Berkshire News Briefs - 2/3/18

Amazon, Berkshire Hathaway, and JPMorgan are creating a new healthcare company to tackle the 'hungry tapeworm' of rising costs

Amazon, Berkshire Hathaway, and JPMorgan Chase are creating a new business designed to lower healthcare costs for US-based employees in a move that could shake up the managed-care industry.

The companies were not specific about what kind of enterprise they aim to create, noting only that they wanted to improve employee satisfaction while reducing costs, according to a joint release. Still, the news was enough to send shares of managed-care providers lower. [...]

Berkshire Hathaway Utility Unit Shuffles Top Executives

Berkshire Hathaway is shuffling the executives in charge of its utility unit after promoting Greg Abel to oversee all of Berkshire's non-insurance businesses.

Abel's promotion to vice chairman of Berkshire Hathaway was announced Wednesday. Following that move, Berkshire promoted MidAmerican Energy CEO William Fehrman to replace Abel at Berkshire Hathaway Energy. [...]

Berkshire Hathaway Energy includes MidAmerican, PacifiCorp, NV Energy and several other utilities.

With Fehrman moving up to oversee Berkshire Hathaway Energy, Des Moines, Iowa-based MidAmerican promoted Adam Wright to be its new CEO. [...]

Ajit Jain Reports $109 Million Stake in Berkshire Hathaway

One of Warren Buffett’s top deputies has amassed a stake in Berkshire Hathaway Inc. valued at more than $100 million.

Ajit Jain, the insurance executive who was named a vice chairman of Buffett’s conglomerate earlier this month, disclosed the holdings in a regulatory filing on Thursday. A large portion of the stake is held by a foundation and trusts in his family’s name, and his wife also owns some of the shares. Jain directly controls about $22 million of the stock. [...]

Potential Buffett Heir Reveals What May Be Just the Start of His Berkshire Stake

[...] A regulatory filing on Friday shows Abel indirectly holds about $2.1 million of stock in the Omaha, Nebraska-based company. But a separate disclosure last year noted an agreement that could catapult his holdings higher. That filing showed he could convert a stake in Berkshire’s energy business into more than $400 million of stock in the conglomerate.

The new filing was triggered by his promotion last week to vice chairman for non-insurance operations at Berkshire, a position that will put him in charge of businesses ranging from BNSF Railway to Dairy Queen. [...]

Warren Buffett’s Berkshire Hathaway had an amazing 2017. 2018 isn’t looking too bad, either.

[...] The Jain and Abel ascension followed a momentous 2017 for Berkshire Hathaway that saw the company’s “A” shares break $300,000 per share. It closed at $320,000 on Thursday, but you can still buy the Berkshire “baby B” shares for $213.

Also last year, Berkshire’s cash-on-hand surpassed $100 billion as Buffett/Munger scurried to find new investments. The Republican tax plan that became law late last month gifted a one-time, $37 billion windfall to Berkshire shareholders, which helped raise the stock price.

Not least of all, Buffett won a $1 million, decade-old bet with a hedge-fund bigwig. Buffett said he could do better than a portfolio of hedge funds by investing in boring, index fund over 10 years. Buffett gave the money to Girls Inc., one of his favorite charities.

So where does Berkshire Hathaway go from here? [...]

Iscar Wants to Expand Galilee Factory, but It Can’t Find Workers

Iscar, the Israeli maker of machine tools owned by U.S. billionaire investor Warren Buffett, wanted to build an additional plant at its headquarters in the Galilee town of Tefen. Eli Cohen, the minister of economy and industry, was there to help with an offer of a 50-dunam (12.5-acre) site at no cost.

Cohen wanted to ensure that as Iscar grows, it grows in Israel, rather than just overseas. But it doesn’t look like the plant will be built after all, and that’s because there aren’t enough skilled workers to hire, sources close to the company told TheMarker. [...]

New headquaters, expanding workforce at Guard

Berkshire Hathaway Guard Insurance, having moved its headquarters to downtown Wilkes-Barre’s Public Square, is now in the process of filling about 170 jobs it says have been made possible by the move.

The project, which began late last year, is well underway with many departments having moved to the building at 39 Public Square, which Westguard Insurance Co. purchased for just over $5 million in November, according to Guard officials. [...]

GUARD’s annual sales have grown sixfold to approximately $1.2 billion since 2007, and the insurer had run out of space for its more than 675 employees, most of them working in five different spots in the downtown.

Wilkes-Barre, wanting to retain the company, facilitated a $1 million Local Share Account grant to help the project. The state added another $855,000 grant. [...]

Your Next Running Shoes Will Be Custom-Built for You

[...] biomechanical assessment, part of a service and philosophy that Brooks calls Run Signature, has long been in use by the company to help guide its customers to the best-fitting shoe in its arsenal. But the options so far have been limited to what Brooks can sell off the shelf.

Now Brooks, the top brand in specialty running with 25% of the shoe market, according to the NPD Group, wants to take that a step further. The company is working with tech stalwart HP to marry a runner’s gait information with a three-dimensional foot scan generated by HP’s new FitStation device. HP’s technology can measure pressure along the foot as it lands in each stride. The data help Brooks determine how much polyurethane to inject in a shoe’s sole to achieve the right density for as many as 30 zones of your foot.

At a time when Adidas, Nike, and other sportswear companies limit footwear customization to color and material, Berkshire Hathaway–owned Brooks seeks to create running shoes with customized performance elements as well as build data-rich digital customer profiles. [...]

Philanthropist Susie Buffett to help launch Navy's newest littoral combat ship into fleet

The Navy's newest Independence-class littoral combat ship will join the nation's fleet Saturday with a commissioning ceremony in San Diego, and the future USS Omaha has close ties to the family of Berkshire Hathaway Chairman and CEO Warren Buffett.

Susie Buffett, an Omaha philanthropist and the billionaire's daughter, is serving as the ship's sponsor. [...]

Warren Buffett is expected to attend along with other prominent leaders from Nebraska. [...]

Back in 2015, she formally christened the future USS Omaha at the Austal USA shipyard in Mobile, Alabama, with a bottle of bubbly. [...]

Berkshire Hathaway 1Q15 Earnings

10-Q Quarterly Report

Company Press Release (a brief summary)

Berkshire Hathaway Inc. Reports a Solid 20% Increase in Operating Income in the First Quarter (Fool)

Ahead of its annual shareholders meeting over the weekend, Berkshire Hathaway reported first-quarter results for 2015. Operating earnings, which exclude the impact of gains or losses in its equity and derivatives contracts, jumped by 20%, to $4.24 billion, up from $3.53 billion in the first quarter of 2014. Net income also jumped 9.7%, to $5.16 billion, or $3,143 per Class A share.

Investment results were less than spectacular, largely the result of losses from its outsize public stock portfolio. The company reported losing $1.02 billion from its equity portfolio. [...]

Berkshire Profit Climbs 9.8% on Burger King, Railroad Gain (Bloomberg)

Berkshire’s biggest unit, the BNSF railroad, contributed $1.05 billion to quarterly earnings, compared with $724 million a year earlier. The railroad said last week that it won back market share for grain and agriculture commodities that it lost to Union Pacific Corp. in 2014. [...]

The manufacturing, service and retail segment, which includes toolmaker Iscar and chemical company Lubrizol, added $1.12 billion to earnings, compared with $933 million a year earlier. Profit climbed 59 percent to $230 million at the segment selling building products as the Shaw carpet business and Johns Manville insulation provider benefited from higher sales and lower costs for energy and raw materials.

Profit at the utility unit, Berkshire Hathaway Energy, fell to $421 million from $452 million a year earlier as milder weather limited demand. The business operates natural-gas pipelines that stretch from the Great Lakes to Texas and power companies in states including Iowa and Nevada. [...]

Berkshire Starts 2015 on a More Solid Note (Morningstar)

Book value per Class A equivalent share at the end of the first quarter was $146,963--up 6% year over year and basically flat when compared with the fourth quarter of 2014. This was lower than our forecast, which had book value per share increasing to $149,841 at the end of the first quarter. The company closed out the first quarter of 2015 with $63.7 billion in cash on its books, up marginally from $63.3 billion at the end of last year, even though the firm spent $4.1 billion to close out the Van Tuyl deal in early March. Berkshire did not buy back any shares during the first quarter of 2015.

Looking more closely at Berkshire's insurance operations, only two of the firm's four insurance lines--Geico and Berkshire Hathaway Primary Group--posted earned premium growth during the quarter, with General Re and Berkshire Hathaway Reinsurance Group reporting another quarterly decline. [...]

Berkshire Subsidiary News - 5/1/13

Buffett's Berkshire Buys Rest of Iscar for $2.05B (Fox Business News)

Warren Buffett's Berkshire Hathaway Inc. agreed to pay $2.05 billion to purchase the remaining piece of an Israeli metalworking company that it had acquired a stake in seven years ago. Berkshire is buying the remaining 20% stake in IMC International Metalworking Companies, called Iscar, from the Wertheimer family, the founders of the firm. They had sold the first 80% to Berkshire for $4 billion in 2006, meaning the company doubled in value since the initial transaction.

Heinz shareholders approve acquisition by 3G, Berkshire (Washington Post)

Heinz is one step closer to going private. The Pittsburgh-based ketchup maker said Tuesday that shareholders overwhelmingly approved its acquisition by Warren Buffett’s Berkshire Hathaway and 3G Capital, the investment firm that also owns Burger King.

Heinz Wins Ruling Tossing Investor Suits Over Berkshire Buyout (Bloomberg Businessweek)

HJ Heinz Co. won a judge’s ruling throwing out lawsuits brought by investors seeking to block the $23 billion buyout of the company by Warren Buffett’s Berkshire Hathaway Inc. and Jorge Paulo Lemann’s 3G Capital. The decision by Pennsylvania state court judge Christine Ward clears the way for a shareholder vote today on the purchase. Nine shareholder lawsuits had been filed before Ward challenging the proposed merger. Three complaints filed in federal court were voluntarily dismissed earlier this month.

New Heinz owners to focus on cutting $14B in debt (Tribune Live)

The $28 billion acquisition of H.J. Heinz Co. is expected to lead to further international growth of the iconic Pittsburgh food company in the long term. But in the short term, a near tripling of the condiment-maker's debt by the buyers, Warren Buffett's Berkshire Hathaway and Brazilian investment firm 3G Capital, could result in aggressive cost-cutting, analysts said.

AP Twitter hack is lesson on risk of social media, Berkshire’s Tamraz says (Washington Post)

The hacking attack that caused the Associated Press to send an erroneous Twitter post shows the risk of social media, said Cathy Baron Tamraz, chief executive officer of Berkshire Hathaway Inc.’s Business Wire. The false information about explosions at the White House, which sent markets down 1 percent in a matter of seconds, is an “object lesson” in why social media aren’t a substitute for press releases, Tamraz said today in a phone interview.

Buffett Trucking Unit Joins Wirtz in Missouri Wine Wager (Bloomberg)

Berkshire Hathaway Inc.’s McLane trucking unit, a supplier to retailers and restaurants, formed a venture with closely held Wirtz Corp. to take a stake in a wine, spirit and beer distributor. The deal to invest in Missouri Beverage Co. is expected to be completed next month, according to a statement yesterday from the companies that didn’t disclose terms. The agreement brings together McLane’s logistics expertise and Wirtz’s experience in the U.S. Midwest, Wirtz President W. Rockwell “Rocky” Wirtz said. [...]

The deal fulfills part of a projection by Berkshire Chairman Warren Buffett last year that the trucking unit would build its business. McLane Chief Executive Officer Grady Rosier bought two alcoholic-beverage wholesale distributors in 2010 and last year acquired Meadowbrook Meat Co., a North Carolina-based business that supplies national restaurant chains.

Israeli Billionaire Opens Industrial Park in Nazareth (Bloomberg)

Wertheimer is now only "Honorary Chairman Emeritus" of Iscar; his son is now the Chairman.

Israeli billionaire Stef Wertheimer, founder of the Warren Buffett-owned Iscar Metalworking Cos., opened an industrial park in Nazareth today that intends to provide manufacturing jobs for local Arab residents. The park’s aim “is to use the skills of the people of Nazareth and surrounding area,” to create export-oriented products, Wertheimer said. Unemployment and poverty rates for Israeli Arabs, who comprise about 20 percent of the country’s population, are higher than for the Jewish majority. [...]

Wertheimer, whose machine-cutting tools company Iscar was bought by Buffett’s Berkshire-Hathaway Inc. for $4 billion in 2006, operates five other industrial parks in Israel’s outlying Galilee and Negev regions that have attracted export-focused manufacturers. He also established an industrial park that opened in Gebze, Turkey in 2003.

Being Green: A GEICO associate on what it's like to be the Gecko (Geico Now)

Jim Parshall is a GEICO senior systems security analyst. He's also a Gecko. "I am an overgrown kid at heart (my cell phone case has Winnie the Pooh on it)," says Parshall, who has made over 100 appearances in costume as GEICO's green spokes-reptile. GEICO Now asked Jim Parshall how someone gets to be the Gecko, and how it really feels to be green.