation.

Founded in 1914, the Seattle-based firm was close to bankruptcy when Jim Weber took over as chief executive in 2001. Weber decided to concentrate solely on running, a strategy Buffett bought into when he acquired the brand in 2006.

Brooks is now the market leader in the U.S. specialty running shoe market with a 29 percent share. It had total sales in 2014 of US$548 million, still only a fraction of overall leader Nike's sales of US$32 billion in the year to May 31. [...]

Berkshire Hathaway Said to Be Among Leading Oncor Bidders (Bloomberg)

Warren Buffett’s Berkshire Hathaway Inc. submitted a bid for Energy Future Holdings Corp.’s Oncor Electric Delivery Co., people familiar with the talks said, joining NextEra Energy Inc. as a top contender to buy Texas’ biggest transmission operator.

Energy Future is mulling offers that value Oncor at about $18 billion, according to the people, who asked not to be identified because the information is private. The process is fluid and the leading bidders have switched places several times, the people said. [...]

25 Years of Learning and Laughter (Gates Notes)

I don’t remember the exact day I first met most of my friends, but with Warren Buffett I do. It was 25 years ago today: July 5, 1991.

I think the date stands out in my mind so clearly because it marked the beginning of a new and unexpected friendship for Melinda and me—one that has changed our lives for the better in every imaginable way.

Warren has helped us do two things that are impossible to overdo in one lifetime: learn more and laugh more. [...]

Berkshire News Briefs - 7/1/16

Warren Buffett Tries To Buy A Smart Basketball (Vocativ)

Spalding, exclusive provider of basketballs for the NBA, is owned by Russell Brands (and not Fruit-of-the-Loom as this article says; I double-checked). Other companies have until July 18th to bid on the bankrupt company's assets before the bankruptcy court finalizes the sale.

Russell Brands LLC, a subsidiary of Buffett’s Berkshire Hathaway Co., has offered $1.5 million for the bankrupt start-up company that makes the 94Fifty Smart Sensor Basketball, according to the Wall Street Journal. The parent company, InfoMotion Sports Technologies Inc., reportedly filed for Chapter 11 protection on March 1.

The 94Fifty ball, which sells for $199.99 and was named a top-25 invention of 2014 by Time magazine, uses embedded sensors in a basketball to log such data as shooting arc, backspin, release speed, and dribble speed. [...]

Berkshire units ordered to halt California workers' comp policy sales (Reuters)

California's insurance commissioner has ordered two Berkshire Hathaway Inc insurance units to stop selling some workers' compensation policies that he considers illegal.

Commissioner Dave Jones on Wednesday issued a "cease and desist order" preventing Berkshire's Applied Underwriters Inc and California Insurance Co units from selling or renewing the policies in question in California.

Jones had on June 20 found that the units evaded a state law meant to protect small businesses from unexpected workers' compensation costs, through the sale of a nontraditional policy whose terms and rates had not been reviewed by state officials. [...]

Claiming Unfair Treatment, Buffett’s McLane Sues To Enter Texas (Shanken News Daily)

McLane Co., the mammoth food and drinks distributor owned by Warren Buffett’s Berkshire Hathaway, has filed a federal lawsuit in Austin claiming that the Texas Alcoholic Beverage Commission (TABC) is unfairly barring it from distributing beverage alcohol in the Lone Star State.

McLane’s lawsuit, filed in conjunction with the Texas Association of Business, takes aim at the TABC’s so-called “one share” rule—under which the agency aims to protect the three-tier system by prohibiting alcohol producers, distributors and retailers from holding as little as one overlapping ownership share in another tier of the business. Because McLane parent Berkshire Hathaway owns a 2% stake in Walmart—which retails beverage alcohol in Texas—the TABC has refused to grant it a distribution license in the state. [...]

Why Warren Buffett is one of the very few making money off Alberta’s mostly unprofitable electric system (Financial Post)

Two years ago, Buffett’s Berkshire Hathaway Inc. bought more than half of all the electric transmission lines crisscrossing Albertan farmland in a $3.2 ­billion acquisition of Calgary-­based AltaLink LP from troubled SNC-­Lavalin Group Inc., making Berkshire Hathaway the electricity transmission provider to 85 per cent of Albertans.

Electricity analysts in the province say that purchase, like many of Buffett’s deals, now looks brilliant. Electricity prices in the province have collapsed — from $49 per megawatt hour in 2014 to around $16 so far this year — but transmission prices have risen, and will continue to rise for at least the next five years. [...]

Two BNSF Freight Trains Collide in Texas on Busy Rail Route (Bloomberg)

Two BNSF Railway Co. freight trains collided in Texas, leaving at least one worker injured. Rescue efforts were under way for three other employees involved in the accident. [...]

The collision occurred at 8:25 a.m. local time near Panhandle, Texas, BNSF said in a statement Tuesday. [...] The trains were carrying intermodal cargo, which are usually consumer goods. The accident occurred on the main line known as the Southern Transcon linking Los Angeles with Chicago. [...]