Berkshire News Briefs - 1/10/18

Berkshire Hathaway Inc. News Release

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

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

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

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

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

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

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

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

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

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

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

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

Berkshire Hathaway could gain $37 billion from GOP tax cuts

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

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

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

Warren Buffett Shares the Secrets to Wealth in America

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

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

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

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

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

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

Brooks Needs Runners Who Hate to Run

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

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

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

Q&A with Lubrizol’s Eric R. Schnur

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

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

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

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

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

Russell Brands announces layoffs

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

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

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

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

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

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

Berkshire News Briefs - 12/15/17

Buffett's About to Get $3 Billion Back From Burger King Owner

Burger King-owner Restaurant Brands International Inc. is scheduled to redeem $3 billion in preferred shares Tuesday from Buffett’s Berkshire Hathaway Inc. The money helped the fast-food chain finance its 2014 purchase of Tim Hortons.

The redemption will take away a lucrative investment for Berkshire and add to Buffett’s arsenal for investments and takeovers. At the end of the third quarter, Buffett’s Omaha, Nebraska-based holding company had a record $109 billion in cash. [...]

After Decades of Hints, Buffett’s Heir May Now Be More Apparent

Keeping the successor’s identity a secret also gives the board more flexibility. Circumstances can change, after all, and probably have during the long period Berkshire’s board has been weighing its options. These days, however, most arrows are pointing toward one man. [...]

Abel has steadily expanded a utility holding company in Iowa into a colossus in the energy industry. It runs several power companies throughout North America and the U.K., interstate natural gas pipelines, and giant wind and solar farms. It’s a big part of Berkshire that stands to get only bigger, Buffett said in May, adding that it’s “hard to imagine a better-run operation.” [...]

Buffett's Fruit of the Loom Tries on Subscription Underwear

Warren Buffett’s Fruit of the Loom is joining the subscription craze.

Guys can now get their boxer briefs from the Berkshire Hathaway Inc.-owned brand through a new subscription service called Fruit to Your Door. Shoppers can buy a six-pack of skivvies, among other products, and have them re-ordered every six months at a 30 percent discount. The program, available for men’s and women’s garments in the U.S., can also be gifted. [...]

What's Geico Really Worth to Berkshire Hathaway?

Few success stories are as important as Geico, which has grown by leaps and bounds since Berkshire acquired it 1996. But as Buffett wrote in his 2010 letter to shareholders, Geico has never been written up to reflect its success and is carried at a mere $1.4 billion premium to its book value.

What would Geico be worth if Berkshire were willing to sell it? We can use a method Buffett laid out in his 2010 letter to shareholders to estimate its value. [...]

Warrren Buffett urged to take old oil tankers out of Adirondacks

An Adirondack conservation group is urging billionaire investor Warren Buffett to remove obsolete oil tankers now being stored indefinitely on a rail line in the Adirondacks.

Adirondack Council Executive Director William Janeway wrote last week to the Nebraska-based investor asking that rail cars owned by subsidiaries of Buffett's sprawling Berkshire Hathaway company be removed from the line.

Owned by Union Tank Car Co. and North American Tank Co., the graffiti-scarred cars are being stored in Warren and Essex counties on a line owned by a Chicago-based company. [...]

Warren Buffett scores a quick $230 million with DaVita deal

UnitedHealth is paying $4.9 billion for a division of DaVita, the kidney dialysis center operator that counts Berkshire as its biggest shareholder, with a 20 percent stake. The one-day paper profit to Berkshire is more than $231 million.

The deal is for DaVita Medical Group, which operates 300 clinics and a handful of outpatient surgical centers in six states. [...] The rest of DaVita will be left to focus on the kidney care business. [...]

Berkshire began investing in DaVita in 2011. The stock has been a favorite of Berkshire portfolio manager Ted Weschler, who has a personal stake in the medical services company of 2.2 million shares, according to FactSet.

But it hasn't always been a slam dunk. At the end of 2011, DaVita shares traded at about $38, rising to $75 by the end of 2014. But they are down 20 percent since then, closing on Tuesday at $60.93. [...]

Duracell Appoints Thom Lachman to CEO of the Duracell Company

Duracell and its parent company Berkshire Hathaway announced today that Thom Lachman has been promoted to CEO of the Duracell Company, Inc., effective January 1, 2018. Roberto (Bobby) Mendez will take over Lachman’s former role, being promoted to President of Duracell North America. [...]

Lachman joined Berkshire Hathaway as a member of Berkshire Hathaway’s Duracell Transition Team on November 1, 2015, and has served as Duracell’s President of North America since March 1, 2016. Before coming to Berkshire Hathaway, Thom gained over 30 years of experience with Procter & Gamble (P&G). His last role as President of P&G Canada was preceded by a role leading the North America integration of the Gillette acquisition. [...]

Chairman of Berkshire Hathaway’s Marmon to Retire in 2018

Frank Ptak, a longtime executive at one of the largest units of Warren Buffett’s Berkshire Hathaway Inc., said in an interview that he plans to retire at the end of 2018.

Mr. Ptak has overseen industrial conglomerate Marmon Holdings Inc. since 2006. He said his preferred successor is Angelo Pantaleo, the current chief executive of Duracell, another Berkshire business.

Earlier Thursday, Duracell said Mr. Pantaleo will become president and chief operating officer of Marmon on Jan. 1. He will also become Duracell’s chairman. [...]

Munich Re to take majority stake in aviation insurer

Munich Reinsurance Co. will hold a majority stake in Global Aerospace Underwriting Managers Ltd. after agreeing to buy an additional 11% of shares in the London-based aviation insurance provider.

Following the purchase from National Indemnity Co., a unit of Berkshire Hathaway Inc., Munich Re will own 51% and National Indemnity will own 49%

Katy Perry drops in on Warren Buffett

Warren Buffett met another celebrity when Katy Perry came to town last week for a concert — or was it the other way around?

Her Instagram account showed the two chatting in Buffett’s office and noted that they talked about cryptocurrency. [...]

Our musicologist, Kevin Coffey, reports that at the concert, Perry told the Omaha crowd that she had had lunch with “your governor, Warren Buffett.” [...]

Berkshire News Briefs - 8/28/15

This week, 90% of the news I saw about Berkshire Hathaway fit into three categories:

1. Slower news outlets and blogs covering last week's announced purchase of Precision Castparts.
2. The stock market dip earlier this week caused Warren Buffett to lose a lot of money.
3. Comparisons between Berkshire Hathaway and Google... errr... Alphabet.

But there were a few interesting other news bits:

Geico to pay $6M to settle Calif. insurance bias charges (St. Louis Post-Dispatch)

Geico, the auto insurance unit of Warren Buffett's Berkshire Hathaway Inc, agreed to pay $6 million to settle charges it discriminated based on gender, education level and occupation when quoting rates online, the California Department of Insurance said on Monday.

The settlement lasts three years and resolves claims first raised by the Consumer Federation of California against Geico, which insures more than 22 million vehicles.

Geico was accused of targeting women, people with low incomes and people not working in professional or executive jobs with deceptive and inflated rate quotations, while offering better terms to drivers it considered more desirable. [...]

DQ Bakes is Dairy Queen's largest-ever menu expansion (Minneapolis Star Tribune)

Look for a raft of Dairy Queen TV ads next month for the Turkey BLT, Triple Chocolate Brownie a la Mode and more items from the new DQ Bakes menu.

Dairy Queen says it’s the restaurant chain’s largest-ever menu boost, aimed at bolstering its appeal as a food destination, while fortifying its stronghold in sweet treats.

Dairy Queen’s franchisees nationwide are installing oven systems — a big investment — to make DQ Bakes. And the Edina-based chain is for the first time doing year-round advertising to burnish a brand that turned 75 this year. [...]

While Berkshire is publicly traded, it doesn’t include Dairy Queen’s results in its financial reports. Gainor said that Dairy Queen’s stores together do $4.1 billion in annual sales. The company’s massively popular Blizzard makes up about 36 percent of that tally.

The chain’s same-store sales growth, a key restaurant financial gauge, has been in the high single digits in the past year or so, and in the mid-single digits on average since the 2009 recession, Gainor said. [...]

Shaw to make more carpet from recycled PET (Plastics News)

Shaw Industries Group Inc. plans to spend tens of millions of dollars at a South Carolina carpet fiber plant to increase the use of fiber from recycled plastics.

The world’s largest carpet maker, based in Dalton, Ga., is planning new polyester extrusion operations that will include the use of recycled PET beverage containers. The company also will add nylon fiber capacity. [...]

The $45 million project will create more than 50 new jobs at the facility, which already employs 290, the company said. Across South Carolina, Shaw has seven plants and more than 1,500 workers. [...]

S&P: Reinsurance M&A Will Be Driven by Berkshire Hathaway Model (Insurance Journal)

“We have seen an increased interest by investors to emulate the Berkshire Hathaway Inc. business model,” S&P said in its report. “Through their investment holding companies, they are acquiring [insurer/reinsurers] with strong operating cash flows that will be upstreamed to the parent company. This buy now and pay later [insurance/reinsurance] model generates cash flows, or “float” that these [Berkshire Hathaway] copycats invest.” [...]

The Berkshire Hathaway “business model is hard to duplicate and it is becoming a crowded trade in an already saturated reinsurance market,” the ratings agency said. “We expect more similar deals to come to the market during the next 12 months, which will likely continue to put pressure on reinsurance pricing given these holding companies’ lower cost of capital relative to stand-alone, publicly traded reinsurers.”

Burger King peace offer to McDonald's: 'Let's make a McWhopper' (Business Insider)

In the name of global peace, Burger King proposed making the hybrid hamburger to its rival McDonald's on Wednesday, at least for one day, the United Nations-promoted International Day of Peace on Sept. 21.

Burger King, perpetually locked in tough competition with the larger but less profitable McDonald's, delivered the olive branch via a full-page advertisement in The New York Times, saying it is time to "call a ceasefire on these so-called burger wars." [...]

Behind the scene in the campaign is some of the financial power of Burger King's part-owner, Berkshire Hathaway head Warren Buffett.

Peace One Day is strongly backed by the charitable foundation of the tycoon's son Howard Buffett, who is a director of Berkshire Hathaway and possible successor to his father as chairman.

Berkshire Hathaway 1Q15 Earnings

10-Q Quarterly Report

Company Press Release (a brief summary)

Berkshire Hathaway Inc. Reports a Solid 20% Increase in Operating Income in the First Quarter (Fool)

Ahead of its annual shareholders meeting over the weekend, Berkshire Hathaway reported first-quarter results for 2015. Operating earnings, which exclude the impact of gains or losses in its equity and derivatives contracts, jumped by 20%, to $4.24 billion, up from $3.53 billion in the first quarter of 2014. Net income also jumped 9.7%, to $5.16 billion, or $3,143 per Class A share.

Investment results were less than spectacular, largely the result of losses from its outsize public stock portfolio. The company reported losing $1.02 billion from its equity portfolio. [...]

Berkshire Profit Climbs 9.8% on Burger King, Railroad Gain (Bloomberg)

Berkshire’s biggest unit, the BNSF railroad, contributed $1.05 billion to quarterly earnings, compared with $724 million a year earlier. The railroad said last week that it won back market share for grain and agriculture commodities that it lost to Union Pacific Corp. in 2014. [...]

The manufacturing, service and retail segment, which includes toolmaker Iscar and chemical company Lubrizol, added $1.12 billion to earnings, compared with $933 million a year earlier. Profit climbed 59 percent to $230 million at the segment selling building products as the Shaw carpet business and Johns Manville insulation provider benefited from higher sales and lower costs for energy and raw materials.

Profit at the utility unit, Berkshire Hathaway Energy, fell to $421 million from $452 million a year earlier as milder weather limited demand. The business operates natural-gas pipelines that stretch from the Great Lakes to Texas and power companies in states including Iowa and Nevada. [...]

Berkshire Starts 2015 on a More Solid Note (Morningstar)

Book value per Class A equivalent share at the end of the first quarter was $146,963--up 6% year over year and basically flat when compared with the fourth quarter of 2014. This was lower than our forecast, which had book value per share increasing to $149,841 at the end of the first quarter. The company closed out the first quarter of 2015 with $63.7 billion in cash on its books, up marginally from $63.3 billion at the end of last year, even though the firm spent $4.1 billion to close out the Van Tuyl deal in early March. Berkshire did not buy back any shares during the first quarter of 2015.

Looking more closely at Berkshire's insurance operations, only two of the firm's four insurance lines--Geico and Berkshire Hathaway Primary Group--posted earned premium growth during the quarter, with General Re and Berkshire Hathaway Reinsurance Group reporting another quarterly decline. [...]

Berkshire News Briefs - 12/14/14

Berkshire Hathaway buys Charter Brokerage (Fortune)

Warren Buffett’s Berkshire Hathaway Inc on Friday said it was buying oil industry logistics provider Charter Brokerage from private equity firm Arsenal Capital Partners. [...] Charter is a U.S. petroleum and chemical drawback services provider. A drawback is the refund of import duties and taxes on a product when a form of that same product is exported. Charter Brokerage connects importers and exporters in the petroleum and petrochemical industries to arrange such refunds. Earlier this year, a source familiar with Arsenal’s potential sale of Charter valued the company at up to $500 million.

Warren Buffett Looks Ahead to Berkshire’s Next 50 Years (WSJ MoneyBeat)

Warren Buffett says that lately he’s been pondering the future of Berkshire Hathaway Inc. more than usual. Like in years past, he has been busy composing his annual letter to shareholders reviewing Berkshire’s performance in 2014. However, because 2015 will mark the golden anniversary of Berkshire Hathaway under “current management,” Mr. Buffett has also been laying out, on paper, his vision for Berkshire for the next 50 years. [...] Berkshire shareholders and those who follow the conglomerate’s activities will get a bonus next year: Mr. Munger is also writing down his vision for Berkshire for the next 50 years. Shareholders love Mr. Munger’s sometimes bruising wit and deadpan delivery, often in response to questions posed at Berkshire’s annual meeting.

Berkshire Hathaway Director Susan Decker Offers Rare Peek Into How The Berkshire Board Functions (Silicon Valley Business Journal)

Berkshire Hathaway's unusual operating style extends deep into the boardroom, according to Susan Decker, the former Yahoo! CFO who became a director in 2007. [...] "The board is not involved in the valuation decision for acquisitions. Warren will often discuss large deals with the board in advance, but usually at the conceptual level, rather than asking for approval of valuation and structuring," Decker said. "It's the opposite with other boards I'm on, in which approval is required by the board for the funds used for large acquisitions and for structuring considerations of the deal."

NetJets infiltrated private website, pilots say (Columbus Dispatch)

The NetJets pilots union is accusing company officials of impersonating a member of the union on Twitter and infiltrating a password-protected message board. [...] The union has a website for its members. Parts are public, but much of the site is private and password-protected. The lawsuit alleges that in September a NetJets official had several printouts of pages of “ confidential communications” from the message board. This created a “chilling effect on the ability of union members to communicate with one another and their union leadership and interferes with the union’s ability to fairly represent (the pilots),” the lawsuit states, adding that such surveillance is a violation of the Railway Labor and Stored Communication acts. [...] The lawsuit also charges that tweets from someone with the Twitter handle TwinkieTheKid tried to interfere with union elections, threatened to blacklist union pilots from other employment and posted photos of union members “conducting lawful picketing, thereby documenting the identities of union members who engaged in protected activities under the Railway Labor Act.”

Pilots picket NetJets at Art Basel (NY Post)

Pilots for private jet firm NetJets are picketing outside Art Basel Thursday against their own company, which is owned by Warren Buffet‘s Berkshire Hathaway, for a plan that would reduce their paycheck by 5 percent over five years, and have them work more hours. [...] Explaining, that the reason CEO Jordan Hansell “is telling us we have to take pay cuts is because Berkshire Hathaway is demanding a greater return, they want more profits to be sent up to Berkshire … our owners are some of the wealthiest people on the planet, really.”

Berkshire Hathaway insurance unit to enter Singapore (Omaha World Herald)

Berkshire Hathaway Specialty Insurance, a 2013 startup at Warren Buffett’s Berkshire Hathaway, has expanded to Singapore, where it plans to sell business coverage. The Boston-based unit of Omaha’s Berkshire said in a statement Monday it had received a license to sell insurance in Singapore, a city-state in Southeast Asia with a population of 5.5 million that is the world’s second-largest port and fourth-largest financial center. BHSI, started at Berkshire Hathaway with the defection last year of many top executives at New York-based American International Group, plans to sell coverage in Singapore for commercial property, business liabilities, energy and construction projects, and marine and financial risks.

Understanding The True Value of Warren Buffett's Berkshire Hathaway Inc. (Fool)

So what is the actual intrinsic value of Berkshire Hathaway and the litany of businesses it owns? Well, that's an easier question to ask than to answer. [...] Buffett is right in saying neither he nor Charlie -- nor anyone else for that matter -- can definitively calculate the true intrinsic value of Berkshire. But we can be certain it is worth a whole lot more than the $8.2 billion (or just 2.2% of its total value) the market currently suggests it is.

Berkshire Hathaway Owns 4.18% of Restaurant Brands International and Controls 14.37% of its Voting Shares (Valuewalk)

Upon the closing of the Burger King acquisition of Tim Horton’s on December 12, 2014, Berkshire purchased, for a total of $3 billion, a 9% perpetual voting preferred stock and exercised a warrant to purchase 8,438,225 common shares at the exercise price of $0.01 per share [...] However, Berkshire’s press release indicates that it now owns 4.18% of the outstanding common shares of QSR. [...] The 4.18% stake translates into approximately 20.2 million shares which, at BKW’s closing price on December 12 of $35.50 per share, are currently valued at about $715 million.

Buffett's wealth balloons as Berkshire hits high (CNBC)

Warren Buffett is now the world's second-richest person as Berkshire Hathaway's stock rallied to an all-time high. Forbes said its real-time ranking of the world's billionaires now estimates Buffett's wealth at $74.4 billion, about $1.5 billion more than Carlos Slim's $72.9 billion. Slim is now in third place.

Berkshire News Briefs - 11/13/14

Berkshire Hathaway Inc. Earnings: Don't Trust the Headlines (Fool)

Consider the coverage from Businessweek, headlined "Berkshire Profit Slips on Buffett's Tesco 'Mistake'," or the report by Fortune, titled "Berkshire Hathaway Earnings Take a Dip on Investments." Although those are factual realities about Berkshire's third quarter, the problem is, they don't tell the whole story. As it turns out, investors have no absolutely no cause for concern.

Warren Buffett’s Berkshire to Buy Duracell From Procter & Gamble (NY Times Dealbook)

Instead of simply being spun out from Procter & Gamble, Duracell will find a new corporate home – with Warren E. Buffett. The conglomerate run by the billionaire, Berkshire Hathaway, said on Thursday that it would acquire Duracell from P.&G. through an unusual transaction aimed at lowering the overall tax bill.

Warren Buffett's Berkshire Hathaway buys Duracell batteries (CNN)

Warren Buffett's Berkshire Hathaway has agreed to buy the Duracell battery brand from Procter & Gamble in a multi-billion dollar deal. Berkshire Hathaway announced Thursday morning it will make the purchase using about $4.7 billion in P&G stock. The consumer products giant also committed to pump $1.8 billion in cash into Duracell. The amount means Buffett is virtually cashing out his entire P&G holding to buy the battery brand. That holding had made him the fifth-largest shareholder in Procter & Gamble. [...] P&G bought Duracell back in 2005 as part of its $57 billion acquisition of Gillette. Who did they buy it from? Berkshire Hathaway, which at the time was the largest shareholder in Duracell's then-owner.

Buffett Set to Save More Than $1 Billion on Taxes in Swap (Bloomberg)

For the third time in a year, the billionaire chairman of Berkshire Hathaway Inc. has structured a deal in which he buys businesses in exchange for stock that has appreciated. The transactions, called cash-rich split-offs, allow him to avoid capital gains taxes that would be incurred if he sold the shares in the open market. Berkshire announced today that it would turn over about $4.7 billion in Procter & Gamble Co. stock in exchange for P&G’s Duracell battery business, which will be infused with about $1.7 billion in cash. Since Buffett’s cost basis on the shares was about $336 million, and corporate capital gains are typically taxed at 35 percent, structuring the deal in this way could save Berkshire more than $1 billion.

Buffett Said He Paid a Lot. $15 Billion Later, BNSF Is a Cash Machine. 'He Stole It' (Bloomberg)

Days after Warren Buffett announced his $26.5 billion buyout of railroad BNSF, he insisted that he’d paid a steep price to own a business that would benefit his company, Berkshire Hathaway Inc., over the next century. [...] Five years later, that assessment rings a bit hollow. Buoyed by an onshore oil boom, BNSF has become a cash machine for Buffett. The railroad had sent more than $15 billion in dividends to Berkshire through Sept. 30, according to quarterly regulatory filings, the latest of which was released last week. More stunning: The business is on pace to return all the cash Buffett spent taking it private by the end of this year.

BNSF profit is up, but volume held back by congestion (Omaha World Herald)

BNSF Railway, employer of 5,000 people in Nebraska, said third-quarter profit rose 5 percent, with freight volume falling 1 percent as congestion continues to strain the company’s rail network. [...] net income was $1 billion, up from $989 million, a year earlier. Revenue rose 4 percent to $5.8 billion. Freight volumes fell in three of the railroad’s four categories, as crew, locomotive and railcar shortages coupled with record grain harvests and crude oil production from North Dakota have led to shipping delays. The harsh winter and spring floods also hurt the nation’s railroads in getting trains to customers on time. To speed improvements, BNSF said in its quarterly update that it has budgeted $500 million more for capital improvements, on top of the $5 billion already allocated.

Burger King tests India waters, starts with 12 outlets (CNBC)

U.S. fast food chain Burger King Worldwide will open about 12 outlets in India over the next 60-90 days, Rajeev Varman, chief executive of the hamburger chain's India unit said on Saturday. [...] In India, the hamburger chain has changed its menu to sell mutton, chicken and veggie sandwiches. [...] Burger King is a late entrant in the country. Rival McDonald's Corp has been around for close to two decades and has already grown its network in tier two and three cities.

Berkshire News Briefs - 9/12/14

Berkshire Challenges Lawuit Over Benefits at Brick Unit (Bloomberg)

Warren Buffett’s Berkshire Hathaway Inc. (BRK/A) didn’t break promises on retirement benefits to employees of a brick-making business it acquired in 2000, the company said in a challenge to a lawsuit filed last month. [...] The plaintiffs have misinterpreted the agreement to acquire Fort Worth-based Acme, Berkshire said today in a statement. The plaintiffs mistakenly contend that the acquisition “required Acme to permit participants to accrue additional defined benefits forever, at the same rate that benefits were being accrued at the time of the acquisition,” Berkshire said today. The plaintiffs also contend the acquisition required “additional 401k matches forever,” at the same rate as the matches in 2000, Berkshire said.

Railroad union rejects contract with BNSF that would have allowed one-person crews (Minneapolis Star Tribune)

A railroad union has rejected a deal with BNSF that would have allowed one-person crews on as much as 60 percent of its tracks. [...] The deal would have allowed BNSF to use one-person crews on tracks where a system capable of stopping the train remotely had been installed. But trains that carry hazardous materials, such as crude oil and chemicals, would have continued to have two-person crews. BNSF operates tracks in 28 states in the western U.S. and two Canadian provinces. The railroad, based in Fort Worth, Texas, said it has Positive Train Control systems installed on about 60 percent of its 32,500 miles of track.

Dairy Queen still light on details of data breach (Minneapolis Star Tribune)

A week after crooks hacked into its customers’ financial data, Dairy Queen still hasn’t released specifics on the breach. Still, the Edina-based company said in a statement Thursday it has “determined that only a small portion of our 4,500 U.S. stores are potential victims of the criminal activity. The stores are not geographically clustered and each has a mitigation plan.” [...] Dairy Queen’s efforts to track the hack may be complicated by its business structure. Almost all of its stores are owned by franchisees, so there could be a multiplicity of information technology systems. Dairy Queen has 3,000 franchisees in the United States, many operating just a handful of stores. Of course, such a decentralized system like Dairy Queen’s may also have impeded a wider hack. [...] Dairy Queen was stricken with “Backoff” malware, and last week the U.S. Department of Homeland Security said that more than 1,000 retailers could have been hit by it. Backoff is believed to be behind a hack announced in mid-August by Eden Prairie-based Supervalu, which affected just over 1,000 grocery and liquor stores; and the massive attack on Target during the 2013 holiday season, which exposed the financial data of 70 million customers.

Shaw files ‘epic’ suit against flooring rival Carlisle (Atlanta Constitution-Journal)

Shaw Industries Group, the Dalton-based carpet and flooring producer, is suing a competitor for trademark infringement and deceptive trade practices over the use of the word ‘epic’. In a lawsuit filed recently in federal court in Atlanta, Shaw claims Carlisle Wide Plank Floors refuses to drop the word “epic” from its marketing, a “mark” that Shaw said it has had exclusive rights to use since 2006. Carlisle, based in Stoddard, NH., calls itself “the epic wide plank floor company.” In marketing material, the company says it produces the widest, longest center-cut plank floors available in the world and that its product is “truly epic.” [...] Shaw said it licenses the use of “EPIC”, which the manufacturer uses as a reference for “engineered wood flooring”, from Omaha-based Columbia Insurance Co., which owns the mark. Both companies are subsidiaries of billionaire Warren Buffet’s Berkshire Hathaway investment firm.

Buffett Called Hatch to Gauge U.S. Tax Inversion Policy (Bloomberg)

Billionaire investor Warren Buffett called U.S. Senator Orrin Hatch to gauge Congress’s direction on curbing tax inversions, the senator said today. Buffett, chairman and chief executive officer of Berkshire Hathaway Inc., is helping finance Burger King Worldwide Inc.’s purchase of Tim Hortons Inc. and its move to Canada. That transaction could be affected by legislative and regulatory changes being considered in Washington. [...] The call happened before Burger King “reached final agreement” on the deal and “consequently well before it was announced” on Aug. 26, Debbie Bosanek, Buffett’s assistant at Omaha, Nebraska-based Berkshire, wrote in an e-mail today. [...] Charles Munger, Berkshire’s 90-year-old vice chairman, said yesterday that Berkshire will pay the U.S. government more because of its $3 billion investment in the deal. “Anyone who thinks this is a great tragedy and a great injustice is stark raving mad,” Munger said regarding the fact that the new company will be based in Canada. “It’s a non-event.”

The 1 Peculiar Trait Shared by Warren Buffett's Energy Investments (Fool)

Since the beginning of last year, Berkshire has made two major additions to his portfolio in the energy industry -- ExxonMobil and Suncor Energy -- and has also added significantly to his position in one other -- National Oilwell Varco. On the surface, they look like pretty different companies. You have the largest integrated oil and gas company, a specialist in the Canadian oil sands business, and an oil and gas equipment and services supplier that has a corner on building drill rigs and related equipment. [...] It all comes down to generating fat stacks of cash from continuing operations. It's not just that these companies are really good at generating free cash flow from continuing operations, it's that they are the best at it in their respective realms.

Colahan to leave RSA for Berkshire Hathaway in Australia (Post Online)

The names and resumes of the people involved here aren't as important as the bigger story between the lines that Berkshire Hathaway Specialty Insurance is expanding to Asia and Australia.

Post understands Chris Colahan, CEO RSA Asia, is leaving the company to oversee a new operation for Berkshire Hathaway in Australia. [...] Post understands Colahan will help set-up Berkshire Hathaway Specialty in Australia and New Zealand, while Marc Breuil, formerly head of AIG Hong Kong, has been tasked with heading up its Asia operations. Berkshire Hathaway has also recruited Marcus Portbury AIG's regional casualty head for Asia-Pacific. [...] Buffett has reportedly authorised Berkshire Hathaway Specialty Insurance to apply for licenses in Sydney, Europe, Hong Kong and Singapore.

Berkshire Hathaway Inc. CEO Warren Buffett the Social Media Leader on Twitter Inc (TWTR) Amongst Fortune 500 CEOs (Insider Monkey)

Berkshire Hathaway Inc. CEO and legendary investor Warren Buffett is the leading Fortune 500 CEO on Twitter Inc, in spite of making just five tweets since he joined the social media network last year, and none since February of this year. While underscoring the reverence people have for Buffett on the one hand, it also speaks to the fact that not many prominent CEO’s are making use of social media [...]

Ex-Bengal Ickey Woods does 'Ickey Shuffle' in Geico ad, internet loves it (CBS Sports)

Former Bengals running back Ickey Woods only played in 37 games during his brief NFL career, but that was long enough for him to give us the 'Ickey Shuffle.' Woods would do the shuffle after every touchdown he scored, which meant 15 shuffles in 1988. The shuffle was everywhere in 1988 because the Bengals made it all the way to the Super Bowl. Thanks to Geico, the shuffle is now back.

Berkshire News Briefs - 9/5/14

Buffett’s Burger King Deal Has Warrant for 1.75% Stake (Bloomberg)

Berkshire Hathaway Inc.’s $3 billion of financing for Burger King Worldwide Inc.’s planned takeover of Tim Hortons Inc. gives billionaire Warren Buffett the option to buy a 1.75 percent stake in the combined company. Buffett’s company received the warrant to buy common shares and agreed to purchase 30,000 preferred shares as part of the deal, Miami-based Burger King said yesterday in a regulatory filing. The perpetual preferred securities pay a 9 percent coupon. [...] “Berkshire’s participation on this deal demonstrates its ability to use its strong balance sheet and massive cash generation to capture very attractive returns, even without the backdrop of a financial crisis,”[...]

Canadian identity wrapped up in homegrown ‘Timmy’s’ (Omaha World-Herald)

Few things unite Canadians the way Tim Hortons does. [...] So news last week that Burger King will buy Tim Hortons -- helped by $3 billion of preferred equity financing from Warren Buffett’s Berkshire Hathaway -- served as a bittersweet reminder of how beloved the homegrown chain is in Canada. Seventy-five percent of all the coffee sold at fast-food restaurants in Canada comes from “Timmy’s,” [...] While the takeover by Burger King, which is based in Miami but controlled by a Brazilian private equity fund, is getting much attention in Canada, it’s not causing panic. U.S.-based Wendy’s recently owned Tim Hortons and its brand remained intact. Wendy’s then spun off Tim Hortons as a separate company in 2006 after more than a decade of ownership.

Acme Brick employees sue Buffett’s Berkshire Hathaway for cutting retirement benefits (Fort Worth Star-Telegram)

Two employees and a retiree of Fort Worth-based Acme Brick Co., including the company’s chief financial officer, have sued the company and its parent, Berkshire Hathaway, alleging the company improperly reduced the company match on its 401(k) retirement plans and froze its pension plan. The class action suit, filed Aug. 15 in U.S. District Court in Fort Worth, says Berkshire Hathaway, run by multi-billionaire Warren Buffett, broke a pledge it made when it acquired Acme with Justin Industries in 2000 not to reduce benefits in the company’s retirement plans. [...] Acme Brick’s senior management on July 15 voted to make changes to the retirement plans urged by Buffett, Berkshire’s chief executive officer, and Marc Hamburg, its chief financial officer. Otherwise “Berkshire Hathaway intended to divest itself of Acme as a subsidiary,” the lawsuit says. [...] The lawsuit alleges that the changes to Acme’s retirement plans violate the federal Employee Retirement Income Security Act, commonly known as ERISA.

'The whole system is suffering': Words of frustration, caution at hearing on rail delays (Omaha World-Herald)

BNSF is working on improvements with all the gusto it has, company marketing chief Stevan Bobb said. “We know our service has not met your needs,” said Bobb, addressing the room full of farmers, grain cooperative officials and other shippers. Bobb noted the the company’s shipments from North Dakota — a state bulging with wheat, corn, barley, crude oil, soybeans and many other commodities — are at a record. Grain shipments from North Dakota this year, Bobb said, are still higher than a year ago, delays or not. BNSF, he told commissioners, is shifting railcars to the region and counting on track improvements scheduled to wrap up in October. “We should have the capability to move record volumes. Note that I said should,” Bobb said. “If all the bushels want to move in the same month, your railroad could be running like a sewing machine and you are still going to be late.”

Why Bill Gates And Warren Buffett Are Railroad Rivals (Business Insider)

[...] even though both billionaires are philanthropically entwined, when it comes to the old-school realm of investing in North America's railroads, Gates and Buffett part ways. [...] In Gates' case, his railroad stake can be viewed as simply an investment -- evidently a timely one -- but nothing more than that. Gates isn't running CN. But Buffett, because Berkshire Hathaway owns BNSF, is effectively running the railroad.

Buffett Search for Sure Thing Propels 76-Year Junk Food Quest (NewsMax)

Billionaire investor Warren Buffett got his entrepreneurial start at age 7, buying six-packs of Coke for a quarter, then hawking the beverages for a nickel apiece on hot summer nights. Now, at age 83, he’s still betting on simple indulgences. Berkshire Hathaway Inc. agreed Tuesday to provide $3 billion of financing for Burger King Worldwide Inc.’s purchase of doughnut chain Tim Hortons Inc. [...] Berkshire also owns See’s Candies and Dairy Queen, which sells ice cream and burgers. In 2008, Buffett’s firm helped finance Mars Inc.’s purchase of chewing-gum maker Wm. Wrigley Jr. Co. [...] For fast-food chains and candy and soda companies, Buffett “can look into the future and not have to wonder if they’re going to be doing great things,”

Why Buffett's son bought Rosa Parks archive (CNN Money)

Howard Buffett, the youngest son of the billionaire investor, said he was thinking of his mother when he paid $4.5 million for a trove of historic belongings left by civil rights activist Rosa Parks. "I knew that my mom would think that it was something that should get done," Buffett told CNNMoney. [...] "This is an incredible part of history, and to have that history locked in a chamber somewhere is not right," Buffett said. Buffett runs the Howard G. Buffett Foundation, which works in the developing world to improve agriculture and clean water delivery. He said the Parks material would be turned over to an institution that would ensure its availability to historians and others.

Berkshire News Briefs - 8/27/14

Buffett greases $11B Burger King-Tim Hortons deal (CNBC)

Burger King on Tuesday confirmed plans to acquire Ontario-based Tim Hortons for about $11 billion—creating a new company to be based in Canada with combined sales of $23 billion. Berkshire Hathaway Chairman and CEO Warren Buffett is helping to fund the deal by committing $3 billion of preferred equity financing. The news release on the deal did not disclose the terms for Berkshire, which is only a financing source and will not have any participation in the management and operation of the business.

Burger King, Warren Buffett under fire for Canadian inversion deal (LA Times)

Burger King's overall effective tax rate in 2013 was 27.5%, according to its annual report. Tim Hortons' effective tax rate for the same year was 26.8%. "We don’t expect there to be meaningful tax savings, nor do we expect there to be a meaningful change in our tax rate," Burger King Chief Executive Daniel Schwartz told reporters on a conference call. [...] Buffett said Tuesday that it made sense for the combined company's headquarters to be in Canada. “Tim Hortons earns more money than Burger King does,” he said told the Financial Times. “I just don’t know how the Canadians would feel about Tim Hortons moving to Florida. The main thing here is to make the Canadians happy.”

Buffett’s Berkshire to pay $896,000 over reporting violation charges (Fortune)

This story was just breaking when I included a short brief about it in last week's news briefs. Here's a better story about it.

Berkshire Hathaway has agreed to pay a $896,000 civil penalty in order to settle charges that it failed to give federal regulators advance notice before significantly increasing its stake in Chicago-based drywall maker USG last year. [...] The regulators said that Berkshire violated pre-merger reporting laws in December when it failed to provide advance notice before it exchanged $243.8 million of USG convertible notes for 21.39 million common shares, increasing Berkshire’s stake in USG to roughly 28% from about 15%. [...] What’s more, the FTC says the alleged violation came just a few months after Berkshire produced a similar violation when it increased its stake in financial services company Symetra Financial. The FTC chose not to punish Berkshire for that alleged violation, with the commission instead deciding to take Buffett’s firm on its word that it would comply with the Hart-Scott-Rodino Act’s filing requirements going forward.

Squeezed by consumers' focus on fresh foods, Heinz revamps frozen meals (Pittsburgh Tribune-Review)

Known primarily as a maker of ketchup and condiments, Heinz is a major player in the $50 billion frozen food industry, with brands such as Ore-Ida potatoes, Bagel Bites, Weight Watchers Smart Ones, T.G.I. Friday's and Nancy's. But the industry has lately experienced a slump in sales, as consumers give frozen fare a cold shoulder and increasingly choose fresh foods they perceive as healthier. That's put more pressure on Heinz and others in the industry to revamp products.

Heinz recalls four batches of infant food in China (Reuters)

Ketchup maker H.J. Heinz Co has recalled some infant food in eastern China after it was found to contain lead in excess of the allowable limit, the company said on Monday. The move by Heinz comes after food safety regulators in eastern Zhejiang province said on Friday that they had found "excessive amounts of lead" in the company's AD Calcium Hi-Protein Cereal. [...] "This relates to an isolated regional withdrawal in eastern China," company spokesman Michael Mullen said in e-mailed comments to Reuters. "Extensive testing confirmed that no other Heinz baby food varieties are affected."

Rise of discount retailers hits Heinz's Irish business (Irish Independent)

The Irish arm of food giant Heinz has blamed the increasing impact of discount retailers here for contributing to a 8.4% drop in its Irish business last year. [...] The principal activity of the firm is the manufacture of frozen food products for Heinz's manufacturing supply chain hub. The directors also state that revenues were impacted by "the meat integrity issues that received prominent media coverage in the first half of the current period". Part of the firm's business is to sell, market and distribute Heinz products in the Irish market and according to the directors "while in overall market terms the company's core categories have declined consistent with the softness in the Irish grocery trade, the company has grown relative market share".

Berkshire's Probable Q3 Strategy For Chicago Bridge & Iron (Seeking Alpha)

Chicago Bridge & Iron has become a battleground stock in the last several months, following a short thesis issued by Prescience Point in mid-June, which has resulted in declining share prices, including questions about the quality of CBI's accounting statements. It appears the market was and continues to hold Berkshire Hathaway as the final arbiter for this conflict, as CBI's largest shareholder, and the most recent data indicates Berkshire continues to see value in the company. [...] According to the [13F] filing, Berkshire's position increased by about 12 percent, to 9.89 percent of CBI equity during the second quarter. Bloomberg also reported on August 21st that, according to a report to state insurance regulators, Berkshire bought those shares acquired during the second quarter "at an average price of $70.34 over a stretch that ended June 20." This appears to indicate that Berkshire acquired these new shares immediately following the initial decline that followed the Prescience Point report.

China's BYD shares slide 9 pct in Hong Kong after H1 earnings drop (Reuters)

Berkshire Hathaway owns 10% of BYD.

Shares of BYD Co Ltd were set to open 8.7 percent lower in Hong Kong on Monday after it posted a drop in first-half net profit as sluggish sales of gasoline cars offset a surge in its electric vehicle business. [...] BYD saw its first half net profit fell 15.5 percent to 360.7 million yuan ($58.64 million) from 426.9 million yuan a year earlier, dragged down by a 27 percent fall in vehicle sales volume.