Berkshire News Briefs - 3/31/16

Buffett's Wells Fargo Stake Hits Level Requiring Fed Review (Bloomberg)

Warren Buffett’s holding in Wells Fargo & Co. reached 10 percent, a level that triggers a Federal Reserve review and could prevent him from buying more shares until he receives regulatory approval.

The billionaire investor’s stake reached that threshold because Wells Fargo has been buying back stock, according to a regulatory filing Monday. The document said the holding is about 506 million shares, the same as on Dec. 31 when it accounted for 9.9 percent. [...]

BNSF furloughs have hit 4,600 employees nationwide (Fort Worth Star-Telegram)

In another sign of the fallout of low energy prices, BNSF Railway says it has furloughed about about 4,600 of its employees nationwide over the past several months.

The furloughs amount to about 10 percent of the Fort Worth-based company’s workforce, matching the layoffs made by the railroad in 2007 and 2008, according to statements made by Matthew Rose, executive chairman of BNSF at an energy conference in Billings, Montana. [...]

Berkshire Hathaway Is 35% Undervalued (Fool)

If I sum up $107 per B-share in investments and $82 per B-share for the operating businesses, that gives me a grand total of $189 per B-share. That's 35% more than the current trading price of $140 per B-share.

Increasing Costs And Premiums At Berkshire Hathaway’s Geico (Valuewalk)

All told, both the severity and frequency of claims have been on the rise at Geico, said David Kass, a business professor at the University of Maryland and a Berkshire Hathaway shareholder.

“This resulted from lower prices for gasoline and an improving economy, which led to more miles being driven by policyholders,” Kass said. “These increases in costs to auto insurers reduces their profitability in the short run until appropriate premium increases can be implemented.” [...]

McLane Co. executive advises students on success in business (Richmond Dispatch)

“If you can accept being inconvenienced, then the rewards will be there, because it is noticed,” said W. Grady Rosier, president and chief executive officer of Temple, Texas-based distributor McLane Co., which he noted supplies groceries and other products to retailers and restaurants in every ZIP code in the nation. [...]

McLane grew from a one-man retail shop opened by Robert McLane in 1894 in Cameron, Texas, to become a $48 billion-a-year supply-chain behemoth, mostly by hitching its own trucking business to the rise of convenience stores such as 7-Eleven starting in the 1950s, then the explosion of big-box chain stores such as Walmart starting in the 1970s.

Rosier, 67, grew up in Florida and was the first in his family to attend college. He joined McLane in 1984 and became CEO in 1995, five years after it had been acquired by Walmart.

In 2000, the company was acquired by Berkshire Hathaway Inc., the holding company managed by billionaire investor Warren Buffett. [...]

International Dairy Queen, Inc. Opens First DQ Grill & Chill® Restaurant in Jordan (BusinessWire)

The Dairy Queen® system, part of Berkshire Hathaway, has opened a new DQ Grill & Chill® restaurant at Abdoun Circle in Amman, Jordan. The opening of this location in Jordan represents the latest country outside of the United States with a DQ brand presence.

SKM Franchise Co. Ltd. has entered into a long-term franchise agreement with American Dairy Queen, Corp. (ADQ) and plans to develop a minimum of 10 locations, including five DQ Grill & Chill® restaurants throughout Jordan over the next five years. [...]

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 - 7/29/14

Canada Approves Berkshire Buy of SNC-Lavalin’s AltaLink (Bloomberg)

Berkshire Hathaway Inc.’s energy unit won Canadian approval for its planned purchase of SNC-Lavalin Group Inc.’s AltaLink electric transmission business after committing to reinvesting in the country. The subsidiary of Warren Buffett’s Berkshire has agreed to maintain AltaLink’s staffing and keep the company’s headquarters and senior management in Alberta, Industry Minister James Moore said in a statement yesterday. Berkshire Hathaway Energy also promised to reinvest all of AltaLink’s earnings back into the company or elsewhere in Canada for at least five years.

The transaction is expected to be formally completed in late 2014 or early 2015. Altalink Press Release; Berkshire Hathaway Energy Press Release.

Buffett faces end of $255m a year dividend cheque (New Zealand Herald)

Dow Chemical shares rallied past $53.72 on Wednesday for the first time in nine years. If they close above that price for 20 trading days in a 30-day window, the chemical maker can convert Buffett's $3 billion preferred stake into common stock. Swapping the shares would cut dividend payments that Dow has been paying since it turned to Buffett's Berkshire Hathaway to help finance a takeover in 2009 of Rohm & Haas. [...] The preferred stake is particularly expensive for the chemical maker with interest rates now near record lows. The securities have an 8.5 per cent yield, entitling Berkshire to $255 million in dividends annually.

US railways: Back on track (Financial Times - Free Registration Required)

Since 2011, all seven big Class I railroads in the US and Canada have been earning returns higher than their cost of capital – a modest achievement in most industries but a mark the US’s railroads had missed for the past 70 years. Rising traffic levels are letting railroads sweat their assets harder and work more efficiently. Matt Rose, executive chairman of BNSF, operator of the US’s second-biggest rail network, says the industry is in a “virtuous cycle”. “You make investments,” he says. “You make more money on that; you make more investments. That’s this virtuous cycle that nobody in the 1970s or 1980s thought was possible.”

This Man Will Not Destroy Warren Buffett's Empire Berkshire Hathaway Inc. (Fool Video)

Replacing Warren Buffett atop Berkshire Hathaway will be no easy task once the 83-year old billionaire is out of the picture. While debate rages on over who should replace the Oracle of Omaha as CEO, Buffett has made it clear that he'd like to see his son, Howard, step as a non-executive chairman of the board. Will this mark the beginning of the end of Berkshire Hathaway's greatness?

Geico's gecko ain't cheap: Top 10 insurance advertisers (Insurance Business)

Geico spent more money on advertising than any other insurance company in the U.S, expending a whopping $935.1 million in 2013 alone, according to Nomura. The second biggest advertiser was Allstate Corp., who had a budget of $654.8 million - about $280 million less than Geico. [...] “Berkshire Hathaway’s auto-insurance company Geico has been a growth machine in recent years and the advertising data show just how important good advertising is to growth,” said Nomura. Geico enjoyed 11.2% growth in personal lines in 2013, which is slightly over the 2% growth rate it experienced the previous year.

Major Brands To Acquire Fellow Missouri Wholesaler MoBev (Shanken News Daily)

Missouri-based spirits and wine wholesaler Major Brands has agreed to acquire local rival Missouri Beverage Co. (MoBev) for an undisclosed sum. The deal is expected to close this fall. MoBev, with 2013 sales of around $20 million, is minority-owned by Wirtz Beverage and McLane Co., the latter of which is owned by Warren Buffett’s Berkshire Hathaway firm.

BNSF train carrying North Dakota oil derails in Seattle (Yahoo/Reuters)

A Burlington Northern Santa Fe train carrying crude oil derailed as it left a railyard in north Seattle on Thursday, but there were no reports of a spill or injuries, BNSF said in a statement. Four railcars came off the tracks at around 2 a.m. PDT, three of which were carrying crude oil, said BNSF, which is owned by Berkshire Hathaway. The train originated in North Dakota and was bound for Tesoro Corp's 120,000 barrel-per-day Anacortes oil refinery, 80 miles north of the city, Tesoro confirmed. The derailment comes at a pivotal moment for the booming crude-by-rail industry, which has come under intense scrutiny after a series of accidents over the past 18 months.

Berkshire Unit Needn't Arbitrate Asbestos Coverage Rows (Law360)

A New York federal judge has refused to force a Berkshire Hathaway Inc. subsidiary to arbitrate disputes under Transatlantic Reinsurance Co.'s reinsurance agreements covering American International Group Inc. insurers' asbestos liabilities. U.S. District Judge Edgardo Ramos on Tuesday sided with Berkshire's National Indemnity Co. and denied TransRe's arbitration petition [...] The more than 40 treaties at issue provided reinsurance coverage to AIG for policies dated from 1978 through 1985. While NICO did not sign any of the treaties, it purportedly replaced AIG as a party through loss portfolio transfers, according to TransRe's petition. [...] According to NICO, its agreements with the AIG insurers were for typical services provided by third-party administrators that help insurers collect reinsurance.

Berkshire News Briefs - 12/13/13

Rabbit Hunting With Warren Buffett (Fool)

In his 2010 annual letter to shareholders, Berkshire Hathaway Chairman and CEO Warren Buffett used the metaphor of his company's cash as an "elephant gun" to be used in his hunt for big companies to purchase. Ever since then, the news media has fixated on Berkshire Hathaway's hunt to bag that elephant to fuel its future growth. After all, how can an enormous company the size of Berkshire Hathaway grow even larger without swallowing up increasingly larger subsidiaries? [...] While the world watches and waits for that elephant to come along, though, Berkshire Hathaway has been quietly growing another way: rabbit hunting. Rather than using the metaphorical elephant gun to bring down the biggest game of all, the subsidiaries Berkshire Hathaway already owns have been quietly hunting their own small targets. Taken individually, most of these moves barely made the news outside of a company press release. But looking at all of the little moves together, you can see from the pattern that Berkshire Hathaway is growing just fine without any elephants.

BNSF CEO Rose changes roles, renews Buffett succession talk (Reuters)

Berkshire Hathaway Inc's BNSF Railway Co moved Chief Executive Matthew Rose to an executive chairman role, renewing speculation that he may be in line to replace Warren Buffett at Berkshire's helm. As executive chairman, Rose, 54, will work on activities including organizational planning, market positioning and public policy at BNSF over the next decade, the company said on Wednesday. Carl Ice, 57, will replace Rose as chief executive at the nation's largest railroad, beginning January 1. Ice has been at the railroad for 34 years, and has been president of BNSF since November 2010.

Berkshire Hathaway HomeServices Grows Again with 12 Affiliate Signees (MarketWatch / BusinessWire)

Berkshire Hathaway HomeServices, the new real estate brokerage network operated by HSF Affiliates LLC, today announced the signing of 12 more affiliates for the network. [...] These signings bring to 502 the number of offices that have transitioned to or signed with the brand since July, and include nearly 19,000 agents in 24 states. Many more signings are on the way, said Earl Lee, CEO of HSF Affiliates LLC.

Related:

Warren Buffett’s new franchise brand, Berkshire Hathaway HomeServices, grows to 51 firms (Inman)

Warren Buffett’s new real estate franchise brand, Berkshire Hathaway HomeServices, will convert 12 more Prudential Real Estate-affiliated brokerages, bringing the total number of firms committed to the 1-year-old network to 51. [...] The 12 new firms, which grow the new franchise network to 502 offices and 19,000 agents in 24 states, will transition to the new brand by the middle of 2014. [...] HomeServices of America created the new brand when it took a majority stake in the Prudential Real Estate and Real Living brands from Brookfield Asset Management in October 2012. It will eventually replace the Prudential Real Estate brand, which is slated to disappear in the 2020s as a condition of Prudential Financial Inc.’s sale of its real estate franchising business to Brookfield Asset Management in 2011. [...] So far, only Prudential-affiliated firms have committed to Buffett’s new brand.

Brokerages converted to the Berkshire Hathaway HomeServices brand and having their press releases turn up in my BRK news search this week include Middle Tennessee, Nebraska, Atlanta, GA, Orlando, FL, Greenville, SC, and Wellesley, MA.

Buffett's Berkshire Buys More DaVita (NASDAQ)

Warren Buffett 's company, Berkshire Hathaway, bought 1,314,170 additional shares of DaVita HealthCare Partners this week. The transaction, reported Dec. 9, represents a 6.77% increase to the existing holding. After the buy, Berkshire's DaVita stake is sized at 36,461,294 shares, raising its ownership to about 17.14%. [...] The two companies have agreed that Berkshire will not acquire more than 25% of DaVita without DaVita's approval.

Warren Buffett’s Berkshire Hathaway acquires Hartford UK variable annuity business (Life Insurance and Pensions)

This story came up last summer, and the deal is just now finalizing.

Columbia Insurance Company, a Berkshire Hathaway firm, has purchased Hartford Life International Limited (HLIL) in a transaction valued at approximately $285m. Property and casualty insurance provider Hartford originally signed an agreement with Columbia Insurance in June this year, to divest its UK variable annuity business, as part of its strategy to streamline its operations. HLIL's sole asset is its subsidiary, Hartford Life Limited (HLL), a Dublin-based company that sold variable annuities in the UK from 2005 to 2009. As of 30 November 2013, HLL had $1.7bn in assets under management.

Berkshire Estimates Were Cut For Bad Reasons. Expect A Good Q4 (Seeking Alpha)

After strongly outperforming the S&P 500 through July, Berkshire treaded water for a few months but then began to notably underperform the SP500 since Berkshire announced Q3 earnings on Nov 1. The culprit? Not only did Q3 earnings miss the consensus estimate, but, even worse, that surprise caused the few analysts who cover Berkshire to lower future earnings forecasts. We think that in their rush to not get fooled again, they overreacted.

Did Buffett Buy ExxonMobil Because It's More "Buffett" Than Berkshire? (Fool)

Berkshire Hathaway CEO Warren Buffett's most notable investment this past quarter, 8.8 million shares of ExxonMobil, actually started with a larger 31 million-share buy in the quarter ended June 30. Based on the Sept. 30 13F, this makes ExxonMobil Berkshire's seventh-largest stock holding, worth $3.75 billion. While that's significantly smaller than the company's holdings in Wells Fargo, Coca-Cola, IBM, and American Express -- each worth more than $10 billion -- ExxonMobil is perhaps the most "Buffett" of all the companies that Buffett has invested in over the years. Let's take a look at why.

Warren Buffett Places One Heck of Bet on Energy (Fool)

Warren Buffett made big headlines in the energy space when Berkshire Hathaway publicly disclosed that it had accumulated a $3.4 billion position in ExxonMobil. This alone is a pretty significant bet on the future of oil and gas. When you look at some of Buffett's other energy holdings, though, it points to a very specific investment strategy: Canadian oil sands. Let's take a look at Buffett's energy holdings and what makes all of them work.

Berkshire Hathaway Is Undervalued By 15% (Seeking Alpha)

Berkshire Hathaway is unlikely to repeat the 19.8% returns it enjoyed from 1964-2011 due to its size and because it has already bought up many of the most desirable investment opportunities in the marketplace. However, Berkshire should continue to generate solid growth and performance due to its mix of high quality businesses that it owns as well as its well-regarded portfolio of marketable securities. [...] Berkshire Hathaway's share price is undervalued by 15% relative to its fair intrinsic value and its business units continue to generate steady profit growth.

Berkshire Hathaway and Warren Buffett's 2013 Year in Review (Fool)

Berkshire Hathaway has had a relatively eventful 2013, with a major acquisition, a few significant stock purchases, and one question that still lingers.

Finally...

Warren Buffett held a Q&A session with MBA Students from 8 universities last month, and a professor from the University of Maryland Robert E. Smith Business School in attendance took copious, detailed notes:

Buffett talks about how he writes the annual letter to shareholders (2013's is already done except for the final numbers, watch for it to be published on February 28). He talks about the Goldman Sachs and GE warrant deals from 2008. He talks about how his political views were formed. Moats, negotiations, women's equality, assessing managers, influences, career advice.