Berkshire Subsidiary Briefs - 12/14/15

What It’s Like to Be Owned by Berkshire Hathaway (Harvard Business Review)

Berkshire Hathaway is known for its extreme decentralization. The company’s more than 80 operating subsidiaries have complete independence and minimal oversight from headquarters, which requires little else besides regular financial statements and the return of excess cash that is not needed to sustain and grow the business. The company does not ask for budgets, financial forecasts, or strategy documents. It has no central marketing, procurement, sales, HR, IT, or legal department. It does not even have a General Counsel. This is for a corporation greater in size than General Electric, General Motors, IBM, or Chevron.

How exactly does such a structure work, given that it defies almost every major tenet taught in business school regarding management and governance?

Could This Company Be Berkshire Hathaway's Largest "Bolt-On" Acquisition to Date? (Fool)

The Financial Times reported this morning that Warren Buffett's Berkshire Hathaway Inc. is one of the companies exploring a bid for ITC. [...]

As of today, ITC Holdings has a market capitalization of $5.8 billion (enterprise value: $10.2 billion), which would make it the largest "bolt-on" acquisition in Berkshire Hathaway's history by a large margin.

However, the setup for this deal would be highly atypical for Berkshire, which generally announces agreed deals after conversations in which it is the sole potential acquirer.

Buffett's BNSF May 'Participate' In CP-Norfolk Battle (Investors Business Daily)

Shares of Norfolk Southern rose Friday on a report that BNSF Railway Chairman Matt Rose said his company may enter the bidding for the struggling railroad.

BNSF, which is controlled by Warren Buffett's Berkshire Hathaway (NYSE:BRKB), might step in to provide a competitive bid to Canadian Pacific Railway's $28 billion hostile offer for Norfolk Southern, Rose told Bloomberg in an interview.

How Berkshire Hathaway Travel Protection Is Targeting Millennials (Travel Agent Central)

From claims sent via smartphone to claim payments that can be made directly into the consumer’s bank or PayPal accounts, the company's technology-focused innovations are being used to attract a younger customer, says Sivley.

“In 2013, when we were looking at the market and what we wanted to do, it was all geared around the fact that we wanted to do something totally different and it was actually aimed at or targeted at the Millennials,” Sivley tells Travel Agent. [...]

NetJets' Profits Take Hit with Aircraft Cancellations (Aviation International News)

While its aircraft share sales have increased this year, NetJets' earnings suffered in the third quarter as the company continued to streamline its fleet with the cancellations of some older orders and the realignment with new models. In the quarter, NetJets reported a 37-percent drop in earnings from “increased nonfuel flight operation costs and increased general and administrative expenses, including fees to cancel certain aircraft purchases,” parent company Berkshire Hathaway reported.

Berkshire Hathaway often does not break out specifics on revenues and earnings for NetJets and its sister company FlightSafety International, and did not specify which aircraft cancellations eroded earnings in the third quarter. But French airframer Dassault in July reported the cancellation of a NetJets order for 20 Falcon 2000s that dated back to 2006. [...]

Warren Buffett And Berkshire Hathaway's Collection Of Privately Held Companies (Seeking Alpha)

Buffett has built up his wealth over the years through his conglomerate Berkshire Hathaway. The company started out as a textile business but over time transformed into a holding company for his many equity investments. Most of Berkshire's largest holdings are minority positions he's taken in large companies like Coca Cola and Wells Fargo.

But some may not know about the privately held companies that Buffett also owns. Buffett has been known to purchase some companies in entirety if he's a fan of its business model. Buffett and Berkshire Hathaway now fully own over 50 different companies including several well known names. [...]

How Warren Buffett Helps Start-Ups Without Spending a Dime (The Street)

Buffett, the CEO of Berkshire Hathaway, "has never allocated capital to a start-up and wouldn't, because he's way too conservative," said Lawrence Cunningham, corporate law professor at George Washington University and author of Berkshire After Buffett. "On the other hand, the operating companies are allowed to do whatever they want pretty much."

Those companies include a variety of household names, from fast-food chain Dairy Queen to auto-insurer Geico and Burlington Northern railroad. And some of them, like furniture business CORT, are dipping their toes into the start-up realm. [...]

Berkshire News Briefs - 4/29/15

Berkshire Hathaway Inc BNSF Retakes Agricultural Transport Market Share From Union Pacific Corporation (Bidness Etc)

Berkshire Hathaway Inc.-owned Burlington Northern Santa Fe Corp (BNSF) railway reported yesterday that it has taken back its market share of grain and agricultural goods. The company lost its share last year as it failed to meet the customer demand and because its competitor, Union Pacific Corporation, had taken the market share lost by BNSF, and has been providing services since then. [...]

Union Pacific managed to increase its carload by 6.7% during last year, benefiting from the market share loss of BNSF. As BNSF is increasing its market share in agricultural goods, Union Pacific will ultimately lose some of its cargo load and market share. BNSF managed to increase its grain carload by 27% in the first quarter of the current year, hitting Union Pacific carload, which declined 3%. BNSF aims at further increasing its market share of agricultural product cargo, which contributed to 19% of the company’s total revenues last year.

Berkshire insurance unit has unique birthday celebrations (Boston Globe)

Most financial companies don’t celebrate their birthday with a slide show and a song written for the occasion. But Berkshire Hathaway Specialty Insurance isn’t a typical financial company.

The company already employs more than 550 people, including nearly 75 at its downtown Boston headquarters, even though the Berkshire Hathaway subsidiary will be only two years old on April 29. It’s aiming to exceed $1 billion in premiums this year. [...]

The company now has nine offices in the United States and operates in five other countries. It has made at least one big acquisition, the purchase in 2014 of travel assistance firms MyAssist and Insure America, so far. Eastwood said he hopes to expand into the United Kingdom and continental Europe later this year.

MiTek Acquires BuilderMT (BusinessWire)

MiTek Industries, Inc. (“MiTek”), a diversified, global business supplying a wide range of engineered products; proprietary business management and design software; and automated equipment sold into the broad construction and industrial end markets announced today that it has acquired BuilderMT, headquartered in Denver, Colorado. BuilderMT is a leader in providing industry-specific workflow process management software to the residential home building market, serving both single family and multi-family builders.

Berkshire Hathaway Specialty Insurance Company Expands into Australia (BusinessWire)

Berkshire Hathaway Specialty Insurance Company (BHSI) today announced that it has received its insurance license to provide all lines of General Business in Australia, established operations in Sydney, and named Chris Colahan as President of its Australasia Region. [...]

Beginning immediately, BHSI will be providing property, casualty, financial lines and marine cargo insurance in Australia.

Angie's List Announces Exclusive Relationship with Shaw Industries (BusinessWire)

Angie’s List today announced an exclusive relationship with Shaw Industries, the world’s largest carpet manufacturer, that will provide Angie’s List members with exclusive product offers from Shaw. [...]

Brady added that the agreement with Shaw comes on the heels of a similar agreement Angie’s List announced last month with Benjamin Moore & Company. Both Shaw and Benjamin Moore are Berkshire Hathaway companies.

Under the agreement, Shaw will provide discounts to service providers on Angie’s List who buy Shaw flooring for installation to Angie’s List members. In addition, members will be able to purchase pre-packaged offers from Angie’s List’s online marketplace that include Shaw flooring and installation.

3 Ways Berkshire Hathaway Will Look Different 10 Years From Now (Fool)

Berkshire Hathaway is Mr. Buffett's life work and he has directly contributed an incalculable amount of value to the firm through his capital allocation choices. However, his retirement or death wouldn't be catastrophic -- contrary to what some investors appear to believe. As one should reasonably expect, given the care and effort with which he has built Berkshire, Buffett has been equally deliberate in putting in place the people and the structures necessary to ensure that the business will continue to thrive without him.

CORT Partners with FamilyAid Boston to Address Homelessness (Furniture World)

CORT, a Berkshire Hathaway Company and the nation’s leading provider of transition services, has partnered with FamilyAid Boston to provide supportive housing solutions for approximately 2,500 homeless parents and children in Boston, Massachusetts, each year. More specifically, CORT has provided furniture solutions for FamilyAid Boston’s apartment-based shelter units in an effort to provide families with private, neighborhood-based shelter while they work to regain their stability and return to permanent housing. [...]

Over the past eight years, CORT has worked with FamilyAid Boston to provide furniture and accessories for roughly 1,000 shelter housing units. CORT furniture solutions include sofas, beddings, dressers and artwork. In addition, CORT has donated furniture accessories such as lamps and artwork, helping turn the apartment units into homes.

Berkshire News Briefs - 3/10/14

Several members of the Berkshire Hathaway Leadership team went on CNBC Monday morning. Warren Buffett, Ted Weschler, Todd Combs, and Tracy Britt Cool were all there. CNBC posted the transcript in this PDF. There's some good info in there, especially in the second half when they start talking to Ted and Todd. I like this bit, in reference to my reading backlog...

BECKY QUICK: [...] We are here in Omaha because-- Berkshire Hathaway's annual letter-- Warren Buffett's annual letter to the shareholders went out on Saturday morning. And, Warren, we've spent some time digesting-- a large annual letter.

WARREN BUFFETT: I get paid by the word.

25 Must-Read Quotes from Warren Buffett's Letter to Shareholders (Fool)

"Forming macro opinions or listening to the macro or market predictions of others is a waste of time. Indeed, it is dangerous because it may blur your vision of the facts that are truly important. (When I hear TV commentators glibly opine on what the market will do next, I am reminded of Mickey Mantle's scathing comment: "You don't know how easy this game is until you get into that broadcasting booth.")

Berkshire Hathaway buys AA Party Rentals (The Herald of Everett WA)

I do so love these little tuck-in acquisitions.

AA Party Rentals with locations in Mountlake Terrace and Tacoma was acquired by nationwide events company CORT in a deal anounced Thursday. AA Party Rentals has been providing rental equipment and services in the greater Seattle and Tacoma markets for more than 40 years. [...] CORT is a Berkshire Hathaway company.

Buffett’s Berkshire Reaches $300 Billion Market Cap (WSJ)

Warren Buffett didn’t grow Berkshire Hathaway Inc.’s net worth faster than gains in the S&P 500 index over the last five years, but the gigantic conglomerate recently crossed another milestone: passing the $300 billion mark in market capitalization for the first time. [...] Berkshire is already among the top 10 largest U.S. companies by market capitalization, and in recent years, has made the top-five list often. At $300 billion, its position among America’s most-valuable companies doesn’t change much. On Friday afternoon, Apple topped the list with $475 billion; followed by Google with $409 billion, Exxon Mobil close on its heels with $405 billion; Microsoft at fourth place, and ahead of Berkshire, at $316 billion.

The Best Warren Buffett Coverage You Haven't Read (Fool)

A link to more links!

For value investing disciples around the world, the annual release of the Berkshire Hathaway Letter to Shareholders is an interesting mix of fanaticism, jubilation, conversation, and conjecture. For those of us who just can't get enough, here are three reads you probably haven't seen that are interesting and uniquely insightful into the Oracle of Omaha's mind.

Here's Why Warren Buffett Is Betting Big on Renewable Energy (Fool)

Buffett's success is also his ability to acknowledge that sometimes things do change and that new competitive advantages can and must be built. MidAmerican Energy has been doing just that for the past nine years, working with companies like Siemens, SunPower, and Vestas to add renewable energy to its mix in a big way. Renewables are becoming a huge -- and growing -- part of Berkshire's competitive advantage at MidAmerican.

Brokerages to Join the New Real Estate Network During 2014's Second and Third Quarters (St. Louis Post-Dispatch)

Berkshire Hathaway HomeServices, the new real estate brokerage network operated by HSF Affiliates LLC, today announced the signing of 22 additional affiliates to the network. Several signees come from Prudential Real Estate’s Gibraltar Circle of Top 50 brokerages based on overall production. Berkshire Hathaway HomeServices now accounts for more than 26,000 agents and 700 offices in 33 states since it began transitioning affiliates in September.

Canada Tomato Law Saves Former Heinz Plant From Buffett Closing (MoneyNews)

A bit unfair to call this a "Buffett Closing"...

Canada’s insistence that tomato juice be extracted from “sound, ripe, whole” tomatoes instead of paste — a higher standard than in the U.S. — has partially saved an H.J. Heinz Co. plant marked for closing by Warren Buffett’s private-equity partner. A group of Ontario investors announced last week they plan to run the century-old plant and take over producing and distributing tomato juice for Heinz in the Canadian market. The move spared 250 of the 740 workers slated to lose their jobs in Leamington, Ontario, widely known as the tomato capital of Canada.

Berkshire spends $77 million to add to DaVita stake (NASDAQ)

Berkshire Hathaway is still buying up shares of DaVita. Most recently, Warren Buffett's firm bought 1,159,858 shares of the company's common stock on Feb. 24 for $66.58 per share. All told, Berkshire paid $77,679,440 to increase its holdings by 3.2%.

Berkshire News Briefs - 6/23/13

Buffett Nets Cool $44 Million in Quiet Media General Deal (MoneyNews)

The merger of Media General and New Young Broadcasting led to a benefit for Warren Buffett's Berkshire Hathaway [...] the story begins with Buffett and Berkshire Hathaway purchasing all of Media General's newspapers, except the Tampa Tribune, in May 2012. Berkshire Hathaway loaned Media General $445 million "to refinance a crushing debt load coming due," Poynter stated. The initial interest rate was 10.5 percent. Berkshire Hathaway got penny-a-share warrants to acquire 19.9 percent of the company. A benefit of the merger: Media General said last week it will be able to refinance its debt "at a considerable savings of interest expense." Poynter reported that Berkshire Hathaway will reportedly be paid a $44 million premium as part of the refinancing. Media General’s shares skyrocketed more than 30 percent the day the merger with New Young Broadcasting was announced, and have roughly doubled in value since Buffett’s investment just over a year ago.

Buffett's Berkshire Hathaway Jumps Over Allstate as No. 2 Insurer (Property Casualty 360)

Warren Buffett’s Berkshire Hathaway, led by the group’s auto-insurance subsidiary Geico, leapt over Allstate in 2012 to become the second-largest P&C insurance group based on net premiums written [NPW], according to data from SNL Financial. [...] The Berkshire group saw a 2012 increase in NPW of 12.1 percent—the largest such growth in the Top 20 P&C insurance groups. Berkshire's NPW was about $27.25 billion. Allstate slipped to No. 3, with NPW of about $25.58 billion, which is still a 1.4 percent increase over 2011. State Farm by leaps and bounds retained its title as the largest P&C group in 2012, with nearly $53 billion in NPW.

MidAmerican to issue $700 million in bonds to fund Solar Star projects (Clean Energy Authority)

MidAmerican Solar, a subsidiary of Warren Buffet-controlled Berkshire Hathaway’s Mid-American Energy Holdings Co. is planning to issue $700 million in secured senior notes to support the $2.7 billion Solar Star project, which was formerly known as the Antelope Valley Solar Projects. The bonds, beings issued by Solar Star Funding, LLC, will support construction of the Solar Star projects, which MidAmerican bought from SunPower in January 2013. SunPower is currently building the Solar Star projects, which, when completed in October 2015, will consist of 597 megawatts of AC electric generation. Once complete SunPower will provide ongoing operations and maintenance of the projects, which are co-located in Kern and Los Angeles Counties, Calif.

An Interview with Whitney Tilson (Fool Video with Transcript)

[Whitney Tilson:] The way I value Berkshire is only secondarily as a multiple of book value, because book value is such an incorrect way to look at so many of Berkshire's holdings. Something like GEICO is being carried at book, but it's worth a significant premium to book. [...]

But again, this is a good example of the "I missed it" phenomenon. I think a lot of people look at Berkshire today and just say, "The A shares have run from closer to $100,000 a share to over $160,000 a share in not much more than a year. I've missed it." Well, people have been saying "I missed it" on Berkshire...When it ran from $100 to $1000, they said "I missed it," and then $1000 to $10,000, then $10,000 to $100,000. Each time, they didn't miss it. They just had to wash that thought from their brains, and evaluate it. I value Berkshire, just taking the cash and investments per share, as a little over $120,000 a share. Then I just put an eight multiple on the pre-tax earnings of the operating businesses, about $9000 a share. You take $9000 a share of earnings, times an eight multiple is $72,000 per A share. Add the cash bonds and investments of $120,000 per share, and you get a bit over $190,000 per share of intrinsic value.

Buffett: Tracy Britt isn't Berkshire CEO successor (Omaha World-Herald)

Last week's item following up on a Wall Street Journal profile of Warren Buffett's financial assistant Tracy Britt stretched toward the question of whether she might, someday, succeed him as CEO of Berkshire Hathaway Inc. Seemed like the logical question to explore, as others have done in print and online. But not exactly, Buffett said in an email (relayed from his computer-less office through his assistant, Debbie Bosanek). [...] Britt's office is a ways down the hall, not next to his, as the Journal article said. The office sequence, in footage away from Buffett's corner office, is Bosanek, Todd Combs, Britt and Ted Weschler. Combs and Weschler manage some of Berkshire's investments.

Berkshire’s Abel, Britt Join Heinz Board After Swann Leaves (Bloomberg Businesweek)

Gregory Abel and Tracy Britt, two of Warren Buffett’s deputies who have been adding responsibilities at Berkshire Hathaway Inc. (A), were selected by the billionaire to join him as directors of HJ Heinz Co. [...] They replaced directors including Lynn Swann, the former wide receiver for the National Football League’s Pittsburgh Steelers. [...] Britt is chairman of at least two Berkshire units that replaced their CEOs last year, and Abel has been building the company’s energy business through acquisitions.

iCORE Global Partners with CORT Business Services (National Real Estate Investor)

iCORE Global, a full-service commercial real estate provider, has formed a strategic partnership with CORT Business Services, a Berkshire Hathaway Company. iCORE has been providing commercial real estate services in over 267 major markets worldwide for the past 28 years. Now, iCORE will be able to provide clients with furniture solutions. [...] "With CORT currently servicing over 80 percent of the top Fortune 500 companies, there’s already a significant overlap in our customer base," iCORE Global CEO and Managing Director Samantha Mueting said in a statement.

Berkshire Hires CNA's Fortin for New Insurance Unit (WSJ)

Warren Buffett's Berkshire Hathaway Inc. said Wednesday it hired CNA Financial Corp. executive Dan Fortin to work for a new insurance unit the company launched in April. Mr. Fortin will serve as senior vice president for executive and professional lines, Berkshire said in a statement. He was previously senior vice president at CNA Specialty and served as interim CEO of CNA Europe in 2009. Mr. Fortin joins a growing group of underwriters moving to Berkshire after several top managers from American International Group Inc. (AIG) departed to set up the new unit in late April. The new unit, called Berkshire Hathaway Specialty Insurance, is based in Boston and headed by former AIG executive Peter Eastwood.

Berkshire Hathaway HomeServices gets social (Inman News)

The new Berkshire Hathaway HomeServices real estate franchise has rolled out Facebook, Twitter and Instagram accounts. The move comes in advance of broad adoption of the new brand by many Prudential Real Estate and Real Living brands beginning in the third and fourth quarters of this year.