Berkshire News Briefs - 10/6/15

Marmon and Wells Fargo buy GE Capital rail businesses (Railway Gazette)

Berkshire Hathaway’s Marmon Holdings has bought ‘substantially all’ of GE Railcar Services’ tank wagons with immediate effect, and expects to complete the acquisition of GE Railcar Repair Services in the fourth quarter of 2015.

The wagons will be managed by Union Tank Car Co and Procor, while the repair facilities will expand the UTLX Repair Services and Procor Repair Services networks.

Buffett Cuts Munich Re Stake After Lamenting Reinsurance Slump (Bloomberg)

Warren Buffett’s Berkshire Hathaway Inc. has cut its stake in Munich Re after lamenting a slump in the reinsurance business.

Berkshire’s holding was lowered to 9.7 percent from about 12 percent, Munich Re said in a statement Tuesday, citing a notification from Buffett’s Omaha, Nebraska-based company. [...]

“It’s a business whose prospects have turned for the worse and there’s not much we can do about it,” Buffett told shareholders at his company’s annual meeting in May.

Berkshire's Abel Targeted by Pilots Union Over Board Secrecy (Bloomberg)

A union representing pilots at Berkshire’s NetJets unit said that it took out an advertisement Monday in Abel’s hometown newspaper, Iowa’s Des Moines Register, identifying the executive as a board member of the business. Two other directors remain unidentified, despite attempts to learn who is overseeing the company, the group said on its website.

Berkshire Hathaway Said to Borrow $275 Million for Texas Wind (Bloomberg)

Warren Buffett’s Berkshire Hathaway Inc. borrowed $275 million for a 300-megawatt wind farm in Texas that’s supplying power to Austin Energy, according to two people familiar with the deal. [...]

Berkshire Hathaway’s BHE Renewables unit owns the wind farm, which it acquired from Chicago-based Lincoln Clean Energy LLC.

Warren Buffett Gets Into Cybersecurity Insurance (24/7 Wall St)

Berkshire Hathaway Specialty Insurance (BHSI) unveiled two new types of insurance policies on Tuesday, providing cyber liability and breach response coverage. The company now offers risk management resource policies: the Professional First Network Security & Privacy Policy and the Professional First Professional Liability and Network Security & Privacy Policy. Berkshire Hathaway indicated that the latter also includes customizable errors and omissions liability coverage. [...]

As far as what features these policies include, that would be coverage for third party exposures, breach expense and extortion threat coverage, media liability coverage, business interruption coverage, access to the eRiskHub and more. [...]

Warren Buffett Saved Media General: Don't Dismiss Berkshire In A Fight Over Its Future (Forbes)

In the case of broadcasting conglomerate Media General, Buffett similarly helped revive the company through a creative May 2012 deal where he bought 63 of its newspapers for $142 in cash and provided the Richmond, Va.-based company with a $400 million term loan and a $45 million revolving credit facility. [...] This morning Nexstar Broadcasting disclosed that during Media General’s stock slide, it has been lobbying to buy the company in a merger that would instantly create a powerhouse broadcaster touching nearly 40% of U.S. households. [...] Berkshire, according to the BAML analysis, is a potential friendly investor for Nexstar. However, Berkshire, currently a holder of nearly 4% of Media General’s outstanding stock after a series of stock-funded acquisitions, has historically balked at hostile takeover deals. If Media General’s board decides to continue on its path for Meredith and its standalone strategy, odds are Buffett will support the plan. [...]

Lubrizol opens CPVC resin facility in Thailand (Business Standard)

The Lubrizol Corporation, , a Berkshire Hathaway company, on October 5, 2015 opened a chlorinated polyvinyl chloride (CPVC) resin manufacturing facility in Rayong, Thailand as part of a joint investment with Sekisui Chemical Company Ltd. The plant opening is the latest in the company's efforts to increase global CPVC capacity as previously announced in 2013. [...]

The Thailand facility, combined with Lubrizol's other recent investments in Louisville (Kentucky) and Dahej (India), as well as its existing CPVC operations around the globe, better positions the organisation to support its future business growth. [...]

MetLife Fighting Systemic Tag Asks Why Buffett Gets Pass (Bloomberg)

MetLife Inc., the insurer fighting the U.S. government’s decision to label it a potential threat to financial stability, wants to know why Warren Buffett’s Berkshire Hathaway Inc. has gotten a pass. [...]

“It is difficult to understand why, say, Berkshire Hathaway with $64 billion in debt and $277 billion of market capitalization should not be considered a systemic risk,” Hele said at the November meeting at the Treasury Department in Washington.

Hele also mentioned Visa Inc., noting that the world’s largest payments network had a market capitalization of $135 billion. MetLife’s market capitalization is about $52 billion.

Conservative think tank attacks NV Energy plan to build new power plant (Las Vegas Sun)

The Beacon Hill Institute, a conservative think tank backed by the Koch brothers, released a report Monday condemning a new, $1 billion natural gas plant proposed by NV Energy.

The institute, based at Suffolk University in Boston, said building the new plant could cost consumers $604 million by 2025 and that a new power plant could cost Nevada more than 1,600 jobs and $18 million of private investment.

The Nevada Policy Research Institute, which opposes shutting down coal-fired power plants in exchange for solar and natural gas generation, hired Beacon Hill to do the study. [...]

NV Energy hopes to phase out its use of coal entirely and have one quarter of its electricity generated from renewable sources in the next decade.

Warren Buffett outlasts Ndamukong Suh in final arm-wrestling duel (WPLG 10)

There was more than just football taking place Monday at the Miami Dolphins Training Facility in Davie.

Inside, WPLG Local 10 owner and billionaire Warren Buffett was challenging Dolphins defensive tackle Ndamukong Suh to an arm-wrestling rematch. [...]

It was a struggle, but in the end Buffett, aka "The Bicep," reigned victorious over Suh, aka "The Dominator," once again.

Berkshire News Briefs - 3/25/14

Buffett's Berkshire gets its first TV station (CNBC)

For the first time, Warren Buffett's Berkshire Hathaway will directly own a television station. Under terms of an agreement in principle announced Wednesday, Berkshire will get ABC-affiliate WPLG in Miami from Graham Holdings. Graham holds the assets that remained after the Washington Post Co. sold its namesake newspaper to Amazon chief Jeff Bezos for $250 million last August. In the new deal, Graham would swap the station, some Berkshire shares it owns and some cash in exchange for roughly 1.6 million Graham shares now held by Berkshire. [...] The trade would leave Berkshire with just about 100,000 shares.

Media General to buy LIN in US$2.6b broadcast deal (NewsAsia)

US broadcaster Media General said on Friday it will buy LIN Media in a US$2.6 billion deal that creates the nation's second-largest television broadcasting company and a digital media powerhouse. The merged company will own and operate or service 74 television stations across 46 markets, and serve some 26.5 million households, or 23 percent of the US market, Media General said in a statement. [...] Media General, partly owned by tycoon Warren Buffett's Berkshire Hathaway, will form a new holding company that will be named Media General.

Warren Buffett's Warrants Shine in Media General Deal (The Street)

As Media General works to merge with LIN Media, forming the nation's second largest pure-play TV broadcasting company, Berkshire Hathaway continues to make money off of a newspaper deal it cut with Media General in 2012. In May 2012, Berkshire Hathaway bought 63 newspapers from Media General for $142 million in cash and agreed to provide the nationwide TV broadcaster with a $400 million term loan and a $45 million revolving credit line, as the company worked to repair its balance sheet. As part of the newspaper purchase and its loan to Media General, Berkshire also received penny warrants for approximately 4.6 million of Media General's Class A shares, about 20% of its outstanding stock at the time. Berkshire's loans, which carried an interest rate of 10.5%, and its warrants, quickly paid off.

Buffett’s BNSF Leads Locomotive Surge to Ease Railroad Cargo Jam (Bloomberg)

BNSF Railway Co., owned by Warren Buffett’s Berkshire Hathaway Inc., is leading an effort by U.S. railroads to add hundreds of locomotives to ease a cargo jam spurred by bad weather and surging crude shipments. BNSF increased engines by 250 in the last two months and will have another 125 new ones on the tracks in the next two months, the company said. [...] The congestion started with BNSF before the bad weather because of equipment shortages and increasing cargo, then worsened as the snowstorms swept in, said Jason Seidl, an analyst with Cowen & Co. “A lot of business came their way and they sort of got behind the eight ball,” he said. “Then the weather hit and the rest is history as they say.”

Buffett’s Hathaway Compensation Rises to $485,606 (Claims Journal)

Well, OK, I guess he's earned a small raise.

Warren Buffett’s compensation from Berkshire Hathaway Inc. rose 15 percent last year to $485,606, although the billionaire’s salary remained $100,000. The increase came in “other compensation,” which includes company-paid costs for Buffett’s personal and home security. As usual, Buffett reimbursed Berkshire $50,000 for personal costs such as postage and phone calls.

Will This Company Soon Be Warren Buffett's Biggest Holding? (Fool)

Believe it or not, Bank of America could soon become the single largest holding of Warren Buffett's Berkshire Hathaway. Shocking, I know, but the math is really quite simple. Two and a half years ago, Buffett invested $5 billion in Bank of America. In exchange, Berkshire received a corresponding amount of preferred stock that pays a 6% dividend, and warrants to buy 700 million shares of the bank's common stock at an exercise price of $7.14 per share. The warrants expire in September of 2021. At today's price of roughly $17.90, Berkshire has already more than doubled its initial investment -- and that excludes the preferred stake. The common-stock position has been so lucrative, in fact, that it's become, in effect, Berkshire's fifth largest equity holding.

Berkshire Hathaway HomeServices Named ‘Real Estate Agency Brand of the Year’ in 2014 Harris Poll (Business Wire)

Berkshire Hathaway HomeServices, the new real estate brokerage network operated by HSF Affiliates LLC, today announced it was named “Real Estate Agency Brand of the Year” in the 26th annual Harris Poll EquiTrend study. Berkshire Hathaway HomeServices received the highest ranking in the Real Estate Agency category based on consumers’ perception of its brand familiarity, quality and purchasing consideration, among other qualifying elements. The study was based on opinions of more than 40,000 U.S. consumers surveyed online earlier this year.

Buffett Wins NCAA Billion-Dollar Hoops Bet as Brackets Go Bust (Bloomberg)

It took less than two full days of play for Warren Buffett to win his bet that no entrant in a Quicken Loans Inc. contest would predict the winner of each game in the three-week-long National Collegiate Athletic Association men’s basketball tournament. [...] Two upsets -- Dayton’s defeat of Ohio State two days ago, and Mercer’s win yesterday against Duke -- wiped out 99 percent of the entries. When Memphis defeated George Washington last night, the last of the perfect brackets was busted.

In preparing the news briefs post, I found this interesting two-part story on Seeking Alpha about the corporate structure of Berkshire Hathaway. I thought it was more nuts-and-bolts and not general interest news, so I dropped it down to the bottom; if you don't care how the sausage is made, you're welcome to skip over this post.

On The Structure Of Berkshire Hathaway, Part 1 (Seeking Alpha)

Berkshire Hathaway is a unique company. You have a property-casualty insurance giant owning many businesses directly through insurance subsidiaries, including huge businesses like a Class 1 Railroad - BNSF. Yes, National Indemnity owns BNSF in entire, and many other businesses as well. I thought the pre-crisis organization chart of AIG was complex - because of the many industries that it covers, BRK is far more complex.

On The Structure Of Berkshire Hathaway, Part 2: The Harney Investment Trust (Seeking Alpha)

In Omaha, there is Farnam Street. Among value investors, it is well-known, because the small main office of Berkshire Hathaway is located there. Less well known is Harney Street, but from an insurance standpoint it is important, because Berkshire Hathaway's largest insurance subsidiary, National Indemnity, is located there. One of the major assets of National Indemnity is the Harney Investment Trust, of which National Indemnity is the sole beneficiary. [...] Now, if you read through BRK's filings to the SEC, you won't find many mentions of the Harney Investment Trust. You have to read the insurance regulatory documents to find it, and even if you do that, you will still be puzzled.

Berkshire News Briefs - 1/7/14

(Also see Berkshire Energy & Subsidiary News for 1/7/14.)

WEB on Stocks in the 20th Century (Fool Boards)

This post from the Fool's public BRK board is a transcript of Buffett talking about the history of the stock market in the 20th century.

The country will do very well over time, but you will see these huge waves and if you can stay objective throughout that—if you can detach yourself temperamentally from the crowd—you get very rich. And you won’t have to be very bright…It doesn’t take brains, it takes temperament. It takes the ability to sit there and look at something—when I started out in 1950, I would go through and find things at 2x earnings. And they were perfectly decent businesses and people wanted jobs at those companies and everybody knew they were going to be around and they wouldn’t buy them at 2x earnings. And that’s when interest rates were 2.5%.

Berkshire Seen Failing Buffett 5-Year Test for First Time (Bloomberg Businessweek)

Berkshire Hathaway Inc. [...] is poised to report that it failed to increase net worth more rapidly than the Standard & Poor’s 500 Index during the past five years, according to analyst estimates. It would be the first time the billionaire investor fell short of the goal since he took over the Omaha, Nebraska-based company in 1965. Buffett, 83, highlights the comparison as a way for shareholders to evaluate his performance against a low-cost fund that tracks the index. The S&P 500 returned 128 percent including dividends since the end of 2008, fueled by the Federal Reserve’s stimulus efforts and higher corporate profits. Berkshire’s book value per Class A share, Buffett’s yardstick, rose 80 percent to $126,766 starting at the same point until Sept. 30, the latest data available.

Berkshire Jacks Up USG Corp Holdings To 30.5 Percent (ValueWalk)

Berkshire Hathaway Inc. increased its holdings in USG Corporation to 30.5% following the issuance of shares upon conversion of USG’s 10% Contingent Convertible Senior Notes due 2018. Berkshire now holds 43.43M shares in USG, a building materials company, according to its 13D/A filing. [...] USG Corporation is the biggest manufacturer of gypsum-based building products such as gypsum wallboard in the United States. Warren Buffett has had an interest in the company since 2000 when he had purchased a 15% stake. [...] Buffett is known to have a keen interest in the building industry, though one motive ascribed to this is slightly uncharitable, and, according to investment manager Richar Losch’s blog is “hurricane synergy”: “This is the idea that, if Berkshire Hathaway Inc. can buy enough companies in the building materials, construction, and manufactured housing industries, then, when its insurance companies are paying insurance claims for catastrophic damage due to hurricanes and earthquakes, Berkshire Hathaway, as a company, will just be transferring money from one pocket to another.”

Here's How Warren Buffett Made $9.5 Billion in 3 Months (Fool)

Although we won't know until February what stocks Warren Buffett bought and sold in the fourth quarter, a quick analysis of his most recent investments shows that Berkshire Hathaway probably had one of its best quarters ... ever. Although the acquisition of ExxonMobil was the big news in the fourth quarter, perhaps the biggest news was just how well Berkshire Hathaway did. Provided no stocks were added or sold in the Berkshire Hathaway portfolio, Buffett probably made almost $9.5 billion in the fourth quarter, and the portfolio had a return of more than 10.3%.

Buffett Embarrasses Analysts Again in His Latest Big Win (Benzinga)

Remember when Warren Buffett bought all of those newspapers? In fact, he bought 63 in total for $142 million along with loans totaling $445 million. At the same time, he took his fair share of criticism from all of the “experts” [...] But once again, Buffett showed his experience while simultaneously proving to the “experts” that they still have a lot to learn. As part of the deal, Berkshire Hathaway negotiated the right to “penny warrants.” This gave Buffett the right to buy 4.65 million shares of Media General for a penny a piece. According to the Wall Street Journal, Berkshire exercised those rights in September of 2012, taking a 17 percent stake in the company. By the end of last year, that $4 stock when Buffett became involved had a sticker price of more than $22. That makes Buffett’s position worth about $105 million. Add to that the interest Media General is paying to Berkshire for the loan and what you have is profit for Berkshire. Turns out Buffett wasn’t as nutty as people said back in 2012.

The 2 Real Threats To The Future Of Berkshire Hathaway (And Its Defense Against Them) (Seeking Alpha)

There are two areas, however, which may be harder to sustain without the presence of Buffett himself. (1) Human excellence. This is the real Berkshire edge. Will it be maintained? (2) A unique model of decentralized management but centralized capital allocation. This is made possible in part by the excellence of the managers of the various parts and in part by the authority of Buffett himself, who has allocated capital both internally and externally with no formal help beyond the suggestions and inputs of Charlie Munger and a few of his lieutenants. Is this model sustainable without Buffett?

Here it is, your moment of zen...

My Wish for 2014 (Fool Boards)

Berkshire News Briefs - 6/23/13

Buffett Nets Cool $44 Million in Quiet Media General Deal (MoneyNews)

The merger of Media General and New Young Broadcasting led to a benefit for Warren Buffett's Berkshire Hathaway [...] the story begins with Buffett and Berkshire Hathaway purchasing all of Media General's newspapers, except the Tampa Tribune, in May 2012. Berkshire Hathaway loaned Media General $445 million "to refinance a crushing debt load coming due," Poynter stated. The initial interest rate was 10.5 percent. Berkshire Hathaway got penny-a-share warrants to acquire 19.9 percent of the company. A benefit of the merger: Media General said last week it will be able to refinance its debt "at a considerable savings of interest expense." Poynter reported that Berkshire Hathaway will reportedly be paid a $44 million premium as part of the refinancing. Media General’s shares skyrocketed more than 30 percent the day the merger with New Young Broadcasting was announced, and have roughly doubled in value since Buffett’s investment just over a year ago.

Buffett's Berkshire Hathaway Jumps Over Allstate as No. 2 Insurer (Property Casualty 360)

Warren Buffett’s Berkshire Hathaway, led by the group’s auto-insurance subsidiary Geico, leapt over Allstate in 2012 to become the second-largest P&C insurance group based on net premiums written [NPW], according to data from SNL Financial. [...] The Berkshire group saw a 2012 increase in NPW of 12.1 percent—the largest such growth in the Top 20 P&C insurance groups. Berkshire's NPW was about $27.25 billion. Allstate slipped to No. 3, with NPW of about $25.58 billion, which is still a 1.4 percent increase over 2011. State Farm by leaps and bounds retained its title as the largest P&C group in 2012, with nearly $53 billion in NPW.

MidAmerican to issue $700 million in bonds to fund Solar Star projects (Clean Energy Authority)

MidAmerican Solar, a subsidiary of Warren Buffet-controlled Berkshire Hathaway’s Mid-American Energy Holdings Co. is planning to issue $700 million in secured senior notes to support the $2.7 billion Solar Star project, which was formerly known as the Antelope Valley Solar Projects. The bonds, beings issued by Solar Star Funding, LLC, will support construction of the Solar Star projects, which MidAmerican bought from SunPower in January 2013. SunPower is currently building the Solar Star projects, which, when completed in October 2015, will consist of 597 megawatts of AC electric generation. Once complete SunPower will provide ongoing operations and maintenance of the projects, which are co-located in Kern and Los Angeles Counties, Calif.

An Interview with Whitney Tilson (Fool Video with Transcript)

[Whitney Tilson:] The way I value Berkshire is only secondarily as a multiple of book value, because book value is such an incorrect way to look at so many of Berkshire's holdings. Something like GEICO is being carried at book, but it's worth a significant premium to book. [...]

But again, this is a good example of the "I missed it" phenomenon. I think a lot of people look at Berkshire today and just say, "The A shares have run from closer to $100,000 a share to over $160,000 a share in not much more than a year. I've missed it." Well, people have been saying "I missed it" on Berkshire...When it ran from $100 to $1000, they said "I missed it," and then $1000 to $10,000, then $10,000 to $100,000. Each time, they didn't miss it. They just had to wash that thought from their brains, and evaluate it. I value Berkshire, just taking the cash and investments per share, as a little over $120,000 a share. Then I just put an eight multiple on the pre-tax earnings of the operating businesses, about $9000 a share. You take $9000 a share of earnings, times an eight multiple is $72,000 per A share. Add the cash bonds and investments of $120,000 per share, and you get a bit over $190,000 per share of intrinsic value.

Buffett: Tracy Britt isn't Berkshire CEO successor (Omaha World-Herald)

Last week's item following up on a Wall Street Journal profile of Warren Buffett's financial assistant Tracy Britt stretched toward the question of whether she might, someday, succeed him as CEO of Berkshire Hathaway Inc. Seemed like the logical question to explore, as others have done in print and online. But not exactly, Buffett said in an email (relayed from his computer-less office through his assistant, Debbie Bosanek). [...] Britt's office is a ways down the hall, not next to his, as the Journal article said. The office sequence, in footage away from Buffett's corner office, is Bosanek, Todd Combs, Britt and Ted Weschler. Combs and Weschler manage some of Berkshire's investments.

Berkshire’s Abel, Britt Join Heinz Board After Swann Leaves (Bloomberg Businesweek)

Gregory Abel and Tracy Britt, two of Warren Buffett’s deputies who have been adding responsibilities at Berkshire Hathaway Inc. (A), were selected by the billionaire to join him as directors of HJ Heinz Co. [...] They replaced directors including Lynn Swann, the former wide receiver for the National Football League’s Pittsburgh Steelers. [...] Britt is chairman of at least two Berkshire units that replaced their CEOs last year, and Abel has been building the company’s energy business through acquisitions.

iCORE Global Partners with CORT Business Services (National Real Estate Investor)

iCORE Global, a full-service commercial real estate provider, has formed a strategic partnership with CORT Business Services, a Berkshire Hathaway Company. iCORE has been providing commercial real estate services in over 267 major markets worldwide for the past 28 years. Now, iCORE will be able to provide clients with furniture solutions. [...] "With CORT currently servicing over 80 percent of the top Fortune 500 companies, there’s already a significant overlap in our customer base," iCORE Global CEO and Managing Director Samantha Mueting said in a statement.

Berkshire Hires CNA's Fortin for New Insurance Unit (WSJ)

Warren Buffett's Berkshire Hathaway Inc. said Wednesday it hired CNA Financial Corp. executive Dan Fortin to work for a new insurance unit the company launched in April. Mr. Fortin will serve as senior vice president for executive and professional lines, Berkshire said in a statement. He was previously senior vice president at CNA Specialty and served as interim CEO of CNA Europe in 2009. Mr. Fortin joins a growing group of underwriters moving to Berkshire after several top managers from American International Group Inc. (AIG) departed to set up the new unit in late April. The new unit, called Berkshire Hathaway Specialty Insurance, is based in Boston and headed by former AIG executive Peter Eastwood.

Berkshire Hathaway HomeServices gets social (Inman News)

The new Berkshire Hathaway HomeServices real estate franchise has rolled out Facebook, Twitter and Instagram accounts. The move comes in advance of broad adoption of the new brand by many Prudential Real Estate and Real Living brands beginning in the third and fourth quarters of this year.