There was a lot of news last month, and I fell behind on posting, so there are three posts this time. This is part 1, with general business news about Berkshire Hathaway itself.
(Part 2 - Subsidiaries | Part 3 - Miscellaneous)
The election might not have gone the way Warren Buffett preferred, but as the books close on 2016, the Berkshire Hathaway chairman and chief executive can take heart in his company’s stock price: For the first time, its Class A shares topped $250,000 each. [...]
Still, even as its stock has risen, some of Berkshire’s business operations during 2016 have faced choppy waters: The parent company’s profits are being dragged down by reduced earnings at auto insurer Geico and BNSF Railway [...]
Will Donald Trump Blow Warren Buffett’s Clean-Energy Bet Off Course?
[...] Berkshire Hathaway—owner of everything from Dairy Queen Blizzards to Brooks running shoes to Benjamin Moore paint—will likely also be the largest producer of wind energy in America. In early 2016, Berkshire announced its largest project yet, a 2,000-megawatt wind complex in Iowa. Construction on the $3.6 billion project begins next year. When it’s done, Berkshire will have the capacity to produce 11,139 megawatts of green energy an hour, enough to power nearly eight Las Vegases or 24 Times Squares or 7.3 million homes, much of it by wind. [...]
Perhaps most important, a huge part of Berkshire’s wind-energy play is pegged to tax credits, of which it recognized $336 million in 2016. The government is set to phase those out over the next decade, and that may accelerate under President-elect Trump, who has called global warming a hoax and who has said he doesn’t want to subsidize wind power. But Berkshire Hathaway is fully committed to remaking the landscape—figuratively in energy, and literally in Iowa. [...]
Donald Trump’s Tax Plan Could Boost Warren Buffett’s Company by $29 Billion
[Berkshire Hathaway] could get a $29 billion boost to its book value as a result of the president-elect's plan to lower corporate taxes from an estimated 35% to around 15%, a team of Barclays analysts wrote in a Monday note. [...]
By the end of 2015, Berkshire recorded a deferred tax liability of $63 billion. Gelb's analysis covered about $50.5 billion of that that total, discounting the liabilities associated with Berkshire's regulated utility units, where the tax cuts are expected to benefit the utility customers rather than Berkshire Hathaway.
Even if Trump's administration managed to lower taxes by just 10 percentage points to 25%, Berkshire would still clock an increase in its book value by $14.4 billion. [...]
Dow Chemical to Redeem Cash-Draining Preferred Stock Held by Buffett
Dow Chemical Co. finally gained the right to convert $4 billion of preferred stock into common shares, ridding the company of an expensive burden and depriving Warren Buffett of another lucrative crisis-era investment.
A recent rally in Dow stock on Thursday triggered a clause allowing the chemical giant to convert the shares. That will enable the company to start keeping $255 million it has been sending to Mr. Buffett’s Berkshire Hathaway Inc. every year [...]
The Midland, Mich., company announced after the close it would convert the shares on Dec. 30. They will hand Berkshire roughly 6% of Dow’s common stock [...] Mr. Buffett has indicated he’s a seller.
Related...
Did Warren Buffett Manipulate the Market in Dow Chemical Stock?
If you read a recent article in The Wall Street Journal about Berkshire Hathaway's investment in Dow Chemical, you might have gotten the impression that Warren Buffett tried to manipulate the market to his advantage by shorting the company's stock.
I think that's a stretch. In reality, Buffett may have made an obvious, yet brilliant, trade. [...]
Warren Buffett Just Made a $1.2 Billion Flip-Flop -- and We Shouldn't Be Surprised
After decades of decrying the airline industry -- Buffett once famously said, "If a capitalist had been present at Kitty Hawk back in the early 1900s, he should have shot Orville Wright. He would have saved his progeny money" -- Warren Buffett's Berkshire Hathaway recently invested $1.2 billion in not one, but three airlines: American Airlines Group, Delta Air Lines, and United Continental Holdings.
Buffett has a long history of saying one thing, only to act in a very contrary way down the road -- actions that would have him branded the worst kind of flip-flopper, were he a politician. In reality, it's another reminder that Buffett's mental flexibility and temperament continue to set him apart. [...]
What Can Investors Expect from Berkshire Hathaway in 2017?
(A seven-part series of posts on predictions for the various business divisions in 2017: insurance, BNSF, energy, manufacturing, and services.)
Warren Buffett could look to utilize existing cash reserves for more acquisitions in the upcoming quarters—especially in manufacturing space. It will be impacted by the new presidential administration and expected policy measures towards domestic manufacturing. [...]
Morningstar: Berkshire Hathaway Closes Out 2016 Near Full Value
We came into 2016 believing it would be a better year for wide-moat-rated Berkshire Hathaway (BRK.B) and were big proponents of the shares in the first quarter, when shares dropped down near CEO Warren Buffett's 1.2 times book value per share threshold for buying back stock--the first time since the fourth quarter of 2012 that the shares had come down close to those levels. With the firm's shares now trading close to our fair value estimate of $255,000 ($170) per Class A (B) share, though, having risen in value more than 23% last year, we now view Berkshire as fairly valued. [...]
