Berkshire News Briefs - 9/4/15

Berkshire Hathaway Takes Larger Stake in Phillips 66 (NY Times)

Berkshire Hathaway, the holding company led by Warren E. Buffett, disclosed a $4.48 billion stake in the oil refiner Phillips 66, rebuilding a bet Berkshire had made in the energy industry before oil prices fell.

Berkshire’s stake of 57.98 million shares, or roughly 10.8 percent of the stock, was revealed on Friday night in a filing with the Securities and Exchange Commission. [...]

Mr. Buffett’s company once held a large stake in Phillips 66, which is based in Houston, but shed nearly two-thirds of it in February 2014 when Berkshire swapped $1.35 billion worth of shares for a chemicals business that it folded into its Lubrizol unit.

Crude oil prices have since fallen more than half, though Phillips 66’s share price has dropped less than 1 percent.

Buffet’s Solar “Insurance” Coup In Nevada (OilPrice)

Nevada utility company NV Energy is ideally positioned to benefit from solar power. Nevada is one of those states with a lot of sun, a lot of land, and not many people. The Nevada wilderness is a great place to economically develop large scale solar projects. The cheap cost of land, abundant sunshine, and lack of serious environmental obstacles are all a boon for NV Energy – so much so that the firm just signed a deal to buy solar power at an unbelievably cheap rate of less than 4 cent per kWh. [...]

But in addition to the profit value of generating power at this price point, the deal has another big benefit for NV Energy; it can be used to start squashing the complaints about NV Energy’s roof top solar program. [...]

NetJets fails to reach agreement with pilots in contract dispute (Omaha World Herald)

Berkshire Hathaway Inc.’s NetJets shared-aircraft company and its pilots union did not reach an agreement on a new labor contract by Thursday, as they had hoped. [...]

In a statement posted online, Johnson said bargaining teams had made “remarkable” progress and settled non-economic issues “with a few exceptions.” But the two sides are “a long way apart” on pay and benefits, Johnson said [...]

Union President Pedro Leroux said in a statement that the impasse is “because of company proposals to cut insurance benefits while shifting additional health care costs to the workforce, and pay issues.”

Berkshire Hathaway now fourth place in reinsurance market (Canadian Underwriter)

Berkshire Hathaway Inc. has jumped ahead of SCOR SE in the reinsurance market, replacing the Lloyd's market as the fourth-largest reinsurance group in 2014, A.M. Best Company Inc. suggests in a report released Wednesday. [...]

The top three reinsurance groups, in order, are Munich Reinsurance Company, Swiss Re Ltd. and Hannover Rueckversicherung AG, in 2014 [...] Those are unchanged from 2013. Omaha, Nebraska-based Berkshire Hathaway, which placed sixth in 2013, ranked fourth in 2014.

MedPro Group Finalizes Acquisition of PLICO (MarketWatch / BusinessWire)

MedPro Group (MedPro), a Berkshire Hathaway subsidiary, announced yesterday the completion of its acquisition of PLICO, Inc. (PLICO), one of the Southwest’s premier healthcare liability insurers, from the Oklahoma State Medical Association (OSMA). [...]

PLICO employs about 30 employees, serves over 2,200 Oklahoma healthcare providers, and has annualized gross written premiums of approximately $30 million.

Danish restaurant menu gives Buffett a shoutout (Omaha World Herald)

Omahans Tom and Marilyn Byers shared an outdoor table at the waterfront Cafe Razz in Middelfart, Denmark, earlier this month and spotted the most expensive item on the elegant menu: the “USA Greater Omaha Ribeye,” priced at 350 kroner, about $70.

A translated description from the menu: “The cattle come from Omaha, Nebraska, United States ... known for Buffalo Bill, Warren Buffett and the Missouri River. The meat is specially selected and of the best quality. 375g of meat, served with fried potatoes and pepper sauce or Béarnaise sauce and the free salad bar.” [...]

Berkshire News Briefs - 7/10/15

Warren Buffett Re-Examines Reinsurance (WSJ)

The obscure business of reinsurance has always been one of Warren Buffett’s favorite money makers, but a changing landscape has led his Berkshire Hathaway Inc. to adjust its strategy. [...]

Berkshire is pivoting toward parts of the insurance industry it feels look more promising than reinsurance, putting the company in the unfamiliar role of upstart.

“What was a very lucrative business is no longer a very lucrative business going forward,” Ajit Jain, a longtime top lieutenant to Mr. Buffett and a potential candidate to succeed him as chief executive, said in an interview. Berkshire will pursue reinsurance deals when they make sense, he said. “But since the reinsurance business isn’t going to offer as many opportunities for the foreseeable future, we feel like we should go down the food chain.” [...]

The new focus is on commercial insurance through Berkshire Hathaway Specialty Insurance, and a new initiative called Berkshire Hathaway Direct, copying GEICO's strategy of using the internet to market insurance directly to small and midsized businesses.

Warren Buffett Will Celebrate July 4th With A New Stock: The Kraft Heinz Company (Forbes)

On Thursday, Heinz’s takeover of Kraft Foods closed. The new company will begin trading on the Nasdaq under ticker ‘KHC’ on Monday, July 6.

Ahead of the deal’s closing, Kraft Heinz announced that 3G executive Bernardo Hees will become CEO of the combined company, while Heinz CFO Paulo Basilio will assume the same role with the merged company. [...]

Kraft Heinz’s board will consist of eleven directors, including Berkshire’s Warren Buffett, Greg Abel and Tracy Britt Cool, and 3G Capital executives Jorge Paulo Lemann and Marcel Telles.

Buffett’s Kraft Heinz Bet Valued at $24 Billion in Debut (Bloomberg)

This makes Kraft Heinz BRK's second largest holding, after Wells Fargo ($26B).

Warren Buffett helped take over H.J. Heinz in 2013 and facilitated its combination with Kraft Foods Group Inc. this year. His prize: a stake of about $24 billion in the new company, which began trading Monday.

Kraft Heinz closed at $72.96 at 4 p.m. in New York trading. Buffett’s Berkshire Hathaway Inc. owns about 325 million shares, or roughly a quarter of the company, after investing approximately $9.5 billion over the transactions to acquire common stock.

Berkshire Hathaway’s MedPro Group to Acquire PLICO Insurance (BusinessWire)

PLICO, Inc. (PLICO), one of the Southwest’s premier healthcare liability insurers, the Oklahoma State Medical Association (OSMA), and Berkshire Hathaway’s MedPro Group (MedPro) today announced the signing of definitive agreements for the sale of PLICO to MedPro. The boards of each have approved OSMA’s sale to MedPro of 100% ownership of PLICO in an all-cash transaction, which is subject only to customary closing conditions and regulatory approvals and is expected to close in the third quarter. [...]

Based in Oklahoma City, PLICO serves approximately 2200 healthcare providers in Oklahoma; it has annualized gross written premiums of about $30 million and had statutory surplus of over $60 million at year-end 2014. PLICO’s principal operations will remain in Oklahoma City, where it was founded in 1979.

Berkshire Hathaway's Forest River fined for safety reporting violations (Omaha World Herald)

A manufacturer owned by Berkshire Hathaway Inc. has agreed to a civil penalty and stricter oversight for not reporting safety information properly, the U.S. Department of Transportation said Thursday.

Forest River Inc., based in Elkhart, Indiana, agreed to a $5 million cash penalty and an additional $30 million in “deferred” penalties that would be levied if it violates a 25-page safety enforcement agreement with the department.

The agreement cited reporting violations involving loose wiring on 726 camper trailers that could cause fires and a lack of fresh air exhaust vents in furnaces on 200 other campers that could cause fires or carbon monoxide exposure. The campers were manufactured last year.

Buffett Scores Cheapest Electricity Rate With Nevada Solar Farms (Bloomberg)

Warren Buffett’s Nevada utility has lined up what may be the cheapest electricity in the U.S., and it’s from a solar farm.

Berkshire Hathaway Inc.’s NV Energy agreed to pay 3.87 cents a kilowatt-hour for power from a 100-megawatt project that First Solar Inc. is developing, according to a filing with regulators.

That’s a bargain. Last year the utility was paying 13.77 cents a kilowatt-hour for renewable energy. The rapid decline is a sign that solar energy is becoming a mainstream technology with fewer perceived risks. It’s also related to the 70 percent plunge in the price of panels since 2010, and the fact that the project will be built in Nevada, the third-sunniest state.

International Dairy Queen Opens Newest International Location in the United Arab Emirates (BusinessWire)

The Dairy Queen® system, part of Berkshire Hathaway, has officially re-launched in the United Arab Emirates (UAE) with the opening of a DQ Grill & Chill® restaurant. The UAE is now the 26th country outside the U.S. and Canada with a DQ® presence. [...] Bajco Gulf, LLC is scheduled to develop a minimum of 20 new locations across the territory over the next five years.

Warren Buffett makes $2.84bn donation to Gates Foundation and charities (The Guardian)

Warren Buffett has donated about $2.84bn of Berkshire Hathaway Inc stock to the Bill and Melinda Gates Foundation and four family charities, as part of the billionaire’s plan to give away nearly all of his wealth.

The 10th annual donation, Buffett’s largest, comprised 20.64m Class “B” shares of Berkshire and increased Buffett’s total contributions to the charities to more than $21.5bn.