Berkshire News Briefs - Annual Report Edition - 3/2/17

The 2016 Berkshire Hathaway Annual Report came out last Saturday, so naturally most of the news this week is about it.

Berkshire Hathaway's Operating Earnings Slip 6%

Berkshire Hathaway reported that its fourth-quarter net income grew about 15% compared with the year-ago period, helped by gains on its investments and derivatives portfolio. However, operating earnings, the metric Warren Buffett has long explained is the most important for understanding the company's true earnings power, declined about 6% to $4.4 billion, from $4.7 billion in the fourth quarter last year. [...]

Highlights From Warren Buffett’s 2016 Annual Letter

What we can take away from this brief discussion is that the gap between Berkshire’s book value and intrinsic value has grown over time and, with additional successful acquisitions, should continue to grow in the future. To be clear, important aspects of Berkshire’s results will show up in book value in the future. Berkshire’s retained earnings are fully reflected in book value. Additionally, changes in the value of marketable securities (with few exceptions) are also reflected in book value, net of deferred taxes. However, to the extent that the economic goodwill of Berkshire’s wholly owned subsidiaries continue to increase, the gap between book value and intrinsic value will continue to grow. [...]

Mixed Year at Berkshire Doesn’t Change Our View

There was little in wide-moat-rated Berkshire Hathaway's fourth-quarter and full-year results that would alter our long-term view of the firm. We do not expect to make any changes to our $255,000 ($170) per Class A (B) share fair value estimate or to our wide-moat rating. [...]

We remain impressed with Berkshire's ability to increase its book value per Class A equivalent share, which rose 10.7% year over year to $172,108 (higher than our own estimate of $167,878). This was aided by much stronger performance from its investment portfolio during 2016. The company closed out the year with $86.4 billion in cash on its books, up from $84.8 billion at the end of September and $71.7 billion at the end of 2015. [...]

Full transcript of billionaire investor Warren Buffett's interview with CNBC

"I absolutely look at individual stocks. It has nothing to do what the Federal Reserve, it has nothing to do with the election. As it does have, it would have something to do with interest rates if they did something extraordinary. It hasn't had, because they haven't been, they haven't changed that much. But there just were a couple of things I wanted 'em to do and we had the money. And I like investing. And I would much rather have that $20 billion in these companies that I don't look at it as being in stocks, I look at it as being in businesses. It's just small pieces of businesses. [...]"

Warren Buffett's Shareholder Letter: 5 Lessons for All Investors

There are few things more valuable for serious investors to read each year than Warren Buffett's annual letter to the shareholders of Berkshire Hathaway.

His letter for 2016, released early Saturday morning, is no exception. In it, Buffett covers his usual range of subjects, from the performance of Berkshire Hathaway and its operating units, to the future prospects of the United States, to advice for corporate executives and individual investors.

The whole letter is worth reading -- it is, after all, less than 30 pages long. But for those of you who want to view the highlight reel, here are my five favorite takeaways from Buffett's latest shareholder letter. [...]

Warren Buffett’s Berkshire Hathaway Bought 72 Million Shares of Apple in One Month

On Monday, Buffett told CNBC his insurance and investing conglomerate had bought 72 million of Apple's shares in the first month of January alone. He also owned up to the fact that Apple is one of the legendary investor's own stock picks, and not one chosen by his lieutenants. [...]

Berkshire started buying shares of Apple in mid-2016, and had 61 million shares by the end of the year. Buffett said Berkshire's Apple stake is now more than double that, and worth about $17 billion and amounts to 133 million shares. Buffett bought his most recent stake between Jan. 1 and Jan. 31—the day Apple reported that its sales rose $2.5 billion, or 3%, in the last three months of 2016, which was higher than expected. [...]

Berkshire Hathaway's Lubrizol takes $365 million loss on oilfield business

The company disclosed in its annual report Saturday that results at its chemical unit, Wickliffe-based Lubrizol, included pretax losses of $365 million last year related to the “disposition in the fourth quarter of an underperforming business.” No other details were provided in the document.

The business? Lubrizol’s Oilfield Solutions unit, according to Julie Young, a spokeswoman for the company. The division was created in late 2014 to house businesses purchased from Weatherford International Plc and Phillips 66, as well as some legacy operations. [...]

Proudly Permabullish

Buffett’s the Permabull-in-Chief. This is not the same as saying that he always believes it’s a great time to buy every stock or that he believes he has some edge on where stock prices will be this year or next. Because neither is true.

One of the hallmarks of Berkshire’s success has been its willingness to raise or lower its formidable cash hoard in response to the presence (or lack thereof) of viable investing opportunities. One of the other hallmarks of Buffett’s approach has been to tune out forecasts and de-emphasize the importance of them in general. [...]

Charlie Munger on Getting Rich, Wisdom, Focus, Fake Knowledge and More

"In the chronicles of American financial history," writes David Clark [...] "Charlie Munger will be seen as the proverbial enigma wrapped in a paradox— he is both a mystery and a contradiction at the same time."

On one hand, Munger received an elite education and it shows: He went to Cal Tech to train as a meteorologist for the Second World War and then attended Harvard Law School and eventually opened his own law firm. That part of his success makes sense.

Yet here's a man who never took a single course in economics, business, marketing, finance, psychology or accounting, and managed to become one of the greatest, most admired, and most honorable businessmen of our age, noted by essentially all observers for the originality of his thoughts, especially about business and human behavior. [...]

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 News Briefs - 3/22/16

Warren Buffett’s Compensation in 2015 (BRK Rumors)

Warren Buffett and Charlie Munger both made $100k in salary last year, but Buffett's personal security detail counts as compensation too, bringing him up to $470k. CFO Marc Hamburg made $1.36 million; Berkshire Hathaway Energy CEO Greg Abel made $41 million. Berkshire only pays its board of directors between $2700-$7000.

Warren Buffet’s salary for remained unchanged at $100,000, the same level it has been at for more than a quarter century.

However total compensation has crept up 1% from the previous year due to increased costs associated with keeping Buffett safe. [...]

Warren Buffett remains in control of 19% of all of Berkshire Hathaway’s outstanding stocks and wields 33% of its voting power. Forbes reported on March 15, 2016 that Buffett is worth $66 billion. [...]

Warren Buffett On Investing, Bubbles, Crashes, And Everything In Between (Fool Singapore)

"[T]he only way you get a bubble is when basically a very high percentage of the population buys into some originally sound premise and –- it’s quite interesting how that develops –- originally sound premise that becomes distorted as time passes and people forget the original sound premise and start focusing solely on the price action."

Lots of local stories, which put together, point to a big expansion coming this year for Dairy Queen:

Dairy Queen franchise seeks to add nearly 100 locations this year, with up to 10 new locations in NH

Dairy Queen plans to expand in Spartanburg [SC] County

Dairy Queen plans Vermont expansion for 2016

Dairy Queen targets Amherst, Worcester in major 60-store Massachusetts expansion

Unhappy Teamsters talk strike again at NetJets (Columbus Dispatch)

Two months after NetJets pilots got a generous five-year deal after months of picketing and creating bad publicity for the private jet firm, labor unrest is starting to brew on a new front.

Teamsters members who work in areas such as fueling, catering and dispatching for NetJets are threatening "another serious labor dispute" for the company. [...]

MidAmerican Energy announces grants (Messenger News)

Sixty-five Iowa cities and community organizations are receiving grants totaling $205,000 through MidAmerican Energy's Trees Please! energy efficiency program. [...]

The program provides grants to communities to fund tree planting projects in public areas such as parks and roadways. Since 1998, MidAmerican Energy has awarded more than $3.6 million in funding.

Mobile app purchase propels GEICO to 14 million policies in force (Business Wire)

With the touch of a screen on his smartphone, Christopher Stevens made GEICO history, propelling the company to the 14 million policies-in-force milestone. The Hixson, Tenn., native purchased the record-breaking policy after buying a new car the day before Valentine's Day. [...]

Meet the winners of Warren Buffett's March Madness contest (Yahoo Finance)

"It’s been a heck of a weekend," says Kevin Wills, who works at insurance company USLI in Wayne, Pa., and found out Friday that he was a co-winner of the Berkshire Hathaway (BRK-A) March Madness contest for employees.

Wills and Robert Keller, who works at Berkshire-owned Geico, will split $100,000. Both men had perfect brackets through the first 15 games of this year’s NCAA men’s basketball tournament, until Middle Tennessee State University, a 15-seed, toppled Michigan State, a 2-seed, on Friday night. In other words: Warren Buffett’s big contest didn’t even last two full days. [...]

Berkshire News Briefs - 9/28/15

Charlie Munger: Buffett’s ‘Abominable No-Man’ (Think Advisor)

Sharp as a tack and blunt as Lenny Bruce, Charlie Munger, Warren Buffett’s peppery longtime business partner, is the not-so-secret sauce in the Oracle of Omaha’s extraordinary investing success.

Munger, the curmudgeonly 91-year-old vice chairman of Buffett's holding company, Berkshire Hathaway, is a humorous, deep-thinking billionaire whose judgment has been indispensable to growing Berkshire into a $360 billion-plus enterprise. Indeed, last year it picked up $18.3 billion in net worth.

Now comes “Charlie Munger: The Complete Investor” (Columbia University Press-Columbia Business School Publishing), by Tren Griffin, a book that neatly ties together the astute nonagenarian’s investing acumen in just under 200 pages. [...]

Kraft Heinz, Phillips 66 Targeted by Fake Securities Filings (WSJ)

Two separate filings that said they were submitted by Loreto M. Zamora on behalf of LMZ & Berkshire Hathaway Co. to the Securities and Exchange Commission on Thursday morning claimed to hold at least 10% stakes in both Kraft Heinz and Phillips 66.

Both companies told The Wall Street Journal that the filings are fraudulent and they have contacted the SEC. Warren Buffett, whose Berkshire Hathaway Inc. owns stakes in the food and energy companies, said in an email that he has never heard of Mr. Zamora. [...]

Could Warren Buffett's Utility Empire Be in Trouble? (Fool)

No matter where you look, particularly in Nevada, utilities are under serious pressure from customers looking to find lower-cost and cleaner energy elsewhere. Now that Buffett is one of the largest utility owners in the country, he's directly at odds with some of these trends.

Wynn Resorts is offering $15 million to break ties with NV Energy, and if it weren't for a limit on distributed solar in Nevada, there would be thousands of customers putting up their own generation systems.

The dual threat shows the challenge utilities are facing as the energy industry evolves. [...]

Borsheims CEO Goracke plans visit to share a wealth of retail knowledge with UNK students (Kearney Hub)

When Karen Goracke was approached to be University of Nebraska at Kearney’s Executive in Residence this fall she was at first surprised, then ecstatic. [...]

Giving back, by sharing her knowledge and ideas with students, is something the Borsheims CEO has been waiting to do. The College of Business and Technology Executive in Residence will give her that chance: To talk to students, visit with faculty and play a mentor role to anyone who wants to learn more about retail, Berkshire Hathaway, working for Warren Buffett, merchandising, accounting, sales – her list of what she wants to talk about is long. [...]

Perpetrators of a $10-Million Telemarketing Scam that Used Warren Buffett and Berkshire Hathaway's Names as Baits (Realty Today)

According to the indictment, Jonathan Papa and Methsiri "Lal" Palliyaguru sold phony investments in certificates of deposit and real estate to nearly 200 investors, primarily American senior citizens. They knowingly misrepresented that Warren Buffett and Berkshire Hathaway were involved with the purported real estate investments, in order to lure in unsuspecting investors who idolize Buffett and Hathaway.

Ndamukong Suh and Warren Buffett huddle up (Lincoln Journal Star)

[...] “Every time, we have a great conversation,” Suh said. “And they’re really conversations around the concepts of business or understanding commodities, how it can all work together. It’s not (Buffett saying), ‘You should go pick this stock.’

“He knows my goals, and he’s like, ‘You should think about this’ or ‘This is some advice from people I’ve worked with.’ It’s also him with open arms saying, if you want to learn about something else, if you want to learn about the aviation business — which is something I’m very into — he said, ‘I own NetJets’ and opened the door for me to go out and learn from those people.” [...]

Billionaire Warren Buffett is ready to sub in for Ndamukong Suh (CBS Sports)

When you're worth $70 billion you can do whatever you want and sometimes doing whatever you want includes showing up at a Dolphins game wearing shoulder pads and an Ndamukong Suh jersey.

That's exactly what billionaire Warren Buffett did on Sunday. The third-richest man in the world showed up on the Dolphins sideline before their game against Buffalo and Buffet definitely wasn't wearing his normal suit-and-tie combo. [...]

Berkshire News Briefs - 6/24/15

Berkshire becomes Heinz's top owner ahead of Kraft merger (Reuters UK)

H.J. Heinz Co said on Thursday that Warren Buffett's Berkshire Hathaway Inc has become its majority shareholder by exercising a warrant ahead of the ketchup maker's planned merger with Kraft Foods Group Inc.

In a regulatory filing, Heinz said Berkshire exercised a warrant to acquire about 46.2 million shares for nearly $462,000 this week.

Heinz said the shares represent about 5.4 percent of its outstanding common stock, and that their issuance gives Berkshire a 52.5 percent overall stake.

Warren Buffett plans $2 billion a year Australian spending spree (Sydney Morning Herald)

Mr Buffett, the head of investment conglomerate Berkshire Hathaway, will use funds from a newly minted deal with Insurance Australia Group to build up equity stakes in other large Australian companies including at least one bank.

One of the globe's most astute investors over five decades, Mr Buffett said the deal announced on Tuesday would deliver a stream of Australian dollars which would be invested locally to avoid currency risk.

BNSF Charging Lower Rates for Most-Modern Crude-by-Rail Cars (Bloomberg)

Burlington Northern Santa Fe LLC, the largest U.S. crude-by-rail carrier, is offering lower rates to lug oil in cars that meet the latest federal specifications issued in May. That means the vast majority of cars riding the rails today, known as DOT-111 and CPC-1232, will cost more to haul.

The new rates are part of a plan by the railroad owned by Warren Buffett’s Berkshire Hathaway Inc. to push older cars off the tracks as regulators scrutinize the industry over a series of high-profile explosions. [...]

Fitch Publishes Report on Berkshire Hathaway's Recent Growth in Commercial Lines Insurance (Business Wire)

In a new special report, Fitch Ratings reviews the recent meaningful expansion by Berkshire Hathaway, Inc. into the U.S. commercial lines insurance market. [...]

BRK has also quietly expanded to become the 10th largest U.S. commercial lines insurer based on 2014 direct premium volume. Fitch's report explores the source of BRK's premium growth, recent underwriting experience of new business, and the sustainability and credit implications of this growth.

Business expansion over the past five years has been significant with commercial lines direct premium expanding by 125% to $5.6 billion through organic growth and targeted acquisitions. Workers compensation insurance has been a key driver of this growth and BRK is now the seventh largest U.S. writer based on 2014 direct written premiums.

Berkshire most exposed to asbestos losses (Business Insurance)

U.S. property/casualty insurers' asbestos reserves were deficient by $5 billion to $12 billion as of year-end 2014, with Berkshire Hathaway Inc. being most exposed, Fitch Ratings Inc. said in a report issued Tuesday. [...]

Berkshire Hathaway has the most asbestos reserves of all companies, with about $14 billion, according to the report. But it has assumed $12 billion of asbestos losses through reinsurance transactions, according to the report.

Berkshire Buying Opportunity (Morningstar)

We continue to be impressed by wide-moat-rated Berkshire Hathaway's ability to generate high-single-digit to double-digit growth in its book value per share, believing it will take some time before the firm finally succumbs to the impediments created by the sheer size and scale of its operations. [...]

With the company currently trading at 83% of our fair value estimate--which is at $252,500 per Class A share or $168 per Class B share--Berkshire is not only one of the best near-term opportunities in the financial-services sector, it's also priced at the best entry point we've seen in quite some time for long-term investors.

Charlie Munger Speech at USC - May 2007 (YouTube - 44 min video)

No time to watch the whole thing? Here's a link to a PDF of notes from the speech.

Berkshire News Briefs - 3/7/15

Berkshire Hathaway at 50: Things Have Never Looked Better (Fool)

On Saturday, Warren Buffett released his Golden Anniversary shareholder letter, followed by yesterday's release of Berkshire Hathaway's 2014 annual report. (2015 marks a half-century since Buffett took control of a struggling New England textile business by the name of Berkshire Hathaway.) Mr. Buffett's message is one of optimism, tempered by a dispassionate assessment of the facts: In terms of financial strength, earnings power, and permanence, Berkshire Hathaway appears better positioned than ever -- even as the end of Mr. Buffett's tenure draws ever nearer.

Grading Berkshire after 50 years under Buffett: How does a 1,826,163% stock rise sound? (Fortune)

Here’s another lollapalooza, brought into public view by a quiet change in the report. To the performance table that has always contained only Berkshire’s book value per share and the S&P 500 index, Buffett has added the historical record of Berkshire’s stock price. And there the record is, on the page facing Buffett’s shareholder letter: 50 years of percentage increases and declines in Berkshire’s stock, followed by two summations. For the half-century—for all the years of Buffett’s management—the price grew at a compound annual rate of 21.6%. The gain, overall, was 1,826,163%.

Berkshire Hathaway Wooed by Europe’s Low Borrowing Costs (WSJ)

Warren Buffett ’s Berkshire Hathaway raised €3 billion ($3.3 billion) on Thursday from its first-ever debt sale in Europe. The deal is the latest in a surge of U.S. companies crossing the Atlantic to sell bonds in euros, taking advantage of the region’s slender borrowing costs. Berkshire Hathaway sold three bonds that will mature in eight, 12 and 20 years. Those bonds priced to yield 0.8%, 1.24% and 1.648%, respectively, all close to record lows for those maturities.

6 Quotes From Berkshire Hathaway's Greatest Ever Shareholder Letter (Fool)

Will the "Berkshire system" ensure continued success, despite its size, and after Buffett? Buffett says yes: "Despite our conservatism, I think we will be able every year to build the underlying per-share earning power of Berkshire. That does not mean operating earnings will increase each year -- far from it. The U.S. economy will ebb and flow -- though mostly flow -- and when it weakens, so will our current earnings. But we will continue to achieve organic gains, make bolt-on acquisitions, and enter new fields. I believe, therefore, that Berkshire will annually add to its underlying earning power."

BNSF oil train derails in rural Illinois; two cars aflame (Reuters)

A BNSF Railway train loaded with crude oil derailed and caught fire on Thursday afternoon in a rural area south of Galena, Illinois, according to local officials and the company. [...] Dark smoke was seen for miles around the crash site, and the Illinois Environmental Protection Agency told local WREX.com that two of the cars were potentially on fire. The train with 105 loaded cars - 103 of them carrying crude oil - derailed around 1:20 p.m. CST (1920 GMT), according to a BNSF statement. The incident occurred on what appears to be a major rail line alongside the Mississippi River that handles as many as 50 oil-trains a week, one official said.

Why Warren Buffett Is Worth $72 Billion and You’re Not: Two Theories on Berkshire Hathaway (NY Times)

Academics who study corporate finance overwhelmingly believe that conglomerates — giant companies that operate in a wide range of industries, often built through acquisitions — are an awfully inefficient way to organize businesses. And one of the most successful American companies of the last 50 years is a conglomerate called Berkshire Hathaway, run by the renowned investor Warren Buffett, which is the fourth-most valuable firm in the United States, behind Apple, Google and Exxon Mobil. It employs 340,000 people, roughly the population of Honolulu.

Understanding Succession at Berkshire Hathaway After Buffett (NY Times DealBook)

Today, Berkshire’s succession plan envisions investments run by several portfolio managers, likely including two hired in recent years, Todd Coombs and Ted Weschler. On the executive side, Mr. Buffett’s replacement is to come from among top managers of Berkshire’s many subsidiaries. Berkshire followers speculate on succession at the top, with several names mentioned often—especially Greg Abel of Berkshire Hathaway Energy and Ajit Jain of Berkshire Reinsurance—and another dozen capable candidates, making for a deep bench of chief executives. But a question often overlooked by outsiders is who will assume Mr. Munger’s role. [...]

A Closer Look at Berkshire Hathaway’s Insurance Operations (Insurance Journal)

Insurance operations contributed $5.2 billion to total operating income of $16.6 billion for Berkshire Hathaway in 2014—with the underwriting component of $1.7 billion (after taxes) representing the 12th straight insurance underwriting profit for the Nebraska-based conglomerate. “Our underwriting profit totaled $24 billion during the twelve-year period, including $2.7 billion earned in 2014,” wrote Berkshire’s Chair Warren Buffett in the company’s annual report released last Saturday, referring to the pretax underwriting profit for all insurance operations. “And all of this began with our 1967 purchase of National Indemnity for $8.6 million,” Buffett wrote in his annual letter [...]

The Fate of the Berkshire Mill (WSJ)

They paved a capitalist paradise and put up a parking lot. Okay, maybe “paradise” is overselling it a bit. Maybe we just wanted to reference the Joni Mitchell song. But the fact remains: The building in New Bedford, Mass. that once served as the headquarters of the old Berkshire Hathaway Inc. textile mill was torn down last year, and a parking lot was put in its place. [...] But the fact is, large parts of the original Berkshire mill complex remain. The headquarters building was taken down to build more parking for the other commercial buildings, where Mr. Letendre rents out space to roughly 20 tenants and runs his own company [...] Those remaining buildings represent the majority of the square footage that Mr. Letendre acquired when he purchased the mill from Berkshire in 2000 for $215,000.

Berkshire Hathaway 2014 Annual Report & Letter Roundup

The Berkshire Hathaway 2014 Annual Report and Warren Buffett's Letter to Shareholders was released today. This year's letter, celebrating the company's 50th anniversary of Buffett's ownership, also includes a special letter from Vice Chairman Charlie Munger.

• Buffett and Munger's Letters.
• The Annual Financial Report. This PDF also includes the letters, so if you download this one, you don't need the first link.

Don't have time to read the 148 page annual report? Here are some good articles I have found around the internet today that summarize and highlight.

Warren Buffett, Charlie Munger say their eventual departures won't slow Berkshire Hathaway (Omaha World Herald)

In an essay on the company’s past and future, Chairman and CEO Warren Buffett, 84, said it’s likely to keep growing but not as rapidly as in the past, and he said the company might pay its first dividend sometime in the next 10 or 20 years. Vice Chairman Charlie Munger, 91, writing directly to Berkshire shareholders for the first time, said that his and Buffett’s eventual departures won’t slow down the company and that Berkshire already has executives qualified to be CEO.

Warren Buffett vows never to spin off Berkshire Hathaway subsidiaries (Financial Times)

Warren Buffett has vowed never to spin off any of Berkshire Hathaway’s subsidiaries, in a full-throated defence of the “sprawling conglomerate” he has assembled over the past 50 years. [...] “Berkshire is now a sprawling conglomerate, constantly trying to sprawl further,” he said.

Warren Buffett knows who next Berkshire CEO is (CNN Money)

"The board and I believe we now have the right person to succeed me as CEO -- a successor ready to assume the job the day after I die or step down," he wrote in his latest annual letter to investors. Buffett added that the next Berkshire CEO would be someone that already works at Berkshire and is "relatively young." And while Buffett chose to be coy, Berkshire's vice chairman and long-time Buffett friend Charlie Munger seemed to suggest that it's a two-man race to succeed Buffett. Munger, in his own remarks in Buffett's letter, specifically named Berkshire reinsurance head Ajit Jain and Berkshire Energy CEO Greg Abel as "proven performers who would probably be under-described as 'world-class.'"

If you want a summary of the actual financials reported, there's this one:

Berkshire Hathaway net falls, operating profit rises (Reuters)

Net income fell to $4.16 billion, or $2,529 per Class A share, from $4.99 billion, or $3,035 per share, a year earlier. Quarterly operating profit rose 5 percent to $3.96 billion, or $2,412 per share, from $3.78 billion, or $2,297 per share. [...] Book value per share, which Buffett considers a good measure of Berkshire's worth, rose 8.3 percent from a year earlier to $146,186. For all of 2014, profit rose 2 percent to $19.87 billion, or $12,092 per share, while operating profit rose 9 percent to $16.55 billion, or $10,071 per share.

And finally, a really long one where Wall Street Journal writers live-blogged as they read the letter this morning. It's almost shorter to just read the letter than read their notes. But some of their commentary is interesting:

Analysis: Warren Buffett’s Annual Berkshire Letter (WSJ MoneyBeat)

We’ve read everything through a few times now, and one thing about this year’s letter stands out above all else: Mr. Buffett isn’t writing solely for the people who will read the letter this weekend. He’s clearly hoping this document will be one Berkshire’s leaders will look back on for decades to come. Scattered throughout are instructions to the men and women who will oversee Berkshire after he’s gone, even if they’re not always couched that way. For example, when he writes on page 9 that underwriting profitability “is a religion” at Berkshire’s insurance units, it’s a reminder to guard against a slippage in standards in that part of the company. And when he writes on page 28 that Berkshire’s CEO and board will be very careful before using stock to fund a future acquisition, it’ll later serve as a warning for those executives if they ever consider such a maneuver. And lest the board forget, he says that for a Berkshire CEO, “character is crucial.” He also says that “neither ego nor avarice” should drive him to earn as much as other CEOs of big-name companies. Other parts of the letter use far loftier rhetoric to rally the troops and look to the future. Berkshire rests on “a rock-solid formation” of the company’s existing big operating units. “Looking ahead, Charlie and I see a world made to order for Berkshire,” he says. “Our ambitions have no finish line.”

Berkshire News Briefs - 1/23/15

Lower oil prices affect Berkshire Hathaway (Salt Lake Tribune)

Berkshire is one of the biggest shareholders in Wal-Mart Stores and holds a stake in Costco Wholesale, both of which are trading near all-time highs. Lower gasoline prices could boost consumer spending this year, benefiting retailers. [...] Both jet-fuel and diesel prices have been falling, potentially reducing costs for Berkshire's luxury aviation unit, NetJets, and its trucking company, McLane. [...] Surging U.S. oil production has been a boon to Berkshire's largest subsidiary, BNSF Railway Co. The company has seen an increase in oil carloads from North Dakota's Bakken region and spent heavily to accommodate them. Some of that demand could go away if oil prices stay low for a prolonged period.

Warren Buffett's investing successors blew it in 2014 (Fortune)

Todd Combs and Ted Weschler both appear to have failed to beat the market in 2014. Combs missed the mark by the most. His portfolio appears to have fallen slightly, down 0.3%, in 2014. [...] Weschler did better. His picks rose 6.7%. Still, that wasn’t enough to best the S&P 500, which was up by just over 11%, before dividends, in 2014. (Fortune calculated the returns of Combs and Weschler before dividends as well.) It was the first year both Combs and Weschler lagged the market index since they joined Buffett’s Berkshire Hathaway.

Warren Buffett's Secret Stocks (Fool)

The critical distinction is that Berkshire Hathaway files what is known as a "13F Combination Report." In it is stated in plain sight that (emphasis added) "a portion of the holdings for this reporting manager are reported in this report and a portion are reported by other reporting manager(s)." In other words, what we see in the Berkshire Hathaway 13F filing are the stocks Berkshire Hathaway, owns. But another company, General Re New England Asset Management -- which is owned by Berkshire -- also files a 13F that further discloses what is included in Berkshire's stock portfolio. So what happens when we combine the holdings in the 13F's filed by Berkshire Hathaway and General Re New England Asset Management relative to what is shown in the annual report?

Brooks Breaks Tape on Momentous Year and Kicks Off 2015 with Clear Focus on Being No. 1 Choice for Runners Worldwide (BusinessWire)

For Brooks Running Company, 2014 was a year of milestones: among other noteworthy mileposts, Brooks reached half a billion dollars in annual sales, moved into a new state-of-the-art global headquarters and celebrated its 100-year anniversary. To cap it off, Brooks posted a 15 percent increase in revenue growth year-over-year driven by a 13 percent increase in U.S. footwear sales and a 32 percent increase in EMEA (Europe, the Middle East and Africa) sales on a local currency basis. Additionally, Brooks Canada clocked in more than 37 percent year-over-year revenue growth since formed as a wholly owned subsidiary in 2014.

Texas-sized Furniture Mart store can fit 3 Walmart Supercenters inside (Omaha World Herald)

Ed Lipsett, store director of the massive Nebraska Furniture Mart under construction in this Dallas suburb, takes great pride in the breadth of the new store. At 560,000 square feet, it’s big enough to fit three Walmart Supercenters inside. [...] Lipsett and other marketing executives with the Omaha-based store — owned by Warren Buffett’s Berkshire Hathaway — recently allowed reporters to take a peek inside. The two-story, $400 million store, with its attached warehouse, is about 40 percent completed and has taken two years to build. Store officials declined to reveal a precise opening date. [...] The store will anchor a $1.5 billion, 433-acre development project being built by Berkshire Hathaway. Several restaurants and hotels are also planned.

BNSF Railway Re-evaluates Plan for Safer Cars Amid Client Talks (Bloomberg)

BNSF Railway Co., the railroad owned by Warren Buffett’s Berkshire Hathaway Inc., is reconsidering a plan to buy 5,000 oil-tank cars built to new safety standards after some customers voiced concern about the initiative. “At first everybody applauded us for doing it,” BNSF Chairman Matt Rose said today during a panel discussion in Washington on oil-by-rail safety, without specifying which concerns were raised. “We’re going to go back and talk to our customers and see what they want us to do.” [...] Rose said the company also decided to delay its purchase until regulators establish a standard. While thicker walls are warranted, speed restrictions would hurt other businesses that rely on trains to haul their products, he said.

Ajit Jain's Value To Berkshire Hathaway (Seeking Alpha)

In 1998, BH Reinsurance had a float of $4.3BN and by 2013, the float had increased to $37BN based on Ajit Jain's risk management capability and a staff of less than 50 people. Moreover, the share of BH Reinsurance as a percentage of total Berkshire's total float increased from 19% in 1998 to 48%. The other contributors to Berkshire's float include General Re, GEICO & "Other Primary".

Berkshire Hathaway Corporation and Leucadia National Corporation Appoint Justin Wheeler CEO of Berkadia (BusinessWire)

Berkshire Hathaway Corporation and Leucadia National Corporation today announced the appointment of Justin Wheeler, currently Leucadia’s Chief Operating Officer, as Chief Executive Officer of Berkadia Commercial Mortgage LLC. Since April 2014, Mr. Wheeler has been Berkadia’s acting CEO and, upon becoming Berkadia’s permanent CEO, Mr. Wheeler will be stepping down from his position as Leucadia’s COO. Berkadia, a joint venture of Berkshire Hathaway and Leucadia, is an industry leading commercial real estate company providing comprehensive capital solutions and investment sales advisory and research services for multifamily and commercial properties.

Warren Buffett Watch: Berkshire meeting to offer anniversary book, more time for sales (Omaha World Herald)

Good news for shareholders who shop at Berkshire Hathaway Inc.’s annual meeting. For the first time, the exhibition hall at the CenturyLink Center Omaha will be open for business on the Friday afternoon before the meeting, as well as during the Saturday meeting on May 2. And this year the hottest item might be a special bargain, Berkshire Chairman Warren Buffett told me: A commemorative book to mark the 50th anniversary of the day he bought the New England textile company known as Berkshire Hathaway.

7 Things You Need to Know About Berkshire Hathaway (Fool)

Millions of words have been written about Berkshire Hathaway, and most of them have been devoted to CEO Warren Buffett. This is understandable, since Berkshire is truly a product of Buffett's guiding hands over the past half-century, turning the small regional textile maker into one of the great investing stories in modern history. Berkshire is an amazing collection of companies and stocks that Buffett has acquired over the years, but there's a lot to know about this mega conglomerate. Let's consider seven things you need to know about Berkshire Hathaway. Whether you're a shareholder, considering investing, or just interested in this great company, you might be surprised by some of the things on this list.

12 of the Best Things Charlie Munger Has Ever Said (Fool)

In financial media, you see quotes from Warren Buffett everywhere, as he's well known as one of the best stock-pickers around. The words of his longtime business partner Charlie Munger, however, don't make many headlines -- and that's a shame. [...] "If you buy something because it's undervalued, then you have to think about selling it when it approaches your calculation of its intrinsic value. That's hard. But if you buy a few great companies, then you can sit on your ass. That's a good thing."

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 - 5/22/14

The big news of the week was the quarterly 13F disclosure of Berkshire Hathaway's stock portfolio ownership. You can catch up on all the latest portfolio changes in a convenient color-coded table on Dataroma: http://www.dataroma.com/m/holdings.php?m=brk

Buffett’s Berkshire Discloses $528.7 Million Verizon Bet (Bloomberg Businessweek)

Warren Buffett’s Berkshire Hathaway Inc. (A:US) disclosed a holding in Verizon Communications Inc. (VZ:US) in a wager that the telecommunications company will benefit after buying out its partner in the largest U.S. wireless business. Verizon posted the biggest increase in the Dow Jones Industrial Average. Berkshire held 11 million Verizon shares as of March 31, Buffett’s company said yesterday in a regulatory filing. The investment is valued at about $530 million.

The 12 Stocks Warren Buffett and Berkshire Hathaway Just Bought and Sold (Fool)

Tough to excerpt from this one, because it's mostly tables. To sum up, Buffett was likely responsible for adding to the big positions of IBM, WalMart, and US Bancorp, while Ted & Todd were probably responsible for smaller transactions adding to DaVita, VeriSign, Verizon, and Liberty Global (class A and B), and selling parts of DirecTV, GM, Phillips 66, and Starz.

Brazil grants 'eventual reinsurer' permit to Buffett's Berkshire (Reuters)

Susep, Brazil's insurance industry regulator, on Thursday issued a license allowing Berkshire Hathaway Inc to operate in the country as "eventual reinsurer." The license permits reinsurers domiciled in a foreign country to operate in Brazil without a representative office in the country.

Berkshire Hathaway Specialty Insurance Enters Travel Insurance Business (Boston Herald)

Attentive readers may remember the recent news that Berkshire Hathaway had acquired a small company called MyAssist...

Berkshire Hathaway Travel Protection, part of Berkshire Hathaway Specialty Insurance, today unveiled AirCare, the first product in its new travel-insurance line designed for travelers, travel agencies, tour operators and travel suppliers. AirCare is the first low-cost fixed-benefit flight protection coverage available up to one hour before flight departure. [...] AirCare also includes proactive travel-assistance solutions through MyAssist, a global-assistance and concierge service. [...] AirCare is the first of several innovative travel-protection products slated to be released under the Berkshire Hathaway Travel Protection name over the next several months.

Warren Buffett's Win-Win Deal with Bank of America Corp (Fool)

Given its size and importance to the U.S. economy, Bank of America is always in the news. Recently, the company came under scrutiny for revealing a miscalculation of its assets -- the result, an unexpected $4 billion loss. In the annual meeting, Buffett comments on that miscalculation, and he explains why he choose to alter the terms of the deal he made with Bank of America in 2011 -- and why it will benefit both companies.

NetJets Soaring to New Heights on Its 50th Anniversary (BusinessWire)

A nice history of the company is included in this press release.

NetJets Inc., a Berkshire Hathaway company and the worldwide leader in private aviation, will celebrate its 50th anniversary on May 21 with employees at an event at its headquarters in Columbus, Ohio. NetJets was incorporated as Executive Jet Airways, Inc. on May 21, 1964. [...] "I purchased a small, used aircraft in 1986 that I named Indefensible because I felt guilty about flying privately,” said Berkshire Hathaway Chairman and CEO Warren Buffett. “I quickly realized the value of having a private jet as a business tool for utility and convenience, and a few years later Berkshire purchased a larger jet that I named Indispensable. I joined the NetJets family shortly thereafter, purchased the company in 1998, and continue to see it as a remarkable company with a fascinating history and an even better future.”

NetJets CEO Says Wealth-Gap Critics Overlook Aviation Employment (Bloomberg Businessweek)

Jordan Hansell, who heads the luxury-aviation unit at Warren Buffett’s Berkshire Hathaway Inc., said people who point to private air travel as an example of widening inequality miss that his business creates well-paying jobs. [...] NetJets employs more than 6,000 people, including pilots, mechanics and flight attendants. Hansell said that the company’s average U.S. salary is $1,000 higher than it is in Silicon Valley, the California region known for technology companies like Apple Inc. and Google Inc.

The Surprising Thing GEICO and Costco Have in Common (Fool)

Following up on Buffett's remarks, Munger said, "GEICO to me is very much like Costco. One of the reasons that they succeed is because they're really committed to offering a really great product. A lot of people talk that game, but few live it. GEICO does and that will help it over time." That makes sense. Both companies are known for their low costs and remarkable customer satisfaction. In fact, GEICO and Costco in 2013 topped the American Customer Satisfaction index for their respective industries.

HEDGE FUND MANAGER: Warren Buffett 'Is Basically A Tax Evader' (Business Insider Australia)

Macro fund manager John Burbank of Passport Capital joked that Warren Buffett is “basically a tax evader” at the SALT Conference and attendees started clapping and laughing. His argument is not that Buffett is doing anything illegal or anything like that, but that a lot of his success is in investing in a way that results in the lowest tax bill. [...] “I’m not a publicist for Warren Buffett, but when I keep hearing people talk about Buffett’s record, nobody mentions his tax efficiency.

Berkshire News Briefs - 4/29/14

Also coming up, a second post of Berkshire Subsidiary Briefs with all the subsidiary news that would have made this post even longer!

Nuggets of Corporate Governance Wisdom From Charlie Munger (WSJ)

In the continuing Age of Activism, corporate advisers and theorists spend much time talking about corporate governance best-practices. They’d all be out of a job if Charlie Munger had his way. That’s the premise of a recent paper from the Rock Center for Corporate Governance at Stanford University. The paper highlights several nuggets of corporate-governance wisdom from the famed right-hand man of Warren Buffett. Something like a folksy book of quips, advice and motivational coffee mugs, it boils down to simplicity and trust.

Buffett Can’t Find Bear for Berkshire Annual Meeting (WSJ)

It’s hard to find someone who wants to go on record betting against Warren Buffett. Despite a very public cattle call for people who are short on his Berkshire Hathaway Inc.BRKB +0.62%, Mr. Buffett was unable to find a bearish analyst or investor to invite to his company’s annual meeting on May 3. Instead, Berkshire has invited Morningstar analyst Greggory Warren to be the third questioner on a panel of analysts, along with Jay Gelb of BarclaysBARC.LN +0.50% and Jonathan Brandt of Ruane, Cunniff & Goldfarb.

7 Things We Can Learn From Warren Buffett’s Biggest Money Mistakes (Fool)

The Motley Fool is counting down the days until the annual meeting with a story a day. This entry for day 7 of the countdown was the best of the lot so far:

As chairman of Berkshire Hathaway, Warren Buffett has an excellent investing record. But his record isn't without imperfection. Mistakes happen, even when you're the best at what you do. Fortunately, these mistakes, and Buffett's commentary about his investment decisions, provide us with valuable study materials in the school of investing. Here are seven of Buffett's biggest blunders, and the lessons that we can learn from his mistakes: [...]

Warren Buffett: Stocks aren't 'too frothy' now (CNBC)

A summary of some of the important points from Buffett's interview on CNBC last week, including his abstention from voting on Coca Cola's compensation plan, whether or not we're in a new tech bubble, and how he feels about IBM these days.

Warren Buffett rejected the suggestion the U.S. stock market is "too frothy" right now as the major indexes re-approach their all-time highs. "I think we're in a range, and it's a big zone always, of reasonableness. But stocks ought to be higher every 10 years.There's a plow back of earnings that goes back year after year. Stocks will become worth more decade after decade, not in any precise manner, not in an even manner or anything of the sort. But 10 years, 20 years, 30 years, stocks will be worth more than they are today."

Buffett: Coke exec compensation plan was excessive (Fortune/CNN)

Warren Buffett called Coca-Cola's controversial compensation plan excessive, but said he declined to vote against it. The plan -- which will pay Coke managers generously with shares of the company if they achieve specific performance goals -- passed on Wednesday at Coke's annual meeting, but without Buffett's help. Buffett said he abstained in the vote. Berkshire Hathaway, Buffett's insurance conglomerate, is one of the largest owners of Coke's stock, with a little over 9% of the company's shares. The fact that Buffett didn't vote against Coke's plan, though, is noteworthy.

Buffett: moving oil by rail safely major industry concern (Reuters)

Warren Buffett, chairman of conglomerate Berkshire Hathaway, said on Wednesday that safety is a major priority for the rail industry, after a recent spate of accidents raised concerns about how to transport oil safely. "I can tell you that's all they're thinking about," the investor said in an interview with Reuters. "We're going to move a lot of crude in this country, and we have to learn how to do it very safely," he added. He added that the delay in the construction of the Keystone pipeline was unlikely to prompt additional purchases of tank cars at Berkshire railroad unit BNSF.

Christian Brothers doesn't want Buffett on Berkshire Hathaway's board (Pensions & Investments)

Good luck with that...

Christian Brothers Investment Services is opposing the election of all Berkshire Hathaway Inc. directors, including Warren E. Buffett, chairman and CEO, according to the proxy-voting disclosure of the manager of managers whose clients are Catholic institutions. CBIS is withholding its votes for the directors “due to a lack of information on diversity of the composition of the board” and insufficient background about the directors, even lacking photographs of them, said Marietta L. Parenti, CBIS spokeswoman.

Berkshire News Briefs - 4/14/14

A group of MBA students from Western University of Canada's Ivey Business School recently traveled to Omaha to meet Warren Buffett, and were nice enough to publish their notes on-line. There are many interesting business and non-business questions and answers. Here's an excerpt of one of the non-business ones:

Question # 8: How would you rate your own success on a scale of 1-10? Answer # 8: I don't believe I'm very different from others. I still eat the same food, have a good time when I go out with friends, just like others, the only difference is I travel a little better now. I take my jet when I travel. Success for me is doing what you love and are passionate about and as long as you are doing what you like you'll stand out and outperform. If I have to rate myself I'll always believe I'm a 10. I feel that the way the rich often show off their wealth as a form of "elephant bumping". Buying another house would only be an inconvenience, I’d feel obligated to stay in it instead of my current home which is quite comfortable. For example, I don’t like yachts. They only offer the opportunity to do things with greater difficulty at sea, where I feel trapped, that I could have easily done on land (at the Y) for a fraction of the cost. Ultimately, money is not the ultimate measure of success, but rather, it is how many loved ones you have around you.

Toombs nails a billion for MiTek (St. Louis Business Journal)

(This is from 2012, but I saw it this week, and I found it interesting)

As important as the Berkshire purchase was, even more critical to MiTek’s growth was a seed planted in 1990. That’s when the company, at the recommendation of Dave McQuinn, a young MiTek software developer, bought a new software called Microsoft Windows and became an early beta site. [...] With MiTek’s proprietary software, called Sapphire and developed at a cost of more than $100 million, builders who work with MiTek’s customers get three-dimensional computerized structural drawings that detail every part - all MiTek parts, of course - needed to build a structure at the minimum cost. “We sell them everything except the lumber, delivery trucks and forklifts,” Manenti said. [...] Software as sophisticated as Sapphire provides what Buffett calls a moat, a protection against potential competitors. “I don’t care how much you spend on software. You can’t do it in a year,” said McQuinn, 57, now the company’s vice president of software development. “Software takes time, and we have a 10-year head start. We have 80 engineers adding code to this software right now.” Currently MiTek is putting the software into mobile technology.

BNSF Sees Bakken-Area Rail Tie-Up Lasting Until Year-End (Bloomberg)

BNSF Railway Co., the carrier owned by Warren Buffett’s Berkshire Hathaway Inc., will need the rest of 2014 to untangle train tie-ups in the corridor that serves North Dakota’s Bakken shale region. A system-wide traffic jam, caused by surging grain and crude-oil volumes coupled with harsh weather, is being resolved more quickly on the southern lines linking Chicago and Los Angeles, Chief Executive Officer Carl Ice said yesterday [...] Ice’s forecast underscored the scope of the recovery effort for U.S. railroads after winter storms and rising cargo shipments disrupted operations. BNSF sent 300 additional crew members to its northern region and plans to add 500 locomotives and 5,000 railcars this year to help ease the snarls, Ice said.

Warren Buffett-investee Lubrizol to set up $50 mn CPVC compounding plant in Gujarat (Business Standard)

In what will be Warren Buffett's first investment in Gujarat [India], the Lubrizol Corporation, a wholly owned subsidiary of Buffett's Berkshire Hathaway Inc. on Thursday announced setting up of a chlorinated polyvinyl chloride (CPVC) compounding plant in Dahej. To be set up at an investment of over $ 50 million (Rs 300 crore roughly), the upcoming plant is part of the company's previously announced $400 million global expansion of its resin and compounding manufacturing capacity. What's more, according to senior Lubrizol officials, the company is also exploring possibilities of setting up a CPVC resin manufacturing plant in India. "Many of the raw materials required for Lubrizol's specialty chemical product portfolio are produced in GIDC. Hence, Dahej makes sense due to raw material availability and proximity to South Asia, the Middle East and East Africa markets. [...]" said Eric Schnur, president of Lubrizol Advanced Materials and corporate vice president of Lubrizol Corporation.

Berkshire Hathaway Company Providing Private Jets to Chinese Market (Global Herald)

The business structure of Chinese companies is never simple. China generally demands that foreign companies do business by setting up joint ventures with domestic companies.

A new Berkshire Hathaway company, NetJets, is making the final preparations to launch a private jet service in China. The company has announced that it is awaiting final government approval for an operating certificate, which is expected to be granted in mid-2014. [...] NetJets Business Aviation Limited is part of a joint venture with NetJets Inc.; Hony Jinsi Investment Management (Beijing) Ltd, a subsidiary of Hony Capital, a leading private equity firm of China; and Fung Investments, part of the private investment arm of the families of Dr. Victor Fung and Dr. William Fung, the controlling shareholders of the Li & Fung group of companies.

Lessons From Rebranding a Berkshire Hathaway Consumer Business (Bloomberg Businessweek)

Companies spend an enormous amount of time and money creating a new brand, but when it comes time to launch, they often miss deadlines, communicate poorly with everyone involved, and fail to coordinate the multitude of moving parts. Opportunities are lost to delay, and worse, the company’s image is tarnished. [...] That was the challenge creating Berkshire Hathaway HomeServices, a new real estate franchise formed when Berkshire Hathaway’s real estate affiliate acquired a majority interest in the Prudential Real Estate network. The Prudential affiliates were free to join the new organization or go elsewhere when their existing contracts expired. In addition, we were acutely aware that poor execution might tarnish the Berkshire Hathaway name, which the company has rarely conferred on consumer businesses.

Berkshire Hathaway sees 38.6% growth in excess and surplus lines in 2013 (Business Insurance)

Berkshire Hathaway Inc.'s 2013 U.S. excess and surplus lines premiums grew by 38.6% over 2012 to $560.9 million, according to an analysis released by financial information firm SNL Financial L.C. on Monday. Charlottesville, Va.-based SNL said in its report that Berkshire's premium growth represents the largest percentage growth of the top 30 E&S insurers, moving it up five spaces in its ranking to become the 13th-largest E&S writer in the country, and was “well above” the 7.6% increase for the U.S. property/casualty industry as a whole.

Gov. Perry, Warren Buffett attend Katy GEICO ribbon-cutting; 357 new employees added (The Rancher)

Katy is a western suburb of Houston, TX.

Along with Texas Gov. Rick Perry and Berkshire Hathaway CEO Warren Buffett, GEICO announced Wednesday, April 3, that its Katy claims office has already added 357 new employees towards the goal of 1,000 jobs by 2017. The count is very close to meeting GEICO Chairman Tony Nicely’s 2015 goal of 400 associates.

Buffett Will Steer Investors to Airbnb to Avoid Price-Gouging by Omaha Hotels (WSJ MoneyBeat)

The billionaire investor is planning to mention the website at Berkshire Hathaway Inc.BRKB +0.39%’s upcoming annual shareholders’ meeting on May 3 as a low-cost alternative for shareholders who don’t want to pay the jacked-up rates that Omaha hotels charge while the gathering is taking place every year. [...] According to a recent article in the Berkshire-owned Omaha World-Herald, Mr. Buffett even considered a suggestion by some shareholders to move the meeting to Dallas, a bigger city. However, he was reluctant to leave his beloved Omaha. Instead, he has assigned his financial assistant Tracy Britt Cool to liaise with Airbnb.

Berkshire to Celebrate Cinco de Mayo With Fiesta Ducks (Bloomberg)

Berkshire Hathaway Inc. will sell rubber ducks of Chairman Warren Buffett and Vice Chairman Charles Munger wearing Mexican-themed outfits at the company’s annual meeting, which falls two days before Cinco de Mayo. The “fiesta ducks” sport sombreros, multicolored ponchos and -- in Buffett’s case -- a maraca, according to an advertisement in the visitor’s guide to the May 3 event, which will be held at the CenturyLink Center in Omaha, Nebraska. The souvenirs will be sold by Berkshire’s Oriental Trading party-supply business for $5 a pair. Last year, the unit sold rubber ducks of the executives in business suits.

Not going to the annual meeting? You can buy last year's Buffett & Munger business suit ducks on Oriental Trading's website. $3 for the ducks, but $7 for the shipping? Bah. Amazon Prime has spoiled me.

Oriental Trading will also be selling a Berkshire Hathaway-themed Quirkle game at the annual meeting, but that doesn't make as good of a headline.

Berkshire News Briefs - 6/14/13

Berkshire Hathaway Specialty Insurer Open for Business (Insurance Networking)

Berkshire Hathaway announced today that Berkshire Hathaway Specialty Insurance, its recently formed commercial P&C insurance group, has commenced operations, underwriting property, casualty, professional and executive liability insurance and programs for customers in the United States. [...] The new Berkshire venture is focused primarily on U.S. excess and surplus lines insurance, according to the insurer, due to the growing importance of this market segment in providing tailored solutions to customers.

Warren Buffett Embraces an Old Love (Fool)

It didn't take long after Warren Buffett's Berkshire Hathaway welcomed four former AIG executives into the fold that it introduced a new, specialty insurance arm to the world. Based in Boston, Mass., the new entity will sell commercial insurance products encompassing property & casualty, as well as professional liability insurance. [...]

Peter Eastwood, president of the new insurance arm, has hired 40 people in just six weeks, with staff housed not only in Boston, but also New York, Los Angeles, Chicago, and Atlanta. Some of those employees include former workers at both AIG and CNA Financial. Eastwood says the new company will focus first on areas of coverage that current providers aren't supplying, adding that much work has been done in writing property and casualty policies, and that the insurer will be wading into high-risk areas, as well.

Eastwood: Despite New Market Dynamics, More 'Float' for Buffett is Possible (Property Casualty 360)

Peter Eastwood, president of Berkshire Hathaway Specialty Insurance, says the influx of alternative capital in the form of catastrophe bonds and sidecars, as examples, has a “market cycle-dampening effect,” and he doesn’t expect the types of dips and spikes in rates associated with prior market cycles. [...]

Eastwood is part of the new capacity into the marketplace, having left AIG with executives David Bresnahan, Sanjay Godhwani and David Fields to join Berkshire. He says it was Godhwani who “convinced” Buffett’s insurance lieutenant, Ajit Jain, that despite the above dynamic, the executives could lead an operation to take advantage of Berkshire’s “tremendous balance sheet” in a more “permanent, long-term-focused way”—providing underwriting returns, and investment returns on what Buffett terms “float”—the pool of premiums held before paying claims.

Berkshire Disclose More Details On Insurance Losses After SEC Pressure (ValueWalk)

Warren Buffet’s Berkshire Hathaway Inc. said in its letter to the Securities and Exchange Commission that the insurance major agree to provide disclosures in future filings of the significant catastrophe losses for their insurance group as a whole. The company would also provide such disclosures for each of its underwriting units to the extent that such losses are significant. [...] Considering the magnitude of catastrophe losses to Berkshire Hathaway Inc.’s underwriting results, the Securities and Exchange Commission asked the company to provide additional information on the amount it spends on disaster claims.

A Rising Star Emerges at Berkshire (WSJ)

When Tracy Britt arrived in Omaha, Neb., in 2009 to meet with Warren Buffett, she brought a Harvard M.B.A., a glittering resume and a boatload of ambition. But she also brought the famed investor a gift to highlight their shared Midwestern roots: a bushel of corn and a batch of tomatoes. [...] The seed Ms. Britt planted that day yielded quick results: a job for Ms. Britt as Mr. Buffett's financial assistant at Berkshire Hathaway Inc. Almost four years later, it has blossomed further, with Ms. Britt emerging as one of Mr. Buffett's top lieutenants and even serving as chairman of four companies within his $284 billion conglomerate.

Charlie Munger's 18 Biases That Cause You to Fool Yourself and Make Bad Decisions (Fool)

Almost 20 years ago, Berkshire Hathaway vice-chairman Charlie Munger gave a talk called "The psychology of human misjudgment" at Harvard. He's given dozens of talks since, but I don't think any match its wisdom and usefulness. [...] For the impatient, the talk discusses about 18 separate biases that cause people to fool themselves make bad decisions. I've summarized them here, along with a few comments from Munger.

Ex-billionaire Charlie Munger on recent donations: 'I won't need it where I'm going' (Omaha World-Herald)

Charlie Munger has taken himself out of billionaire status. “I'm deliberately taking my net worth down,” the vice chairman of Berkshire Hathaway Inc. told The World-Herald. “If it's not below a billion, it soon will be.” Actually, his two latest donations, a total of 200 shares of Class A Berkshire stock worth $34.6 million, leave him with 5,674 shares worth about $980 million. [...] Last month, the Henry E. Huntington Library and Art Gallery in San Marino, Calif., received $32.7 million worth of his stock to help fund its new education and visitors center. Munger said the Huntington's goal is to build the best museum store in the world. He has been a supporter for several years and values the library's humanities collection and research. He also gave $1.9 million of his Berkshire stock to the Marlborough School, a college preparatory school for girls in Los Angeles.

Three Things I’ve Learned From Warren Buffett (LinkedIn)

The first thing people learn from Warren, of course, is how to think about investing. That’s natural, given his amazing track record. Unfortunately, that’s where a lot of people stop, and they miss out on the fact that he has a whole framework for business thinking that is very powerful. For example, he talks about looking for a company’s moat—its competitive advantage—and whether the moat is shrinking or growing. He says a shareholder has to act as if he owns the entire business, looking at the future profit stream and deciding what it’s worth. And you have to be willing to ignore the market rather than follow it, because you want to take advantage of the market’s mistakes—the companies that have been underpriced.