Berkshire News Briefs - 10/12/16

Mars Cashes Out Warren Buffett to Take Control of Wrigley

Mars Inc. has finally taken full control of Wrigley, formally putting M&Ms and Altoids mints in the same division — and cashing out its partner, Warren E. Buffett, in the process. [...]

Berkshire Hathaway helped Mars buy Wrigley for about $23 billion in 2008. It was a classic deal for the billionaire, who has traditionally favored acquisitions involving well-known names and strongly performing businesses.

But there was a lucrative element in the way Mr. Buffett participated in the transaction. As part of the arrangement, Berkshire received preferred shares worth about $2.1 billion, which paid a 5 percent annual dividend, and $4.4 billion worth of bonds that carried a hefty 11.45 percent interest rate. [...]

Berkshire Is Bigger Than Buffett

We think two big concerns--a belief that Berkshire Hathaway's size will prevent it from growing at a decent clip in the future and that the company's shares will get pummeled once Buffett no longer runs the show--have kept some investors on the sidelines. Although we believe that the wide-moat firm is unlikely to consistently grow its book value per share at a double-digit rate, something that happened nine times during 2001-15 and 40 times during 1965-2015, we think that Berkshire can grow its book value per share at a high-single- to double-digit rate going forward, much as we've seen since the start of the new millennium. This type of growth should leave returns solidly and consistently above the firm's cost of capital [...]

Cash is piling up faster than Warren Buffett can invest it

Warren Buffett has the kind of money problem most people would envy: a growing mountain of cash.

Nearly $73 billion piled up at Berkshire Hathaway by mid-summer, more than Buffett’s conglomerate has ever held before.

And the total continues growing every day Buffett doesn’t make a major investment because Berkshire’s 90-odd businesses generate roughly $1.5 billion in cash every month. [...]

Yahoo Finance to Host Exclusive Live Stream of Berkshire Hathaway Shareholders Meeting for Second Year

Yahoo! Inc. today announced that it will host the exclusive live stream of Berkshire Hathaway’s annual shareholders meeting on Saturday May 6, 2017, for the second year in a row. Approximately 40,000 Berkshire Hathaway shareholders from around the world attend the highly anticipated annual event. In 2016, Yahoo Finance opened the meeting to the general public via live stream, for the first time ever, with more than 1 million viewers tuning in. [...]

Berkshire Hathaway Eyes Growth Despite Cat Loss Concerns

Berkshire Hathaway’s non-insurance businesses like utilities and & energy, and manufacturing, service & retail, have been reporting favorable results. In fact, total revenue from manufacturing, service and retail has improved substantially over the past several quarters. The strong results across most of the units can be attributed to better economic conditions and higher consumer demand.

Also, the company’s book value has been improving consistently. The insurer’s already robust book value growth is expected to be boosted further with the turn of the economy, increased gains from the value of the derivatives positions, and continued positive contribution from earnings growth in insurance operations. [...]

Atlas Bolt & Screw President Ridenour to retire

Randy Ridenour, President of Atlas Bolt & Screw Company LLC, has decided to retire at the end of 2016 after 32 years with the company. [...]

Atlas Bolt & Screw Company, a Marmon/Berkshire Hathaway company, offers a wide range of construction fasteners that reduce installation costs and extend the lives of metal buildings worldwide. [...]

Shaw Contract eyes smaller town, to raise investment limit

Shaw Contract, a business unit of Shaw Industries Group Inc which is a wholly-owned subsidiary of the Warren Buffet's Berkshire Hathaway, is looking to penetrate into the small towns and also raise investment limit in the country. The Bengaluru [India]-based Shaw Contract India has been in operations for over two decades and is the second-largest supplier of commercial carpet tiles in the country with a market share of around 22 percent, the company claimed. [...]

Berkshire can't resist India any more, to return with reinsurance business

Warren Buffett, who had exited India three years back citing regulatory suffocation, can’t resist India any more. Berkshire Hathaway is in fact returning to India with a plan to set up a reinsurance branch which would be much bigger than what it was when it was into insurance broking. [...]

Currently, Berkshire is present in India as a services company and is a leader of reinsurance treaty — purchased by insurers from one or more other companies — of large insurance companies including Bajaj Allianz General Insurance.

The company provides support services such as data collection, market research and training to insurance companies. As a leader of the treaty, it reinsures vast portions of the risk underwritten by these companies. [...]

Berkshire Hathaway Specialty Insurance Company Expands to Macau, Makes Local Office Appointments

Berkshire Hathaway Specialty Insurance Company (BHSI) today announced that it has received a license to provide insurance and reinsurance in Macau and filled key positions in its newly established Macau office. [...]

Berkshire News Briefs - 7/28/13

HomeServices Lending Announces Plans to Become Wholly-Owned Subsidiary of HomeServices of America (HomeServices Blog)

HomeServices Lending LLC, a joint venture with Wells Fargo, today announced plans to transition to become a wholly-owned subsidiary of HomeServices of America, a Berkshire Hathaway affiliate. The transition work has been underway for some time, and is expected to conclude in 2014.

Berkshire Allowed to Count BNSF Purchase Costs in Rail Rates (Bloomberg Businessweek)

Warren Buffett’s Berkshire Hathaway Inc. (A:US) can count the $8.1 billion premium it paid to acquire Burlington Northern Santa Fe Corp. in the formula used to calculate prices for some shippers, a decision that may make it harder for some rail customers to challenge their rates. The U.S. Surface Transportation Board, which regulates some rail rates, today ruled that Berkshire may count the premium from its 2009 purchase of BNSF by spreading those costs over seven years. Shippers moving products, including coal, asked the regulator to prohibit the company from counting the premium in its cost base, saying Berkshire was unfairly trying to make them reimburse its expenses in the $26.5 billion BNSF acquisition.

Why Warren Buffett's Berkshire Hathaway pulled out of India (Economic Times)

India has long been viewed as a value investor's dream: rapid growth, 1.2 billion people pining for a taste of globalisation, and underdeveloped industries ripe for turnarounds. So it surprised few when the genre's guru, Warren Buffett, placed a bet on the world's ninth-biggest economy. What did come as a surprise was last week's decision by the billionaire's Berkshire Hathaway to give up on India's insurance market after just two years. [...] Buffett isn't alone. Walmart, ArcelorMittal and Posco are pulling back on investments that they had announced with great fanfare. What's scaring foreigners away? A rampant political dysfunction that has stopped India's progress cold.

Buffett Reinsures Irish State Health Claims as Population Ages (Bloomberg Businessweek)

Warren Buffett’s Berkshire Hathaway Inc. will reinsure about 700 million euros ($923 million) in claims for Ireland’s state health insurer, which is seeking to stem losses and its burden on taxpayers as the population ages. Vhi Healthcare and Omaha, Nebraska-based Berkshire signed a deal for one year, which Vhi will seek to extend, Brighid Smyth, a spokeswoman for the Dublin-based insurer, said by phone. She declined to give terms of the agreement, which will cover half of Vhi’s 1.4 billion-euro claim book. The agreement may save Irish taxpayers as much as 90 million euros, Smyth said, as Vhi will require a smaller boost to its reserves given Berkshire’s assumption of some of the insurer’s risks.

Around the Water Cooler With Dairy Queen’s CEO (US News & World Report)

[John] Gainor, 56, started at International Dairy Queen, Inc. as the chief supply chain officer and became the CEO five years ago. He now oversees more than 6,300 restaurants worldwide, with more than 4,500 in the United States. Since Dairy Queen is a wholly owned subsidiary of Warren Buffett's Berkshire Hathaway Inc., the company isn't directly in charge of the several hundred thousand employees. But that doesn't mean Gainor misses an opportunity to converse with the Blizzard techs pumping soft serve behind the counter.

Buffett’s PacifiCorp Agrees to 160-Megawatt Wind Deal With Apex (Bloomberg)

PacifiCorp, a utility unit of Warren Buffett’s Berkshire Hathaway Inc. (BRK/A), agreed to buy power from a wind farm that Apex Clean Energy Inc. plans to build in Utah. PacifiCorp will buy the output from closely held Apex’s $230 million Long Ridge wind farm, which will consist of two 80-megawatt projects and is expected to produce enough electricity for about 43,000 average U.S. homes [...]

Berkshire Hathaway derided for ‘foolish’ Aon deal (Financial Times)

Warren Buffett’s Berkshire Hathaway has been branded “foolish” by a leading insurance executive for blindly following underwriting decisions taken by Lloyd’s of London rivals. An unusual deal that Berkshire has struck with the insurance broker Aon is likely to “end in tears”, warned Richard Brindle, founder and chief executive of FTSE 250-listed specialist insurer Lancashire. Lloyd’s officials have already complained that the arrangement – under which Aon has begun to automatically allocate a chunk of all business it places at the historic market to Berkshire – threatens to undermine underwriting expertise.

Warren Buffett joins ceremony at Carmel Geico service center (Indianapolis Star)

Two American business icons made an appearance Monday at the ribbon-cutting for GEICO’s customer service center in Carmel. One was a big green gecko. The other was billionaire Warren Buffett. GEICO announced March 18 that it would open a service center at 101 W. 103rd St. and bring 1,200 new jobs to the city. [...] Berkshire Hathaway owns agricultural systems manufacturer CTB International Corp. in Milford, liability insurance provider Medical Protective Co. in Fort Wayne and RV manufacturer Forest River Inc. in Elkhart. Buffett also donated money toward the $26 million redevelopment of the historic Meadows neighborhood on the Northeastside in 2011. “Obviously, we like Indiana,” Buffett said to a group of reporters at the ceremony.

Dow Says ‘Rest Assured’ on Effort to Redeem Buffett Stake (Bloomberg)

Dow Chemical Co. said its prospects have improved for redeeming $4 billion in preferred stock held by Warren Buffett’s Berkshire Hathaway Inc.and Kuwait’s sovereign wealth fund after interest rates climbed. [...] Midland, Michigan-based Dow pays an 8.5 percent annual dividend on preferred shares it sold to help fund the 2009 purchase of Rohm & Haas Co. Redeeming those is a “top priority for us,” Weideman said. “As we’ve said all along, timing’s important on this.”

5 Reasons Why the Bears Are Wrong About Berkshire Hathaway (Fool Blog)

On May 13, Michael Price of MFP Investors gave a slide presentation at London Value Conference arguing that the fair value of Berkshire Hathaway's stock should be roughly 20% lower than it is today. So are the bears right about Berkshire? Here's five reasons why I believe the answer is an emphatic “No.”

Real Money Stock Pick: Berkshire Hathaway (Fool Video)

As I [Andrew Tonner] add a few companies this week to the defensive value investing portfolio that I manage for the Fool, the theme of this specific purchase could be "invest with the best." Of course, I'm talking about Berkshire Hathaway, which to me perfectly embodies the conservative, outstanding companies I prefer to own.

Candy date with Warren Buffett up for auction (CBS News)

Now one lucky bidder can spend the day picking the brains of the fourth richest man in the world. The magnate is putting himself on the auction block Thursday to benefit Communities in Schools of Los Angeles (CIS), a charity that focuses on keeping kids in school. [...] The winner of the auction will win an "all-you-can-eat" tour of the See's Candy factory in Los Angeles, where Buffet will demonstrate "the only acceptable way to eat a bonbon." Currently, the highest offer is at $18,000 with two bids since launching.

Berkshire News Briefs - 7/21/13

The Press of Atlantic City to be purchased by Warren Buffett's BH Media Group (Press of Atlantic City)

The Press of Atlantic City will be sold to Warren Buffett’s BH Media Group by ABARTA, a private holding company based in Pittsburgh, Pa., interim Publisher James W. Hopson announced Thursday. [...] The Press of Atlantic City is a 67,000 daily and 77,000 Sunday circulation newspaper that serves Atlantic, Cape May, Cumberland and Ocean counties. The newspaper’s Web site, pressofAtlanticCity.com , reaches 700,000 unique visitors each month. The Bitzer/Taylor family, owners of ABARTA, has owned The Press since 1951.

The Not-So-Dirty Secret Behind Warren Buffett's Recent Buy (Fool)

Back in late May, MidAmerican Energy, a subsidiary of Warren Buffet's Berkshire Hathaway, made a $5.59 billion offer to buy NV Energy. On the surface, this seems like the prototypical Warren Buffett kind of acquisition. If you dig deeper, though, there is one lesser known area that could make this purchase an even bigger win. [...] The biggest upside for the NV Energy lies not in its current customers or its generation capacity, but in the other market that it could serve: California.

Buffett’s Tulsa World Is Latest Berkshire Newspaper to Cut Staff (Bloomberg)

Warren Buffett’s Berkshire Hathaway Inc., acquirer of more than 25 daily newspapers in the last two years, is eliminating about 50 jobs at the Tulsa World in Oklahoma after making cuts at other publications. A dozen positions in the administrative, information technology and production departments were cut immediately, according to a report posted today on the newspaper’s website. The World announced other changes including the creation of distribution centers where carriers will pick up newspapers, eliminating transportation costs for the company.

Berkshire Hathaway HomeServices brand announces first 9 affiliates (Inman News)

Berkshire Hathaway HomeServices, the new HomeServices of America franchise brand, has announced the first nine Prudential Real Estate affiliates that will transition to the brand this fall. The nine firms joining Berkshire Hathaway HomeServices this fall represent about 20 percent of the roughly 50,000 agents currently affiliated with the Prudential brand. Under the terms of a 2011 sale of the Prudential Real Estate brand to Brookfield Asset Management, the brand is slated to fade away when the last rights expire to it in the late 2020s.

Berkshire Hathaway to End India Insurance-Distribution Deal (WSJ)

Two years after Berkshire Hathaway Inc. launched an online insurance-distribution business in India, it is stopping sales of the only products it had been dealing with in the country. [...] Berkshire had launched its India insurance venture, Berkshireinsurance.com, in March 2011, with a big splash by timing it with Chairman Warren Buffett's first visit to India. Berkshire didn't underwrite insurance, but sold mostly vehicle- and travel-insurance policies of Bajaj Allianz, via the website.

What's Behind Berkshire Hathaway Inc's Big DaVita Buy? (Minyanville)

Berkshire has been building a position in DaVita since the fourth quarter of 2011. The stage was set for Berkshire's latest big purchase, however, on July 1, when the Centers for Medicare & Medicaid Services (CMS) unexpectedly announced a proposed rule to cut payments to large dialysis companies by as much as 12% starting in 2014. If approved, the move could close the doors of some smaller dialysis facilities. After the announcement, many DaVita shareholders headed for the exit. By July 2, its share price had dropped by 6% from the day earlier, and by about 13% from the yearly high reached in May. That day, Berkshire portfolio manager Ted Weschler, known for finding value in distressed companies, moved to buy another 639,400 shares of DaVita, boosting its stake to 14.8%, for a total transaction value of $73.37 million.

Warren Buffett sees 'betrayal' as hospital drains big endowment (CNBC)

Donald and Mildred Othmer made a lot of money investing with Warren Buffett. When they died, they wanted their Buffett profits to be given back to the community. They probably never imagined what would happen next. In what it calls a "cautionary tale for wealthy investors who hope their gifts will make a long-term impact," The Wall Street Journal reports on the destruction of a $135 million hospital endowment created less than 20 years ago by the Othmers. Buffett tells the Journal that if the donors were alive, "I would think...they would feel betrayed."

Special Section: Berkshire's Exposure to Detroit Bankruptcy

Buffett Insurer Wrap Firms Up Detroit Debt (Bond Buyer)

In the sea of junk-rated Detroit debt trading for 30 to 40 cents on the dollar, a small piece of the city’s defaulted pension certificates continue to see retail bids of nearly 90 cents on the dollar. The higher valued debt features an insurance pledge from Berkshire Hathaway Assurance Corp., the government bond insurer controlled by financier Warren Buffett. [...] Though Buffett has repeatedly expressed caution about insuring tax-exempt bonds, BHAC has about $400 million in exposure to Detroit’s tainted debt, most of which is sewer bonds. All the BHAC insurance is a wrap on top of an original guarantee from Financial Guaranty Insurance Co. BHAC’s secondary insurance gives additional comfort to investors and means BHAC would only have to pay if the issuer defaults and then the original insurer can’t meet the obligation — a scenario not too far off for Detroit creditors.

Detroit's bust could ripple back to Berkshire (Omaha World-Herald)

Detroit has filed for bankruptcy to reduce its debts, and Berkshire Hathaway Inc. of Omaha insures about $700 million worth of Detroit's sewer and water bonds. It's unclear whether the bankruptcy case would let Detroit default on the bonds or pay only part of what it owes, which could prompt the bond holders to file insurance claims against Berkshire. [...] The bonds insured by Berkshire are being repaid from sewer and water fees, not city taxes pledged to Detroit's “general obligation” bonds. Detroit is seeking to pay only a portion of its general obligation bond debt, along with other debts the city owes. Revenue bonds, such as the sewer and water bonds insured by Berkshire, generally are repaid as long as the revenue continues, and sewer and water fees generally are regarded as a steady source of money. That difference might be enough to prevent a claim against Berkshire.

Special bonds have better chance of being paid (Crain's Detroit Business)

While Detroit's bondholders will be hat-in-hand fighting for owed debt, holders of the city's special revenue bonds have a better prospect of payment through the Chapter 9 process. Detroit's special revenue bonds, including the $5.9 billion bond debt of the Detroit Water and Sewerage Department, are protected under Section 922 D of the U.S. Bankruptcy Code. Payments on a special revenue bond are guaranteed solely from revenue generated from an entity -- such as the water department -- rather than from taxes, as is the case with other bonds. [...] But legal arguments will be raised and those payments will be attacked by other bondholders, said Timothy Wittebort, a partner at Howard & Howard Attorneys PLC in Royal Oak. Wittebort said Detroit's pensioners will argue that the Michigan Constitution protects their pensions and go after the revenue-generating assets.

Berkshire News Briefs - 6/30/13

Berkshire's Oriental Trading Co. acquires toy company (Omaha World-Herald)

Omaha's Oriental Trading Co. said Thursday it had acquired a “brainy” toy company, taking another step in expanding Warren Buffett’s presence in the business of selling goods to consumers through catalogs and online. The subsidiary of Buffett's Berkshire Hathaway Inc. said Thursday it has purchased MindWare Holdings Inc. of suburban Minneapolis for an undisclosed amount of cash, its first acquisition under Berkshire ownership. MindWare creates, wholesales and sells more than 1,000 educational games, toys and other products via catalogs and online sites. [...]

“Our expectation is that this is the first of many acquisitions to come down the road,” Taylor said.“It gives us a chance to leverage our world-class, high-tech platform that we've built to sell products direct to consumers and to organizations.” MindWare owner Martin Smith, who is retiring, said he wanted the company to have a permanent home.

Buffett had helping hand in Oriental Trading acquisition (Omaha World-Herald)

Last year, when Taylor approached Berkshire Chairman and CEO Warren Buffett about buying Oriental Trading, he asked how involved Buffett would be in the business. Buffett answered that his philosophy is autonomy for top managers but that he should be informed about acquisitions. So Taylor brought the MindWare proposal to Buffett. “I knew we'd have to run this by Warren and get his blessing,” Taylor said, “mostly to make sure not to overpay for acquisitions. He was very helpful in helping us size it, to come up with our value we were going to offer.”

Buffett Adds $1.75 Billion in Hartford Annuity Deal (Bloomberg)

Warren Buffett’s Berkshire Hathaway Inc.agreed to take on Hartford Financial Services Group Inc.’s U.K. variable-annuity business, adding $1.75 billion in assets under management. Berkshire will pay $285 million in cash for Hartford Life International Ltd., which sold the annuities from 2005 to 2009, according to a statement today from Hartford, which is based in the Connecticut city of the same name. The deal will cut second-quarter earnings by about $110 million, Hartford said. [...]

The $285 million price is about the same as the unit’s statutory surplus, a measure of assets minus liabilities, as calculated under Irish accounting standards, Hartford said. The Hartford Life Ltd. unit is based in Dublin.

Most Respected (Forbes) http://online.barrons.com/article/barrons_cover.html#article...

Apple's reign is over. Its remarkable three-year hold on the throne of Barron's annual ranking of the world's most respected companies is history. [...] And proving that comebacks are possible even for an 82-year-old CEO, Warren Buffett's Berkshire Hathaway came out on top this year, up from a No. 15 finish in 2012 -- the only time in this ranking's nine-year history that it finished out of the top five.

Berkshire, White Mountains Get Symetra Stock in Warrant Deal (Bloomberg)

Berkshire Hathaway Inc.’s General Re and a unit of White Mountains Insurance Group Ltd. will each get about $40 million of stock in life insurer Symetra Financial Corp. in a deal to retire warrants granted in 2004. [...] Berkshire and White Mountains led an investor group in 2004 that purchased Safeco Corp.’s life-insurance business, which was renamed Symetra after the deal was completed. They remain the company’s largest investors [...]

Mars Said Seeking to Pay Back 11.45% Notes Held by Berkshire (Bloomberg)

Mars Inc. is seeking financing to pay off the balance of $4.4 billion of bonds provided by Warren Buffett’s Berkshire Hathaway Inc. in 2008 to acquire Wm. Wrigley Jr. Co., two people with knowledge of the matter said. [...] Berkshire backed Mars’s $23 billion purchase in October 2008 with the debt financing and an agreement to take a $2.1 billion stake in the Wrigley division once the deal closed. Berkshire would still be left with its equity stake in Wrigley and the preferred shares can’t be sold for another year, one of the people said.

State approves tax breaks to Athenahealth and Buffett company (Boston-dot-com)

The state approved $11.9 million in economic development tax credits Wednesday to 10 companies that promised to create new jobs and invest in local communities, including Athenahealth Inc. and Richline Group Inc., a subsidiary of billionaire Warren Buffett’s Berkshire Hathaway, Inc. [...] The council also agreed to award Richline, a jewelry manufacturing company, $400,000 in tax credits to support its growth in Attleboro. Richline, which recently bought a plant in Attleboro, plans to invest $3.6 million in new manufacturing equipment and interior building improvements, along with adding 100 new jobs.

Call a spade a spade (Hindu Business Line)

Warren Buffett’s Berkshire Hathaway had recently indicated that it is winding up its online insurance operation in India that was started in 2011. The bad news is that the experiment probably didn’t produce the desired results, but the good news is that the company took the bold decision to pull the plug and move on — at least for now. Obviously, the decision need not imply that the company would not try again. It might try, probably at a later time, using a different entry strategy or business model.

Dairy Queen installs treadmills for employees (Yahoo)

Dairy Queen, best known for candy-infused ice cream Blizzards, has installed a bank of treadmill workstations at its Edina, Minn., corporate headquarters as part of a wellness program aimed to combat "sitting disease," the not-so-technical term for ailments associated with sitting at a computer all day. [...] According to Megan Weizel, manager of the wellness program, the company also is adding showers and locker rooms "so people can freshen up if they exercise on their lunch hour or bike into work"—in part to entice potential new employees. "We're looking at not just these, but our whole wellness program as a recruitment tool," she said.

Take This Online Philanthropy Course And You’ll Get To Give Away The Buffett Family’s Money (Fast Company)

Warren Buffett’s family has a lot of money, and they want your help giving it away. The only catch: you have to participate in the Learning By Giving Foundation’s massive open online course (MOOC). Only then will you have the power to decide where (a tiny piece of) the Berkshire Hathaway fortune should go.