Berkshire News Briefs - 11/6/14

Berkshire Hathaway is expected to release its 3rd quarter earnings after the market closes on Friday, November 7.

3 Things to Watch When Berkshire Hathaway Inc. Reports Earnings (Fool)

The elephant in the room with Berkshire Hathaway is the question surrounding what will be done with the mountain of cash it's currently sitting on. At the end of June, Berkshire had $55.5 billion in cold, hard cash sitting on its balance sheet. Astoundingly, that's nearly $20 billion more than it had in June of last year [...] In other words, in one year's time, Berkshire brought in cash roughly equivalent to the market value of Chipotle Mexican Grill. So the question becomes, what will Buffett do with all of that cash?

How Buffett's Brooks Running plans to become a $1 billion brand (Fortune)

Brooks Running Co., a subsidiary of Warren Buffett’s Berkshire Hathaway, hit the $500 million mark in annual sales last April. The company hit that milestone as a result of CEO Jim Weber’s efforts over a decade to specialize on running, rather than trying to be a mini-Nike and be all things to all people. The result is a 13% share of the performance running shoe market (Nike is in the low 40’s). Weber, CEO since 2001, says the company can become a billion-dollar brand at some point thanks to an overhaul to its apparel selection hitting stores in a year, a continued focus on marketing to runners specifically and sponsoring the right running events.

Crash into flight simulator company stops training (HutchNews)

(FlightSafety has been owned by Berkshire Hathaway since 1996.)

A twin-engine Beechcraft King Air crashed into the FlightSafety Cessna Pilot Learning Center on Thursday, killing the pilot and three people inside flight simulators. The cause of the crash, which also seriously damaged the building, is still being investigated. [...] FlightSafey will "definitely have to scramble" but has a large network to help and is good at managing situations, said Rolland Vincent, an aviation consultant. "This is very disruptive," Vincent said. "These flight simulators are very busy and are booked well in advance."

More:

FlightSafety operates five centers in Wichita (The Wichita Eagle)

The building struck by a Beechcraft King Air B200 at Wichita Mid-Continent Airport shortly after takeoff Thursday is one of FlightSafety International’s five centers in Wichita. Wichita has the highest concentration of FlightSafety centers in the world, the company has said. Pilots and maintenance technicians come to Wichita from around the world to train in Cessna, Learjet, Beechcraft and Hawker products.

Three bets going sour on Buffett (MarketWatch)

(Referencing losses with Tesco, IBM, and Coca-Cola.)

Judging by the share price alone, Warren Buffett's Berkshire Hathaway is having a terrific 2014. After all, Berkshire Hathaway is up 17.7% year to date, trouncing the 7.95% rise in S&P 500. [...] Recently, several of Buffett's high-profile bets have fallen out of bed. Each stumble has its own particular explanation. But taken together, they share an overarching theme. The moats that protect these businesses aren't as wide as they once were. Even worse, competitors aren't even bothering to try to cross them. They're just inventing a completely different way of doing business.

MidAmerican Signs Longterm Wind-Power Services Deal With Siemens (Bloomberg Businessweek)

MidAmerican Energy Co., the utility owned by Warren Buffett’s Berkshire Hathaway Inc., has signed an agreement through June 2024 with Siemens AG to support a dozen wind farms in Iowa. Siemens will provide service and maintenance for 958 turbines that will have a combined capacity of more than 2.2 gigawatts, according to a statement today. Financial terms of the agreement weren’t disclosed.

Buffett Railroad’s Shale Focus Blunts Ports’ Comeback Bid (Bloomberg Businessweek)

Seattle and Tacoma are being stymied in their push to regain market share from Canada as railcars destined for the harbors sit idle on tracks across the U.S. Pacific Northwest. Even as the ports, on Washington’s Puget Sound, agreed to consolidate some operations after a century of competition, 40-fold growth in shipments of crude from the Bakken oil fields is straining the region’s main railroad company, BNSF Railway Co., causing delays that have helped shift traffic to less congested harbors in Canada. In September, as many as 150 grain cars piled up in nearby rail yards, said Dale Frazier, manager of Seattle Bulk Shipping Inc.

Forest River, Thor Foundation to Aid Employees (RV Business)

Forest River Inc., a Berkshire Hathaway company, and publicly held Thor Industries Inc. yesterday (Nov. 4) announced the establishment of an unprecedented community foundation set up to benefit the 15,000-plus employees of the two RV-building corporate giants and their families during times of need. The Forest River/Thor Community Foundation will be jointly funded by the two companies and will provide grants of up to $20,000 per qualifying employee or family to help cover emergency financial needs incurred in a variety of unforeseen family crises such as acute illnesses, natural disasters, fires or other hardships. Both firms are based in Elkhart, Ind.

Berkshire News Briefs - 10/1/14

The wrath of Warren Buffett: How Benjamin Moore almost broke his promise (Fortune)

Benjamin Moore is on its third CEO in 2 years, and a combination of strategic zigzags and the dealers’ feelings of betrayal has caused the company to fall behind its main rivals. Moore’s revenues rose a cumulative 40% between 1999 and 2013, while competitors Sherwin Williams and Valspar boosted their revenues, 104% and 196%, respectively. Moore’s revenues declined in the first half of 2014 [...] Buffett says he’s comfortable with the no-big-box stance, even if it means lower sales volume for now. He emphasizes the fact that Moore is a high-end product, what he calls “the best paint out there.” As he puts it, “They’re not the paint for everybody. We’re not in, and we won’t be in, the low-priced paint set… We will not be the top ever in market share. The mass market is going to be bigger than the high-end market. But there will always be a high-end market.”

Buy Like Buffett: A Love Story (Forbes - Video)

Buy Like Buffett: A Love Story is the journey of a young couple expressed through the lens of Berkshire Hathaway Inc. companies, because what says “I Love You” better than a box of See’s candy?

Warren Buffett’s Energy Company Says Net Metering Should Be ‘Eliminated’ (Green Tech Media)

In a strategy document written by SVP Brent Gale for a legal conference in July, Berkshire Hathaway Energy outlined its position on net metering, saying it should be scrapped in favor of a system that recognizes utility fixed-grid costs and utilizes distributed generation at times when it's needed most. [...] Berkshire Hathaway owns a number of regulated utilities, including NV Energy and PacifiCorp. NV Energy and Rocky Mountain Power, a power company run by PacifiCorp in Utah, are both lobbying to make changes to net metering and add fixed charges to the bills of customers getting credited for their solar power.

Similar Story: Warren Buffett's Berkshire Hathaway Energy wants to get rid of net metering (Utility Dive)

NetJets gets OK to begin serving China (Columbus Dispatch / AP)

NetJets said yesterday that its new joint venture soon will begin offering private charter flights in China now that regulators there have granted the company an operating certificate. NetJets, which sells partial ownership interests in business jets in the United States and Europe, has been working since 2012 to gain approval to set up operations in China.

Berkshire Expands in Company-Crime Insurance With New AIG Hire (Bloomberg)

Berkshire Hathaway Inc.’s specialty insurance business, created last year to expand into new niches, is adding sales of coverage to protect employers against misdeeds by their staffs. Brian O’Neill was hired from American International Group Inc. (AIG) to lead the push into the fidelity and crime insurance market, the unit of Omaha, Nebraska-based Berkshire said today in a statement.

AIG And Berkshire Hathaway Had Secret Non-Compete Agreement (ValueWalk)

Berkshire Hathaway Inc. and American International Group Inc had a secret non-compete agreement in place over hiring employees for a year that has now ended, according to a recent Bloomberg TV interview. The interview revealed that American International Group Inc threatened legal action in order to encourage Warren Buffett’s Berkshire Hathaway Inc. to agree not to hire additional AIG’s executives for one year. Berkshire had poached AIG executives Peter Eastwood, David Fields, Sanjay Godhwani and David Bresnahan in 2013 for what Buffett described as a “big time” expansion into business insurance coverage. [...] Benhosche didn’t indicate exactly what the executives may have done wrong, but made references to stealing intellectual property and poaching client business.

Berkshire Hathaway invests in Northwoods values (Stevens Point Journal)

The name of the company is fairly new, but the presence of a travel insurance company led by John Noel in central Wisconsin is anything but. [...] Noel, now president of BHTP, founded Noel Group in 2006 after selling Travel Guard, a travel insurance company he founded in his basement in 1985. Today, Berkshire Hathaway Travel Protection employs about 230 people in Wisconsin and Florida and is expected to grow to about 2,000 workers over the next five years. Noel said in an interview that the majority of those jobs will be located in central Wisconsin, and that he's happy to continue to provide an opportunity for people to live and work in the region.

FlightSafety’s pilot training center at Port Columbus costing $110M (Columbus Business First)

FlightSafety International’s new pilot training facility at Port Columbus International Airport clearly is a major project at 55,000 square feet and the potential to add 90,000. But new information made public by JobsOhio shows just how big the Berkshire Hathaway (NYSE:BRK.B) subsidiary’s investment is - $110.5 million. [...] FlightSafety’s $110.5 million capital investment will help it retain 137 jobs and create another 18, adding $1.2 million to its local payroll, according to JobsOhio’s report. The sister company to Columbus-based NetJets declined to breakdown those costs, but industry sources in May said its six flight simulators will run into the millions of dollars.

Buffett’s Berkshire Hathaway among possible bidders for Oncor Electric (Ft. Worth Star-Telegram)

CenterPoint Energy, Warren Buffett’s Berkshire Hathaway and Hunt Consolidated of Dallas are among companies that signed confidentiality agreements to explore bids for Energy Future Holdings’ Oncor electricity distributor, people familiar with the matter said. [...] Dallas-based EFH, which was taken private in a record leveraged buyout seven years ago, filed for bankruptcy in April with a plan to split off the side of the company that owns the profitable Oncor business. In July, the company — which also operates TXU Energy and Luminant — bowed to pressure from lender groups to gather bids for Oncor. [...] Oncor, which operates the largest distribution and transmission business in Texas, delivers electricity to more than 3 million homes and businesses and serves Dallas-Fort Worth. The company is prized because it’s poised to take advantage of population growth in the state and it has said it plans to invest $1 billion annually in power lines through 2018.

Redundancy costs push Fruit of the Loom further into the red (Irish Independent)

New accounts filed by Dublin registered FOL International - which is owned by the Warren Buffet controlled company Berkshire Hathaway - show that the firm recorded a pre-tax loss last year of €6.78m and this followed pre-tax losses of €23.49m in 2012. FOL International represents clothing manufacturer Fruit of the Loom's European operations. The accounts show that the loss last year occurred after restructuring costs of €6.35m. At its peak, iconic US brand Fruit of the Loom employed 3,500 people in six plants on the island of Ireland. Last year's restructuring comes almost a decade after the company announced in 2004 that it would shut its remaining two factories with the loss of 650 jobs in Donegal and Derry.

Warren Buffett's $750 million grocery bill (WSEE-12)

Warren Buffett may be feeling rotten after investing in a British grocery chain that's gone bad. His famed investment company, Berkshire Hathaway, is the third biggest Tesco shareholder, with a stake of almost 4%. Tesco is the U.K.'s leading supermarket operator. Berkshire is now nursing losses of about $750 million on the investment after the shares plunged by about 43% this year. It paid about $1.7 billion for the stake.

Similar story if you want to read more about Tesco:

The Rise and Fall of U.K. Grocer Tesco That ‘Owned The World’ (Bloomberg)

Berkshire Hathaway Inc. Vice Chairman Charles Munger recently summed up the past seven years of Tesco Plc, Britain’s biggest grocer, in a beat. “Tesco owned the world,” said Munger, whose firm last disclosed a 3.7 percent stake in the company. And “one day, it stopped working so well.”

An alternative take on Buffett and Burger King (MarketWatch)

What really made this deal come together was the financing provided by Warren Buffett's Berkshire Hathaway. He was more than eager to do so. On the surface it may be because of the generous preferred financing that was packaged together by Buffett for Burger King, $3 billion of which yields 9%. However, when I look at the deal, Buffett is providing financing at a cheaper rate than what Burger King currently borrows for long-term financing. Why would he do that, as the company is riskier after the acquisition than before? One could argue that the convertibility factor of the preferred stock has some benefit to Buffett. However, is Burger King a company which would normally fit his investment criteria?

How Warren Buffett Plans to Make You Money (Fool)

While the headline news will always be about what stocks Berkshire Hathaway buys and sells, it's critical to understand Buffett doesn't see those investments as the driving forces which will deliver shareholder returns. His first two points indicate as much, and instead he wants us to see that the things which will propel the value of Berkshire Hathaway forward into the future will come from the collection of operating businesses which now make up Berkshire itself.

ATCO lawyer argues verbal cross-examinations needed around sale of AltaLink (Calgary Sun)

Competitor ATCO continues their effort to derail the BH Energy purchase of AltaLink. I thought this story was over, but apparently not.

The impending sale of AltaLink to business mogul Warren Buffet’s energy arm should be subject to an oral cross-examination to protect Alberta consumers from runaway electricity rates, an ATCO lawyer argued Friday. [...] But SNC-Lavalin lawyer Bernette Ho said the reviews have already been fairly handled and accused ATCO of not being fully forthcoming during the process. AltaLink officials say ATCO has tried unsuccessfully to purchase their company.

Berkshire News Briefs - 9/25/13

Berkshire Hathaway Enters Detroit Bankruptcy Case (Bond Buyer)

Warren Buffett's bond insurance firm made its first appearance in the Detroit bankruptcy case with a brief court paper filed Saturday. [...] Attorneys for Buffet's Berkshire Hathaway Assurance Corp. on Saturday filed a court notice of appearance and request for service. [...] BHAC has about $400 million in exposure to Detroit's debt, mostly in sewer revenue bonds. All the BHAC insurance is a wrap on top of an original guarantee from Financial Guaranty Insurance Co. In addition to $384 million of sewer debt, the insurer also wraps a piece of the city's defaulted pension certificates, though the amount is uncertain.

Colorado Properties joins Berkshire Hathaway HomeServices (Vail Daily)

Berkshire Hathaway HomeServices, the new real estate brokerage network operated by HSF Affiliates LLC, announced on Monday that Colorado Properties is the network’s first resort-brokerage signee. Colorado Properties will begin operating as Berkshire Hathaway HomeServices Colorado Properties in October. [...] Colorado Properties, a full-service brokerage founded in 1971, operates six offices with 85 sales professionals and one of the area’s largest vacation rental companies. The company ranks among Prudential Real Estate’s Top 50 companies nationwide and is a top firm in the Vail Valley.

Prudential California Realty Becomes Berkshire Hathaway HomeServices California Properties (San Diego Business Journal)

Prudential California Realty became the first company to operate as a member of the new Berkshire Hathaway HomeServices network, and was renamed Berkshire Hathaway HomeServices California Properties, the company said. [...] Berkshire Hathaway HomeSevices California Properties has about 3,200 sales associates in 62 offices in Southern California and the Central Coast. It is one of the top five brokerages in the nation, the company said. Last year its agents closed nearly $11 billion in sales and more than 14,000 transactions.

Air Force Contracts Worth $97 Million Awarded Monday (Fool)

$19.9 million: going to Berkshire Hathaway subsidiary FlightSafety Services Corp to exercise a seventh option year on a contract to support Aircrew Training Systems for the McDonnell Douglas KC-10 aerial refueling tanker. FlightSafety will be both supplying and supporting all KC-10 training devices used in the Air Force's Operation and Training System Support Center through Sept. 30, 2014.

Rail Traffic Reaches Record Level (Seeking Alpha)

Total N. American rail traffic last week leaped to the highest levels in the 5 years I began tracking the series here. At 733k carloads it passed the previous highs despite both oil/chemical shipments and coal shipments falling slightly. Strength was seen in intermodal, auto, metals and stone products. The metal and stone product categories sit at or just below multi year record levels. [...] As for the carriers, Burlington Northern [merged with Berkshire Hathaway and Canadian National Railway Company saw their traffic also reach the highest level since I began tracking the series.

Buffett’s 9% Heinz Dividend Means 3G Cutting Jobs, Mini-Fridges (Bloomberg)

Since taking over at the Pittsburgh-based ketchup maker, Hees eliminated hundreds of jobs, grounded corporate jets and pulled the plug on mini-fridges at the office. Savings will help pay down $12.6 billion in borrowing supporting the deal. [...] The management turnover contrasts with Berkshire’s normal approach. When Buffett buys a company, he typically leaves senior employees in place and commits to holding the business forever. The practice makes Berkshire a buyer of choice for many sellers, he’s said.

Warren Buffett Offering Options For MN’s Famous Dairy Queen Manager (WCCO 4 Minnesota)

Joey Prusak saw a woman steal $20 from a blind customer at the Dairy Queen where he works. So he gave the guy his own cash. [...] “Warren Buffet called me this morning and we talked for about 10 minutes,” Prusak said. One of the world’s richest people was calling over a $20 bill. “I go, ‘What I would like to know is why you’re calling here?’ He goes ‘I just wanted to call and thank you for all that you did. It means a lot to me,’” Prusak said. Buffet’s company owns Dairy Queen, and Buffett said he’s planning future talks with Prusak.

Berkshire News Briefs - 9/3/13

It's an all-subsidiary news edition!

Top CEO - Strategic Management - Randy Watson of Justin Boots (Fort Worth Business Press)

By the time Watson realized that he “wasn’t good enough” for professional baseball, his part-time job hadbecome his new passion – one that he pursued to the executive boardroom of Fort Worth-based Justin Brands Inc., a recognized leader in Western footwear. Watson said the competitive and team spirit he learned playing football and baseball helped him succeed in the business world. It also led Ernst & Young to select the Justin CEO as its 2013 Southwest-north Entrepreneur of the Year in manufacturing and distribution. [...] Buffett reiterated his description of Watson as “the prototype Berkshire Hathaway manager” when he promoted him to CEO and board chairman of Justin Brands in 2011.

Forest River and Thor in a Mid-Year ‘Dead Heat’ (RV Business)

For the first time in memory, the industry’s two RV-building volume leaders, Thor Industries Inc. and Forest River Inc., are in a dead heat for retail market share in both towable and motorized RVs [...] But the real news here is to what extent Forest River is pressing its case in both towable and motorized RVs, even while both companies continue to post impressive growth during the current economic recovery. Thor, for its part, recently posted its first $2 billion quarter, and revenues for Forest River, a Berkshire Hathaway Inc. subsidiary, were running at least 22% ahead of last year through June, Forest River President and CEO Pete Liegl confirms.

New planes, reduced competition help NetJets’ earnings (Columbus Dispatch)

Business at Columbus-based NetJets continues to strengthen, according to the latest report of parent company Berkshire Hathaway. The second-quarter earnings news from the company led by billionaire Warren Buffett shows that, in the first six months of this year, NetJets “experienced increased sales of fractional aircraft shares and its earnings increased primarily due to improved flight-operations margins, fractional-sales margins and reduced net financing costs.”Observers say the new planes being added to its fleet and diminished competition in its industry have helped.

Shaw Industries to build plant, add 500 employees (Chattanooga Times Free Press)

Shaw Industries is vacuuming up talent in North Georgia for a new plant that will churn out carpet tile across the U.S., the company announced today. The Dalton, Ga.-based business, which is owned by Omaha billionaire Warren Buffett, will spend $85 million and create 500 new jobs at a new plant in Adairsville designed to meet growing demand for Shaw's soft wares. It will be the seventh facility for Shaw in Bartow County, where it is already the biggest employer. "I think our business has turned," said Vance Bell, CEO of Shaw. "Carpet tile today is well over 50 percent of our commercial carpet mix and continues to grow, and it's just received a very good audience in the commercial marketplace."

XTRA adds free tracking service for leased trailers (Fleet Owner)

Basic trailer tracking service at no charge is now being offered to fleets on new long-term leased trailers from XTRA Lease, the company said. XTRA Lease noted its offered basic trailer tracking on dry van rentals for free but is now upping the ante to include such basic tracking service at no extra cost on all newly leased dry vans and late model reefers, model-year 2010 and newer. The services will enable fleets to view current and historical trailer locations, “drill down” into dormancy and usage data utilization info to better understand how trailers are being used, as well as provide e-mail subscription reports offering the latest location and dormancy information on those leased units.

Berkshire Hathaway’s FlightSafety adds Cessna simulator in San Antonio (San Antonio Business Journal)

New York-based FlightSafety International has added new Cessna Aircraft Co. training simulators in San Antonio and two other U.S. locations. FlightSafety — a division of Warren Buffet’s Berkshire Hathaway Inc. — now offers simulator training for the Citation CJ2+ aircraft at its Alamo City learning center. It is the only dedicated CJ2+ simulator worldwide, company officials say.

Buffett's See's Candies has sour day: Chocolates recalled (CNBC)

San Francisco-based See's Candies is recalling all its Dark Chocolate Blueberries because the product contains undeclared milk, the company said in a press release that was posted on the Food and Drug Administration website. The recall was initiated after a customer reported having an allergic reaction to the product, the statement said.

Dairy Queen Sets World Record With Fruit Sculpture (CBS 4 Minnesota)

Dairy Queen now owns the world record for the largest fruit sculpture ever after hiring an artist to build a 10-foot-tall tree. The restaurant chain sponsored the fruit sculpture in Calgary, Alberta, Canada earlier this month as part of a promotional event for its Orange Julius smoothies. Sculptor Shawn Feeney used 1,200 pieces of pineapples, oranges, strawberries, peaches and mangos to build the tree.