Berkshire Hathaway News Briefs - 10/7/17

Buffett bets on truck stops, to buy majority of Pilot Flying J

Warren Buffett's Berkshire Hathaway Inc bought a major stake in Pilot Flying J, the largest U.S. truck stop operator, and said it will become the majority owner in six years, deepening its commitment to the American economy.

Pilot Flying J has more than 750 locations in 44 U.S. states and Canada selling gas, diesel fuel, and convenience goods, and offering trucks more than 70,000 parking spaces and 5,000 diesel lanes.

While terms for Tuesday's transaction were not disclosed, Pilot Flying J is 15th-largest private company in the United States, with annual sales of $19.6 billion, Forbes magazine said. The family-run company employs more than 27,000 people.

Berkshire bought 38.6 percent of Pilot Flying J from several investors and plans to boost ownership to 80 percent in 2023.

The controlling Haslam family retained a 50.1-percent stake, and will own the remaining 20 percent once Buffett takes over. [...]

Why Autonomous Trucks Aren't A Threat To Buffett's Investment In Pilot Flying J

As fast charging of EVs takes greater hold across the U.S., places like Pilot Flying J will become even better revenue machines than they are now. When truckers and car travelers stop at one of their places now for gas and diesel, they are apt to shop as well during the 15-20 minute stay they have now. Fast charging of batteries, which takes up to 45 minutes, will extend the time a customer has to spend money on goods, as well as the changing service itself.

The point of Buffett’s investment is not just to take advantage of the strong business of Pilot Flying J now as a well branded, preferred network of truck stops serving today’s long-haul diesel truck driver, but as a growing network of places to serve the needs of gas, diesel and EV vehicles. [...]

Berkshire Hathaway's New Moat? Helping America's Family-Run Businesses Protect Their Legacy

[...] Buffett’s held out Berkshire as a safe place for family-owned businesses to turn to when they want to sell and he's beginning to pile up a major trove of deals.

In 2006, Buffett took control of Israeli billionaire Stef Wertheimer’s precision tool company ISCAR, ponying up $4 billion for 80% of the business and taking full control a handful of years later. The Pritzker family turned to Berkshire in 2007, selling a 60% stake in their industrial conglomerate Marmon Holdings, then the world’s 36th largest privately-held company. Seven years later, Berkshire bought the remaining 40% of Marmon and that year it also bought Van Tuyl Auto Group, America’s largest private-held car dealership operator with $8 billion in annual revenues. For Larry Van Tuyl, son of company founder Cecil Van Tuyl, the deal was a 'no-brainer' way to protect a proud legacy; he took a role as chairman of Berkshire Hathaway Automotive when it closed in early 2015.

Now Buffett is at again. On Tuesday morning, Berkshire Hathaway announced it will take a 38.6% investment in travel center operator Pilot Flying J , buying shares from the Haslam family of Tennessee. [...]

Nine years ago Warren Buffett bet on an unknown Chinese battery maker, and it’s sort of paying off

Nine years ago this week, as stocks were tanking in the global financial recession, Warren Buffett put money into a little-known mobile phone battery maker in Shenzhen. This year, with China making it clearer than ever that fossil-fuel cars aren’t going to be welcome for long, that bet is doing better than it’s done in a while.

On Sept. 27, 2008, MidAmerican Energy, controlled by Buffett’s holding company Berkshire Hathaway, announced it was putting $230 million (paywall) into China’s BYD, paying about HK$8 a share (a little over US$1). Back then, BYD, which started out in 1995, was just on the verge of getting into selling electric vehicles. It’s now China’s biggest seller of electric vehicles and saw its stock price increase nearly 60% this year, sending the value of MidAmerican Energy’s stake to about $1.9 billion as of Monday’s closing price. [...]

Russell to cease production of athletic uniforms

Fruit of the Loom, the parent company to Russell Athletic & Activewear, announced Thursday it was getting out of the team uniform business. [...]

“Today, we will begin to transition away from the team uniform business to allow greater emphasis on the consumer retail market. With this shift, we will continue to offer high quality athletic lifestyle and performance apparel for distribution through multiple retail and wholesale channels, including continued distribution of collegiate licensed products along with non-uniform apparel through the team dealer network.” [...]

Dairy Queen, getting a new CEO, looks to freshen brand

International Dairy Queen Inc. will be getting a new chief as the company continues an effort to modernize its  77-year-old brand.

The Edina-based company said Thursday that President and CEO John Gainor will retire at the end of the year and current Chief Operating Officer Troy Bader will take his place, effective Jan 1. [...]

Dairy Queen, a subsidiary of Berkshire Hathaway Inc., has been replacing its old-style restaurants in recent years to compete in the cutthroat quick-service restaurant category. Through its DQ Grill and Chill remodels, the company has updated its seating, beefed up its menu with more food items and tried to offer more specials and creative ice cream treats. It also has made a deliberate push to expand internationally. [...]

Berkshire Weathers the Storms

Given the storm damage and flooding created by hurricanes Harvey, Irma, and Maria during the third quarter, we find it unlikely that wide-moat Berkshire Hathaway will come away unscathed. [...] While we expect the company to experience material losses, it is more than adequately reserved to deal with this year’s hurricane season. [...]

All in, we’re probably looking at $1.5 billion-$3.0 billion in total insured losses for Berkshire’s insurance operations from hurricanes Harvey, Irma, and Maria (based on the dispersion of insured losses from other periods of heavier hurricane activity), with our expectations being somewhere in the middle of that range.

For some perspective, Berkshire recorded $3.4 billion in hurricane-related losses in 2005 when hurricanes Katrina ($2.5 billion), Rita, and Wilma ($900 million) struck the Gulf Coast, with Geico reporting $200 million in pretax losses, General Re posting $685 million in insured losses, and BHRG seeing $2.5 billion in pretax losses. With Hurricane Sandy in 2012, Berkshire’s total insured losses were $1.1 billion on a pretax basis, with $490 million coming from Geico, another $266 million tied to General Re, and $364 million from BHRG. [...]

Consolidation of BH Media Group newspaper printing begins at Journal plant

The consolidation of newspaper printing by BH Media Group’s North Carolina affiliates has begun at a $10 million expansion of the Winston-Salem Journal’s production plant. [...]

The consolidation involves the News & Record of Greensboro, as well as newspapers in Morganton, Marion, Hickory, Statesville and Mooresville printed at the Hickory Daily Record. The plant eventually will take over printing for newspapers in Concord and in Rockingham County. [...]

Berkshire Hathaway's Gen Re Targets Indian Market

General Re, a unit of Warren Buffett’s Berkshire Hathaway Inc. which won a license to open an Indian office in May, is seeking a larger slice of the world’s fastest-growing reinsurance market.

The unit plans to expand in health and life insurance, as well as explore opportunities in property and casualty cover, said Venkatesh Chakravarty, chief executive officer of General Reinsurance AG India Branch. [...]

Building a business in India could help Gen Re’s turnaround. A glut of capital in the global reinsurance industry in recent years has caused prices for some kinds of coverage to sag. Rather than take on policies at those lower rates, Gen Re has said it’s turning away some business.

By contrast, India’s reinsurance market, grew at a compound annual rate of 26 percent from 2012 to 2016, according to Reports Monitor, luring in global reinsurers. [...]

Buffett's Berkshire Expands Bet on Italy With Stake in Cattolica

Berkshire Hathaway Inc. said Thursday it agreed to buy about 9 percent of Italian insurer Societa Cattolica di Assicurazioni Scrl from Banca Popolare di Vicenza SpA, one of two failed banks in the northern region of Veneto. [...]

The purchase follows the December acquisition by Berkshire unit Marmon Holdings Inc. of Modena, Italy-based Zephir SpA, a manufacturer of industrial tractors and vehicles that move train cars in rail yards. Earlier last year, Marmon announced it would buy Italian pasta-equipment maker Dominioni Punto & Pasta Srl and catering-equipment firm Angelo Po.

While Italy, Europe’s third-largest economy, has been struggling with slow growth, Buffett has long said he’s willing to endure sluggish periods at businesses with attractive long-term prospects. [...]

Berkshire Hathaway starts building 212-MW wind farm

BHE Renewables LLC, a unit of Warren Buffett's Berkshire Hathaway Energy, has commenced construction on a 212-MW wind farm in Illinois, the Putnam County Record said Tuesday. [...]

BHE Renewables bought the Walnut Ridge project from renewables developer Geronimo Energy LLC in 2015. The scheme has a power purchase agreement (PPA) for 140 MW with the General Services Administration (GSA) of the US government. [...]

Inside Buffett’s Precision Castparts, a Union Scores a Foothold

On Friday, a group of about 100 welders at the company’s manufacturing operations in Portland, Oregon, voted 54-38 in favor of joining a union. Among the reasons they cited: a lucrative employee stock incentive program that went away after Buffett’s Berkshire Hathaway Inc. bought Precision early last year.

Unionizing is something to watch closely at Precision Castparts, where Chief Executive Officer Mark Donegan is known for a relentless focus on costs. [...]

Precision Castparts -- now one of Berkshire’s largest companies -- has said the welders’ vote might ultimately have a broad effect on its highly integrated manufacturing operations in Portland, where the company is based. A push to unionize thousands of workers in that region failed in 2013. [...]

Berkshire News Briefs - 4/10/17

CC BY-SA 3.0, Link

Berkshire insurance unit sues Goodyear over asbestos claims

Berkshire said Goodyear claimed to have in 2008 exhausted a policy from another insurer for the asbestos claims, but waited until November 2015 to seek reimbursement from Berkshire for "several millions of dollars" under an "excess" policy.

It also said Goodyear had never asked for help in defending against the claims prior to November 2015.

About 62,000 claims are pending against Goodyear in states including Florida, Maryland, New York, Pennsylvania and Texas over alleged exposure to asbestos-containing products as floor tiles, furnace hoses, gaskets and heat shields, Berkshire said.

Berkshire Hathaway affiliate buys Prism Plastics

Precision automotive molder Prism Plastics Inc. has been sold to a subsidiary of Marmon Engineered Components Co., according to an announcement from Altus Capital Partners, the investment firm that had owned Chesterfield, Mich.-headquartered Prism along with its founders since June 2014.

Marmon is an affiliate of Berkshire Hathaway Inc., the publicly traded conglomerate headed by Warren Buffett.

Under Altus ownership Prism has undertaken several growth initiatives, including the June 2016 acquisition of Tech Molded Plastics Inc. of Meadville, Pa. That move doubled Prism’s size and added in-house toolmaking capabilities. [...]

Berkshire subsidiary on renewable energy push across the West

PacifiCorp, a division of Berkshire Hathaway Energy, issued a three-year, $3.5 billion plan for its renewable energy system from Wyoming to California.

The six-state plan will add 900 megawatts of capacity by upgrading generators with larger blades and new technology, build a 140-mile-long power line in Wyoming and add 1,100 megawatts of new wind projects. [...]

The plan includes adding another 1,000 megawatts of solar generators in the states by 2036. [...]

Berkshire Hathaway's Media Group Cuts 289 Newspaper Jobs Nationwide

BH Media Group, the newspaper division of Warren Buffett’s Berkshire Hathaway Inc., announced yesterday that it was cutting 289 jobs at its newspapers across the country yesterday. The cuts included the elimination of 108 jobs that currently are vacant.

The reasons for the job losses are depressingly familiar in the newspaper industry: loss of circulation and advertising revenue, lagging revenue from the digital side of the business.

Terry Kroeger, president and CEO of BH Media, sent a memo to employees yesterday. "While more readers than ever turn to our digital products, our digital revenue is not growing fast enough yet to offset print revenue losses from both advertising and circulation," he wrote. "Therefore, we need to cut our expenses." [...]

The Buffett Series – Thinking About Competitive Advantage

A key requirement for a company to earn high returns on capital over a long period of time is to have a competitive advantage, commonly referred to as a 'moat'. Mr Buffett addresses the issue of competition in his 1993 letter where he talks about the Nebraska Furniture Mart, a businesses he acquired from Rose Blumkin [aka Mrs B.] in 1983. Under the motto "sell cheap and tell the truth," she worked in the business until age 103.

Nebraska Furniture Mart is a pretty simple business, it sells furniture, flooring and home appliances. It's easy to understand and it's unlikely to be subject to a lot of change. In ten years time it will still be selling furniture. [...]

Berkshire Hathaway: An In-Depth Look At Normalized Return On Equity

How much would you pay for a $298 billion perpetual bond with an 8.5% coupon and $66 billion of additional cash? While this seems like an odd question, I would argue it is the one you're trying to answer when choosing to invest, or not invest, in Berkshire Hathaway. No, Berkshire common stock is not a bond; however, as I will try to demonstrate, while Berkshire's stated GAAP earnings are volatile, its underlying return on shareholders' equity is highly consistent, not entirely dissimilar to a bond coupon. This analysis will disaggregate Berkshire's constituent assets and liabilities in its various business segments and the earnings attributable to those segments. Doing so will allow us to uncover what I will term a "steady-state" return on equity. With that return in hand, we can then determine the "yield" and subsequent value to assign our "bond."

Steelworker wins $100,000 in Buffett's March Madness bracket

[Dwayne] Johnson, who works in a steel factory in Huntington, West Virginia, was sitting on his couch Saturday afternoon when Buffett called to tell him that, with 31 out of 32 correct predictions in his March Madness bracket, he'd be winning $100,000 of the billionaire's money. (If Johnson had correctly called South Carolina's victory over Marquette, he would've received a cool $1 million.) [...]

Johnson says the $105,000 in winnings - which include an additional $5,000 from his employer, Precision Castparts - will help him pay off credit card debt and buy a new car. He also plans to save six months' worth of expenses in case he loses his job, something he says he has worried about in recent months after widespread layoffs at the steel mill where he has worked for nearly 10 years. He makes $21.13 an hour as a welder at the company, which Buffett's Berkshire Hathaway purchased two years ago for nearly $32 billion. [...]

Cherry Coke, China and Warren Buffett: 'He's selling well'

People in China are coming face to face with Warren Buffett's love for Cherry Coke.
A cartoon rendering of the billionaire investor is appearing on special edition Cherry Coke cans all over the world's most populous nation.
Buffett is helping Coke launch the flavored soda in China, a sugary drink the 86-year-old claims is his secret to staying young. [...]

Berkshire News Briefs - 1/26/17

BNSF budgets $3.4 billion for 2017 capex plan

BNSF Railway Co. unveiled a $3.4 billion capital expenditure plan for 2017, the Class I announced yesterday. Similar to last year's $3.9 billion plan, the largest component of this year's program will be to replace and maintain the railroad's core network and related assets. That aspect of this year's work will amount to about $2.4 billion, BNSF officials said in a press release. [...] In addition, BNSF expects to spend $400 million on expansion projects; $100 million on positive train control implementation; and $400 million on locomotives, freight cars and other equipment acquisitions.[...]

Kansas logistics park offers big intermodal-growth potential for BNSF

BNSF Railway Co. has tried to accelerate ID efforts in recent years to gain as big a business boost as possible, especially of the intermodal variety. From 2011 through 2015, the Class I each year landed more than $1 billion worth of new or expanded facilities along its lines, including $1.2 billion in 2015 and nearly $1.5 billion in 2014. And as of late last month, BNSF was on pace to surpass the $1 billion mark for the sixth-straight year, with about 100 ID projects on the 2016 docket, including several at a fast-growing, footprint-swelling logistics park in Kansas. [...]

J.B. Hunt, BNSF will review revenue split

[...] Last year, about $3.7 billion -- 60 percent of J.B. Hunt's revenue -- came from its intermodal segment. Michael Haverty, who was the president of Santa Fe Railway when he approached J.B. Hunt with the original intermodal deal in 1989, has estimated that BNSF makes about $1 billion annually from the deal. Santa Fe Railway Corp. and Burlington Northern Inc. merged to form BNSF in 1993.

The "evergreen" intermodal contract automatically renews each year. The agreement stipulates that the revenue division will be negotiated by the two companies and is reviewed quarterly. J.B. Hunt is questioning the period beginning May 1, 2016. [...]

Richline Group Acquires The Aaron Group

Richline Group, a wholly-owned subsidiary of Berkshire Hathaway, and The Aaron Group, a leading jewelry manufacturer and marketer, announced today that Richline has acquired The Aaron Group business effective today, January 11th. [...]

Since its founding as Samuel Aaron Jewelry in 1950, the Aaron Group has grown from its New York City roots to become a widely renowned, vertically integrated international jewelry manufacturer. Along the way, the Aaron Group has remained a true family business and, under the stewardship of third-generation leader Robert (Bobby) Kempler, has achieved stature as a major global force, with operations, factories, partnerships and hundreds of employees in New York, London, Mumbai, Hong Kong, and Guangzhou. [...]

Buffett’s Berkshire Buys German Pipe Company Wilhelm Schulz

A unit of Warren Buffett’s Berkshire Hathaway Inc. agreed to buy Wilhelm Schulz GmbH, a closely held German maker of piping components, as the billionaire accelerates an expansion in Europe.

Rainer Floeth, chief executive officer of Krefeld, Germany-based Wilhelm Schulz, confirmed by phone that Berkshire’s Precision Castparts had agreed to buy the company. He declined to elaborate on terms due to contractual obligations. The deal was first reported by German newspaper Handelsblatt, which cited Precision Castparts Corp. CEO Mark Donegan. [...]

AIG to pay Buffett's Berkshire about $10 billion in insurance deal

American International Group Inc (AIG.N) has agreed to pay roughly $10.2 billion to Warren Buffett's Berkshire Hathaway Inc (BRKa.N) to take on many long-term risks on U.S. commercial insurance policies it has already written.

The reinsurance transaction covers "long-tail" exposures, which are liabilities that emerge long after policies are issued, from excess casualty, workers compensation and other AIG policies issued before last year.

Berkshire's National Indemnity Co unit, led by Buffett's reinsurance chief Ajit Jain, will take on 80 percent of net losses in excess of the first $25 billion, with a maximum liability of $20 billion. [...]

The 5 Operating Principles Behind Berkshire Hathaway’s Uniquely Profitable Reinsurance Business

In his 2015 letter, Warren Buffett warned Berkshire Hathaway shareholders that prospects for the reinsurance industry had dimmed. However, as this week's $1.5 billion deal with The Hartford illustrates, five operating principles will enable Berkshire's reinsurance activity to beat competitors and remain comfortably profitable. [...]

1. Maintain unmatched financial strength and reputation
2. Focus on large, unusual risks
3. Price risks rationally and act quickly
4. Keep risks on your books
5. Stay disciplined and carry on

More Links...

The Brilliant Blunders and Investments that Made Warren Buffet a Billionaire

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Berkshire Hathaway Is Not Built To Last

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Berkshire News Briefs - 8/5/16

Berkshire Said to Draw Fed Scrutiny Over Wells Fargo Investment (Bloomberg)

Berkshire has asked the Fed for approval to maintain and even increase its 10 percent stake in Wells Fargo, saying in a June application that it may seek to “purchase additional shares.” If the Fed denies the request, Berkshire might have to dial back the holding of about $24 billion that Buffett described in a recent shareholder meeting as “our largest marketable security."

Omaha, Nebraska-based Berkshire probably wouldn’t have to sell anything if it can persuade regulators that its stake in AmEx doesn’t mean it exerts any control over the credit-card company. Berkshire has successfully made the argument in the past to banking agencies. [...]

Warren Buffett’s Short-Term Hit and Run Transactions (Insider Monkey)

The examples in the article are Express Scripts (ESRX), Archer Daniels Midland (ADM), Intel (INTC), CVS Health (CVS), and Exxon Mobil (XOM).

Warren Buffett is known for his highly successful value investing approach. [...] However, over the past few years, his fund, Berkshire Hathaway, has disclosed some short or medium-term stakes, positions it did not maintain for more than a year.

In many occasions, these stocks were picked by one of Buffett’s hedge fund managers, Todd Combs and Ted Weschler, and not by himself. [...] As readers will notice, it seems like Combs and Weschler’s strategy is all about profit taking, acquiring stocks at low prices and selling when they surge, instead of keeping them for long periods of time. [...]

Warren Buffett Made a Big Bet On an 'In-Your-Face' CEO (Bloomberg)

[Precision Castparts CEO Mark] Donegan, 60, a former Villanova University football player who devoted most of his career to Precision, shares many qualities with other Berkshire managers: He’s a low-profile CEO with a great track record, relentless about staying ahead of the competition. During the 13 years he led Precision as a publicly traded company, its stock climbed 20-fold, annual revenue quadrupled to $10 billion and he bought dozens of businesses, consolidating a position as a key supplier to Boeing Co., Airbus Group SE and General Electric Co. It helped him attain a cult status among investors. [...]

Behind the numbers, though, something more brutal is going on. For years, Donegan has traveled the globe, sometimes bullying staff during quarterly reviews at Precision plants. Bloomberg News spoke with 15 current and former employees—some at the most senior levels of the organization—as well as half a dozen people with knowledge of how the company is run. Those who know the CEO best describe a manager who’s highly effective but at times strains basic decency. [...]

Book Review: Inside The Investments Of Warren Buffett (Investing-dot-com)

I have no idea how many books have been written about Warren Buffett, but sometimes I have the feeling that he is giving George Washington a run for his money. The latest addition to the literature is Yefei Lu’s "Inside the Investments of Warren Buffett: Twenty Cases" (Columbia Business School Publishing, 2016).

Lu examines 20 investments Buffett made over the course of his career that, in Lu’s opinion, “had the largest material impact on his trajectory.” He puts himself in the shoes of imaginary investment analysts “studying the businesses at the same time … Buffett did.” Why would an ordinary analyst either recommend or, as would often have been the case, argue against investing in a company to which Buffett eventually opted to commit funds? [...]

The DQ® System Announces Plans to Develop 24 Locations in Five Caribbean Countries in the Next Five Years (Business Wire)

If you read these News Brief posts the whole way to the bottom every time, you know that I have a thing for these recurring, formulaic Dairy Queen press releases. They mean almost nothing to Berkshire Hathaway's bottom line in the grand scheme of things, but I love to see DQ expanding to all the corners of the globe anyway.

Plans call for the development of DQ Grill & Chill® locations in Trinidad and Tobago, DQ Grill & Chill and DQ Treat locations in Jamaica, and DQ Treat locations in St. Lucia, Grenada and St. Maarten. Currently, there are eight DQ Treat locations in Trinidad, the first of which opened in 2012. [...]

Royal Treats Ltd. signed the multi-unit, multi-country agreement with American Dairy Queen Corporation (ADQ) to develop the new locations. They currently operate eight DQ Treat locations throughout Trinidad and Tobago [...] With their new agreement, they will introduce DQ Grill & Chill locations to fans in Trinidad and Jamaica.

Berkshire News Briefs - 7/14/16

Berkshire applies to boost Wells Fargo stake above 10 percent (Business Insider)

Warren Buffett's Berkshire Hathaway Inc has applied to increase its ownership stake in Wells Fargo & Co above 10 percent, the Federal Reserve said on its website on Friday.

Boosting the stake above 10 percent could mean increased federal scrutiny over the investment. [...]

CEOs relish 'unique' benefits of being a Buffett-owned business, despite some downsides (Omaha World Herald)

Donegan, during a visit to Omaha this spring for the annual meeting of Berkshire shareholders, estimated that since he became a Berkshire CEO, he can devote 15 percent more of his days to actually running Precision Castparts.

That’s a substantial gain in perhaps the most valuable of economic commodities — time — and an example of how business life inside Berkshire is different from business life outside. [...]

Billionaire Warren Buffett doing energy pilot program in Hawaii (Pacific Business News)

Warren Buffett’s energy company has started doing a pilot program for a residential property manager in Hawaii, a spokeswoman for one of his companies confirmed to Pacific Business News this week.

Iowa-based MidAmerican Energy Services LLC, a Berkshire Hathaway Energy company which was recently registered as a new business in Hawaii, is doing an energy management pilot that uses a technology platform to help clients manage the performance of the heating, ventilation, air conditioning and electric water heater systems at their property sites.[...]

Buffett may be interested in buying Hawaiian Electric Co. if Florida-based NextEra Energy Inc.’s proposed $4.3 billion deal to purchase the Honolulu utility falls through. A decision by Hawaii regulators on the NextEra-HECO sale is expected to come soon.

Precision Castparts neighbors sue, demand company to stop polluting (Oregon Live)

Four Southeast Portland residents who say their homes have been smothered with heavy metals and other pollution by a nearby Precision Castparts manufacturing plant are asking a judge to order the parts maker to stop polluting.

In a suit filed last week, the residents also are asking a Multnomah County Circuit judge to force Precision Castparts to clean up millions of pounds of nickel, chromium, arsenic and other toxic pollutants that they say have settled upon their neighborhoods and increased their chances of cancer and other health problems -- and even put children at risk of lower IQs. [...]

Gen Re Seeks to Add Brokerage Business Through Hookup with TransRe (Insurance Journal)

General Re, the unit of Warren Buffett’s Berkshire Hathaway Inc. that appointed a new chief executive officer in May, struck a deal with a rival reinsurer to help revive sales.

Alleghany Corp.’s TransRe will share revenue and risks on property/casualty reinsurance business that it underwrites through brokers and intermediaries for the next five years, the companies said Tuesday in a statement. The partnership gives TransRe, with the backing of Gen Re, the ability to take on twice as much risk for clients, the Alleghany unit said in a separate document listing facts about the deal.

Gen Re CEO Kara Raiguel is seeking new sources of premium revenue after being named to take over for Franklin “Tad” Montross. [...]

Buffett's Brooks branches out to attract gym generation (Channel NewsAsia)

Brooks, the running brand owned by Warren Buffett's Berkshire Hathaway Inc, believes that the U.S. marathon boom has peaked and it is looking to broaden its appeal to a younger gym generation.

Founded in 1914, the Seattle-based firm was close to bankruptcy when Jim Weber took over as chief executive in 2001. Weber decided to concentrate solely on running, a strategy Buffett bought into when he acquired the brand in 2006.

Brooks is now the market leader in the U.S. specialty running shoe market with a 29 percent share. It had total sales in 2014 of US$548 million, still only a fraction of overall leader Nike's sales of US$32 billion in the year to May 31. [...]

Berkshire Hathaway Said to Be Among Leading Oncor Bidders (Bloomberg)

Warren Buffett’s Berkshire Hathaway Inc. submitted a bid for Energy Future Holdings Corp.’s Oncor Electric Delivery Co., people familiar with the talks said, joining NextEra Energy Inc. as a top contender to buy Texas’ biggest transmission operator.

Energy Future is mulling offers that value Oncor at about $18 billion, according to the people, who asked not to be identified because the information is private. The process is fluid and the leading bidders have switched places several times, the people said. [...]

25 Years of Learning and Laughter (Gates Notes)

I don’t remember the exact day I first met most of my friends, but with Warren Buffett I do. It was 25 years ago today: July 5, 1991.

I think the date stands out in my mind so clearly because it marked the beginning of a new and unexpected friendship for Melinda and me—one that has changed our lives for the better in every imaginable way.

Warren has helped us do two things that are impossible to overdo in one lifetime: learn more and laugh more. [...]

Berkshire Hathaway 1Q 2016 Earnings

Berkshire Hathaway reported 1st quarter earnings for 2016 on Friday, May 6.

• Earnings News Release (PDF)
• 10-Q Filing (PDF)

Berkshire Takes a Hit on Insurance and BNSF Performance in 1Q16 (Yahoo)

Berkshire Hathaway reported its first quarter earnings on May 6, 2016. The company missed the operating EPS (earning per share) analyst estimate of $2,609 and reported $2,275. The company also reported operating earnings of $3.7 billion, as compared to $4.2 billion in the prior year quarter. These earnings were mainly impacted by lower operating profits in the Insurance and BNSF divisions. [...]

Diversification Helped Berkshire Out in First Quarter (Morningstar)

Berkshire Hathaway released results for the first quarter of 2016 that were basically in line with our expectations, with weaker results from BNSF being largely offset by better results from insurance and finance and financial products, as well as the addition of Precision Castparts to overall results. [...]

First-quarter revenue increased 7.7% year over year to $52.4 billion, with the biggest contributions coming from Berkshire's insurance operations (where earned premiums rose 16.6% year over year), followed by its manufacturing, sales and retail operations (which benefited from the closure of the Precision Castparts acquisition) and finance and financial products (which posted 11.1% revenue growth year over year). Excluding the benefits from the Precision Castparts acquisition, first-quarter revenue increased 2.8%. [...]

Book value per Class A equivalent share was $157,369 at the end of the first quarter--up 7.1% year over year and 1.2% when compared with the fourth quarter of 2015. [...]

At Berkshire Hathaway, Cash Tumbles as Float Inches Up (WSJ CFO Journal)

More interesting: what kind of money chief executive Warren Buffett has on hand for acquisitions. The company’s position in cash and cash equivalents totaled $58.3 billion at the end of March down 18.7% from $71.7 billion at the end of the year.

That fall off is no surprise. Berkshire Hathaway completed its acquisition of Precision Castparts Corp., its largest ever, on January 29, and its purchase of the Duracell Co. from the Procter & Gamble Co. a month later.

The decline in cash may mean Mr. Buffett will be content with smaller “bolt on” acquisitions at its wholly-owned companies for a while. [...]

Berkshire News Briefs - 4/25/16

Watch the Berkshire Hathaway Annual Meeting live stream on Yahoo on Saturday, April 30, at 10am Eastern.

Warren Buffett:: 'There’s a little bit of PT Barnum in me' (Yahoo)

Berkshire Hathaway’s annual shareholder meeting gets underway on April 30, and those heading to the big event can expect anything other than a boring analyst convention.

A newspaper-tossing challenge, a 5K fun run and walk, a cookout, and a steak dinner are just some of the events scheduled for Berkshire Hathaway's annual shareholder meeting. “There’s a little bit of P.T. Barnum in me,” billionaire investor Warren Buffett told Yahoo Finance editor-in-chief Andy Serwer. [...]

Meet Precision Castparts' Worried Neighbors (OPB)

State environmental regulators still haven’t identified where the arsenic is coming from, but they do know the source of the nickel: it’s a large metal foundry owned by Precision Castparts, Oregon’s second-largest company and, according to at least one study, one of the country’s top air polluters.

The foundry, which the company calls the PCC Structurals Large Parts Campus, also emits chromium and cadmium. [...]

MidAmerican's $3.6 billion wind investment is 'giant step' toward company's 100 percent renewable energy goal (Omaha World Herald)

Iowa will be further ahead of other states in renewable energy when MidAmerican Energy installs $3.6 billion more in tax-supported wind turbines over the next 2½ years. [...]

By 2020, he said, MidAmerican’s turbines will generate 85 percent of the electricity used by its customers, up from 58 percent when current projects are completed, and 40 percent of electricity used by all Iowans, up from 31 percent today. [...]

3 Wall Street pros reveal why it's so hard to cover Berkshire Hathaway (Yahoo)

“The key risk is — in my view — the fact that relatively few of its investors have a good understanding of what Berkshire actually does...the reporting is very sparse, and while it's probably ludicrous to question Warren Buffett's investing acumen, I think investors are much more likely to assume the best when there are questions of, say, earnings quality. To me, that widespread positive sentiment implies a greater risk that surprises (perhaps following the inevitable senior management succession) will be negative rather than positive, because the positives have already been assumed.” [...]

Warren Buffett’s Risky Final Bet (Harvard Business Review)

For many years, investors have speculated on what will happen to Berkshire when Buffett dies – but they tend to focus on who will succeed him as CEO, and what will happen to the stock price. Buffett insists the company has a solid succession plan in place; at last year’s annual shareholder meeting, he announced that after his death, his son, Howard Buffett, will become the unpaid non-Executive Chair of the Board to ensure the continuation of Berkshire’s unique culture.

Will Howard Buffett be able to fulfill the role of the values champion who defends his father’s legacy in the face of challenges to Berkshire’s strategy and values? We suspect not – not because of any shortcomings, but because he will not have the shares to back him up.

Here the experience of Hewlett-Packard (HP) offers a cautionary tale. [...]

Berkshire Hathaway's Big Profit Center Prepares for Shrinkage (Fool)

A shift in the top ranks at Berkshire Hathaway is a hint that its reinsurance businesses, historically one of its stars, is slated to shrink. The company recently announced the retirement of Tad Montross, who has led Berkshire's General Re subsidiary since 2008 after sharing the role for seven years prior. Montross's position will be filled with an unnamed executive, who will report to Ajit Jain, the head of Berkshire Hathaway Reinsurance. [...]

Berkshire 101: A quick guide to Warren Buffett's $360 billion empire (Yahoo)

Berkshire Hathaway was a struggling textile company when Warren Buffett first invested in it in 1962.

Today, it's a $360 billion behemoth. In Warren Buffett’s own words, it's a “sprawling conglomerate, constantly trying to sprawl further." [...]

Here's a brief introduction to Berkshire Hathaway. [...]

How Warren Buffett’s Son Would Feed the World (The Atlantic)

Without a doubt, the most ambitious of the Buffett philanthropists is the middle child, Howard, 61, a commercial farmer who lives in Decatur, Illinois. His goal is to end world hunger. [...]

Instead of a green revolution for Africa, Buffett favors what he calls a “brown revolution,” or, to quote the distinguished agricultural ecologist Sir Gordon Conway, a “doubly green revolution”—a focus on environmentally sustainable agriculture that minimizes erosion, preserves and regenerates soil, and makes the land more resilient, while also increasing yields. In contrast to the green revolution, the brown revolution is a tortoise-like approach: Its impact is gradual. Over the past decade, patiently, the Howard G. Buffett Foundation has spent hundreds of millions of dollars to identify and promote practical, low-cost methods of conservation farming—cover crops, no-till farming, locally bred seed varieties—that improve African soil quality and crop yields without chemical fertilizers and costly imported seeds. [...]

Berkshire News Briefs - 3/12/16

This week's post got really long, so I broke it in two. News about Berkshire Hathaway itself in this post, news about subsidiaries coming next in a second post...

Berkshire after Buffett: One thing may not change (CBS MoneyWatch)

Most interesting, more and more major shareholders are becoming convinced that they should stick with Berkshire. They've been increasingly assured that with Buffett's decentralized management style -- unit managers operate independently and make their own business decisions -- a solid structure has been put in place that would enable Berkshire to operate soundly even after his departure. [...]

Another wealth manager at a major Wall Street investment bank noted that there could be "initial rush selling" once Buffett announces the exact date of his retirement, but "that would definitely inspire us to jump in and buy more shares when the stock tumbles as a result."

Buffett’s Berkshire Plans $9 Billion Bond Sale to Repay Loan (Bloomberg)

Warren Buffett’s Berkshire Hathaway Inc. sold $9 billion in debt, the conglomerate’s biggest bond deal ever, in the latest offering from a blue-chip company tapping investor demand for the most creditworthy borrowers.

Berkshire sold the debt in seven parts, according to data compiled by Bloomberg. Proceeds will help pay down a $10 billion loan used to finance its purchase of Precision Castparts Corp. Buffett had said earlier that Berkshire used about $23 billion of its cash for the deal and would borrow the rest. [...]

Investor orders for Berkshire Hathaway bond sale hit $34bn (Financial Times)

Investor orders for a piece of a $9bn Berkshire Hathaway bond sale eclipsed $30bn on Tuesday, as the conglomerate headed by Warren Buffett sought to repay bank loans used to finance its $36bn takeover of Precision Castparts. [...]

Orders for the year’s fourth-largest transaction hit $34bn, climbing rapidly as banks closed their books, one person familiar with the situation added. [...]

Nebraska Peace Foundation calls for report on risks Berkshire Hathaway faces from climate change (Omaha World-Herald)

The Nebraska Peace Foundation is asking Berkshire Hathaway Inc. to issue a report describing the risks it faces from climate change and the “initiatives and goals relating to each risk issue identified.” [...]

In the letter and proxy draft, Buffett said it is “highly likely” that climate change “poses a major problem for the planet.” [...]

But although climate change may cause disasters, Buffett said, Berkshire’s property insurance operations do not risk significant losses from such disasters.

That’s because the companies would adjust their premiums and exposure to claims if climate change begins to cause more property damage, which hasn’t happened yet, he said. [...]

Comments on Mistakes and Buffett’s Original Berkshire Hathaway Purchase (ValueWalk)

I noticed a passage in last year's letter that is relevant to the topic—Buffett himself was attracted to buybacks on a dying business—Berkshire Hathaway in the early 1960's. Berkshire was a Ben Graham cigar butt—it was trading at around $7 and had net working capital of $10, and book value of $20. Berkshire was a classic “net net”—a stock trading for less than the value of its cash, receivables, and inventory less all liabilities. Buffett liked the fact that Berkshire was a) trading at a cheap price relative to liquidation value, and b) using proceeds from the sale of plants to buy back shares—effectively liquidating the company through share repurchases. [...]

Why Berkshire Hathaway Is Expected to Outperform SPY in 1Q16 (Market Realist)

7 parts, focusing on the different areas of Berkshire Hathaway (BNSF, Energy, Manufacturing, etc.)

Berkshire’s holdings have been performing on the back of insurance, financials, and manufacturing. Chairman and CEO Warren Buffett is deploying cash for buying stocks at attractive valuations. Berkshire’s recent investments include Precision Castparts (PCP) and Kinder Morgan (KMI). [...]

3 Big Competitive Advantages of Berkshire Hathaway (Fool)

Berkshire Hathaway is a unique business. It's primarily an insurance company, but it also sells furniture, energy, homes, underwear, and private jets. And the company has amassed a stock portfolio that would make most long-term investors jealous. One of Warren Buffett's biggest criteria when deciding what to buy is identifiable competitive advantages -- of which Berkshire has quite a few of its own. [...]

Berkshire News Briefs - 2/9/16

As Berkshire Hathaway meeting set to be streamed online, will fewer make Omaha pilgrimage? (Omaha World-Herald)

Berkshire Hathaway’s annual meeting, which draws nearly 40,000 people to Omaha each year in a pilgrimage to see investor Warren Buffett, will be streamed over the Internet this year for the first time, the company’s chief financial officer told The World-Herald.

That could have implications for the city’s tourism industry: People from around the globe descend on Omaha each year, filling hotels and restaurants. They also shop at Berkshire-owned stores, which offer discounts to shareholders during the annual meeting weekend. Will it keep people away from fair Omaha, which once a year is dubbed Woodstock for Capitalists?

Meeting Ted Weschler (Yaniv's Blog)

Many value investors, at some point of their careers, get to “see the light” and move away from investing in what’s called “cigar butt investing” (bad business at a great price) to investing in companies that trade at richer valuations but have great underlying businesses (great businesses at a reasonable price). The fortunate few, manage through this transition without a negative impact on performance. I asked Ted about this transition process and how he sees the two approaches. He said that when you try to map the risks that inherent to a “cigar butt” investing you end up with a much longer list than when you carry out the same exercise with a high quality business. Of course, many investors manage to achieve great performance over time with the bad-business-at-a-great-price approach so that is not to say that there is anything wrong with this approach–these are just two different styles. [...]

Berkshire purchases Castparts for $37B (Lincoln JournalStar)

Berkshire Hathaway completed its $37.2 billion acquisition of Precision Castparts on Friday.

Berkshire Hathaway’s acquisition of the manufacturer of components for aircraft, power plants and other industries reportedly is its biggest deal ever.

Warren Buffett agreed to purchase Precision Castparts in August.

Berkshire Hathaway names new board of directors for Precision Castparts (Omaha World-Herald)

In a securities filing Thursday, Berkshire said the directors are Warren Buffett, chairman and chief executive of Berkshire; Todd Combs, a Berkshire investment officer; Marc Hamburg, chief financial officer of Berkshire; and three Precision Castparts executives: CEO Mark Donegan, corporate counsel Ruth Beyer and Shawn Hagel, chief financial officer.

Donegan and Hagel were directors before Berkshire’s $32 billion purchase of Precision Castparts [...]

Musk vs. Buffett: The Billionaire Battle to Own the Sun (Bloomberg)

Buffett got into utilities in 1999. While many investors chased the latest Silicon Valley IPO, he bought a nice electric company in Des Moines. Building power plants and maintaining the grid offered almost endless opportunities to reinvest cash, which he had a lot of. And, as a monopoly providing an essential service, the local power company wasn’t going away anytime soon. Owning utilities isn’t “a way to get rich,” he later said. “It’s a way to stay rich.”

By 2013 the energy unit at Berkshire had expanded to include power companies serving parts of Oregon, Washington, Idaho, Wyoming, and Utah. It had also invested billions of dollars in wind farms in Iowa and giant solar arrays in California and Arizona. Two months after SolarCity got its love money from Nevada, Buffett offered $5.6 billion to buy NV Energy. Soon after Berkshire completed the purchase, NV Energy accounted for about a fifth of the company’s energy revenue. [...]

Buffett's BNSF to Cut Spending $1.5 Billion as Cargo Slumps (Bloomberg)

BNSF Railway Co., the railroad owned by Warren Buffett’s Berkshire Hathaway Inc., plans to reduce capital expenditures for the first time in six years as railroads seek to rein in costs amid a freight slump.

The rail carrier said Tuesday that it will spend $4.3 billion, down 26 percent from a record $5.8 billion in 2015, on locomotives, rail cars, track and maintenance. BNSF had increased investment since 2010, which marked a six-year low of $2.7 billion. [...]

Warren Buffett ups stake in Phillips 66 — again (Houston Business Journal)

Warren Buffett’s Nebraska-based Berkshire Hathaway Inc. has further increased its stake in Houston-based Phillips 66.

During the first three days of February, the company bought about 1.7 million Phillips 66 shares for nearly $132 million, according to CNBC. That means that over the past 30 days alone, the company has bought 12.5 million shares for $964 million.

The company now owns 73.98 million shares — or nearly 14 percent of Phillips 66 — worth about $5.9 billion, the Associated Press reports. [...]

What Happens After Warren Buffett Leaves Berkshire Hathaway? (Fool)

Warren Buffett has made it clear that the board of directors already knows who Berkshire's next CEO will be. And while the identity of that person remains a secret, we do have a couple of clues:

Berkshire's directors believe that future CEOs should come from internal candidates.

The new CEO will be relatively young -- Buffett wants the next CEO to stay on the job for decades and says that the company will operate best if its CEOs stay for 10 years or more. [...]

Warren Buffett will be advisor for 'Celebrity Apprentice' (CNBC)

Warren Buffett continues to raise his public profile with an upcoming appearance on the new season of NBC's "The Celebrity Apprentice."

In a news release, the network says that Buffett, "one of the most successful businessmen in the world," will be an advisor on the program, along with former Microsoft chief and Los Angeles Clippers owner Steve Ballmer, model and businesswoman Tyra Banks, actress and entrepreneur Jessica Alba, and entertainment attorney Patrick Knapp Schwarzenegger. [...]

Berkshire News Briefs - 1/6/16

Report Finds Warren Buffett’s Modular Housing Company Ripped Off Minorities (Time)

Recently, the Seattle Times published a special report in conjunction with BuzzFeed News on the business practices of Clayton Homes, a massive modular housing company owned by Warren Buffett’s Berkshire Hathaway, the holding company that serves as a massive investment vehicle. The report does not paint a rosy picture of Clayton, which is the country’s largest homebuilder. [...]

The report found that Vanderbilt Mortgage, the lending arm of Clayton, lends with extremely high interest rates for minorities as opposed to their white counterparts. [...]

Berkshire Hathaway's Clayton Homes defends its loan practices involving minorities (Omaha World-Herald)

In response, Clayton said in a press release that the story’s allegations about loan rates are based on “raw data” that ignore factors including credit score, down payment, loan size, collateral and type of land.

Clayton said Vanderbilt’s average rate was the same for white and nonwhite borrowers with credit scores less than 600 who borrowed less than $50,000 to place a mobile home placed on private land. For borrowers with credit scores greater than 720, the average rate for nonwhite borrowers was 0.07 percentage points less than for white borrowers, Clayton said. [...]

Berkshire Hathaway Buys Newspaper in Fredericksburg, Virginia (Bloomberg)

Berkshire Hathaway Inc. purchased a Virginia newspaper and printing facility as the company run by billionaire Warren Buffett adds to its roster of publications.

The purchase includes The Free Lance-Star and Print Innovators, both located in Fredericksburg, Berkshire’s BH Media Group said Thursday in an e-mailed statement. Terms of the deal with Sandton Capital Partners, which acquired the assets in bankruptcy in June 2014, weren’t disclosed.

The Free Lance-Star has a daily circulation of 31,700, according to the statement. Print Innovators prints the newspaper and other publications in the region.

Berkshire Hathaway Fails Warren Buffett's Test -- Again (Fool)

Berkshire's underperformance this year is inopportune, as the Financial Times noted yesterday:

"The underperformance comes in Mr Buffett's Golden Anniversary year at the helm, when he told investors for the first time that they should judge his record based on Berkshire's share price, rather than just the book value of the company, which had been his preferred yardstick for decades."

BNSF Railway furloughs workers in Minnesota and North Dakota (Minneapolis/St. Paul Business Journal)

BNSF Railway Co. recently laid off railyard employees in Minnesota and North Dakota due to lower-than-expected demand for freight shipping, the Grand Forks Herald reported.

The job cuts — reportedly around 100 — were at the rail company's North Dakota rail yards in Grand Forks, Mandan and Minot, as well as the Minnesota yard in Dilworth.

EU clears Berkshire's acquisition of Precision Castparts (Reuters)

The European Commission said on Wednesday it had approved Berkshire Hathaway's planned $32.3 billion acquisition of Precision Castparts Corp, a maker of aerospace and other parts.

The Commission said in a statement it had concluded that the proposed acquisition would not raise competition concerns given the absence of horizontal overlaps and the limited vertical relationships between the activities of the two companies.

MidAmerican Energy adds 'green' trucks (Eastern Iowa Gazette)

The Des Moines-based utility’s new Green Fleet service trucks are equipped with a conventional engine and a large battery pack that operates the boom and other vehicle features. The dual system eliminates the need to have the engine idling at the job site, thereby saving fuel, reducing engine emissions and the need for engine maintenance, and minimizing job site noise. [...]

“By eliminating those four hours of idling every day, we will save four to eight gallons of gas per vehicle per day, which will add up to a significant reduction in emissions and significant fuel cost savings over the course of the year.”

How Venmo Plans to Make Money (Fortune)

MasterCard doesn’t offer a consumer P2P payment service, but it is selling the technology to businesses. It’s charging customers like Berkshire Hathaway and FreeShipping.com an undisclosed fee to add peer-to-peer payments to their own businesses. Berkshire Hathaway Travel Protection’s Dean Sivley says those fees cost the company less money than printing out and mailing checks or wiring money. The insurer developed a mobile app based on MasterCard’s tech to enable its policyholders to submit a claim and receive a decision and payment in minutes.

The Dairy Queen® System’s Epic Resolution (Business Wire)

The start of the New Year often comes with grand resolutions. But this year, Dairy Queen® restaurants [...] are kicking off the New Year with an epic resolution: beginning January 1, 2016, participating DQ® and DQ Grill & Chill® restaurants across the country vow to serve all Blizzard® Treats upside down or the next one is free. [...]

Berkshire News Briefs - 10/29/15

NetJets reaches deal with pilots, ending Berkshire Hathaway distraction (Columbus Business Journal)

NetJets Inc. has agreed in principle to a contract covering its 2,800 union pilots, ending more than two years of contentious negotiations that saw a management shakeup and required billionaire Warren Buffett to defend parent Berkshire Hathaway Inc.’s attitude toward organized labor. [...]

The union said the proposed agreement meets goals of “protecting, repairing and improving” the previous contract. It comes days after NetJets reached a tentative contract with 278 flight attendants.

Warren Buffett’s Millionaires Club (WSJ)

In 50 years at the helm of Berkshire, Mr. Buffett has transformed a struggling textile mill into a massive holding company with $200 billion in revenue and created a legion of unlikely millionaires—and even a few billionaires. [...]

Early Berkshire stockholders have used shares to finance children’s educations, buy homes and put up collateral for loans. Hundreds of millions of dollars of stock already have gone to shareholders’ alma maters, cultural institutions and medical research.

Warren Buffett's really bad week (Fortune)

Warren Buffett likely had a worse week in the market than you did.

[...] Walmart’s stock fell 10%, [...] so that was a $360 million hit to the conglomerate’s investment portfolio. That same day, Wells Fargo [...] shares dropped a modest $0.36. But to Buffett’s Berkshire [...] that small drop meant another $170 million shaved off the Oracle of Omaha’s portfolio. Then came IBM, [...] IBM’s shares fell 6%, or $8.58. The resulted in a $680 million hit to Buffett’s Berkshire [...]

Three stocks, one week, $1.2 billion down the drain.

Trust and Consequences: A Survey of Berkshire Hathaway Operating Managers (Stanford)

For much of its history, Berkshire Hathaway has been regarded primarily as the investment vehicle of Warren Buffett rather than a bona fide corporation. However, as Berkshire Hathaway has expanded beyond its core insurance operations, more attention is being paid to the structure by which these entities are managed. Notable features of the company’s system are its decentralization, the autonomy afforded to its managers, its long-term investment horizon, and its emphasis on ethical behavior.

We explore this system in greater detail, based on the results of a survey of the chief executive officers of the company’s operating subsidiaries.

Precision Castparts Q2 Earnings & Revenues Lag, Down Y/Y (Nasdaq)

Precision Castparts Corp. reported second-quarter fiscal 2016 earnings from continuing operations of $2.49 per share [...] Also, the bottom line declined 23.1% on a year-over-year basis.

The decline in bottom line was mainly led by poor top-line performance during the quarter. Moreover, higher interest expense as well as selling & administrative costs dragged earnings. This apart, pricing pressure in the oil & gas market, persistent "fastener destocking" and operational issues in the Airframe Products segment added to the year-over-year fall in earnings. [...]

On Aug 10, 2015, Precision Castparts disclosed the signing of a merger deal with Berkshire Hathaway Inc. for about $37.2 billion. The deal is expected to conclude in the first quarter of calendar year 2016 [...]

BYD's Third-Quarter Profits Surge (Nasdaq)

BYD Co.said it is expecting a strong 2015 performance after the Chinese company on Thursday reported a surge in third-quarter net profit, lifted by higher electric-car sales and government subsidies.

The battery and car maker, which is 9.1%-owned by Berkshire Hathaway Energy, a unit of Warren Buffett's Berkshire Hathaway Inc., said its net profit for the July-Sept period totaled 1.49 billion yuan (US$234.5 million), sharply higher from CNY28.2 million a year earlier. Its operating revenue during the period was up 23.5% to CNY16.9 billion. [...]

BYD expects its full-year net profit to rise by around 435% to 481% from a year ago, on anticipation of strong sales of its plug-in hybrid cars in the fourth quarter [...]

Buffett's Berkshire takes on Charles Taylor insurance books (Telegraph)

Charles Taylor has offloaded its last tranche of property and casualty insurance policies to a subsidiary of Warren Buffett’s Berkshire Hathaway, three years after increasing competition prompted it to call time on its general insurance run-off business. [...]

Tenecom, a subsidiary of Mr Buffett’s business empire, will liquidate the businesses before paying Charles Taylor a dividend.

Insurance consolidation firms such as Tenecom buy up legacy businesses from other firms in the hope of generating more money than it takes to pay for claims made on the policies before they expire.

7 Secrets From Warren Buffett’s Employees (Fool)

"I would describe it as very strange and almost bizarre the way he manages, because he doesn't manage," Matthew Rose, executive chairman of Burlington Northern Santa Fe Railway said in a D Magazine article. "He takes companies that he likes, he spends a lot of time in terms of developing the goals of how management will be compensated and how the scorecard will look, and then he allows management to run the company."

Berkshire News Briefs - 10/15/15

Buffett Builds Rail Superhighway to Grab Truck Freight (Bloomberg)

After this year, BNSF Railway Co. will be more than 99 percent finished with a second, parallel line to its 2,200-mile (3,500-kilometer) Los Angeles-to-Chicago route. Doubling up will create a rail superhighway speeding deliveries of toys, electronics, autos and other goods, because trains won’t have to yield to each other on sidings as they do on single tracks.

The goal: help the unit of Buffett’s Berkshire Hathaway Inc. grab cargo now going by road. [...]

The Los Angeles-to-Chicago route links the busiest U.S. container port to the biggest mid-continent rail hub, giving BNSF a leg up in the race to find alternatives to those dwindling coal cars. [...]

Warren Buffett: We don't do due diligence — we just look into your eyes (Business Insider)

Buffett told Loomis he met with Precision Castparts CEO Mark Donegan for about 10 or 15 minutes and asked whether he would listen to a takeover offer from Berkshire. After taking this to his board, Donegan agreed to listen to an offer.

And so Buffett made an offer, they talked about it, and then they had a deal. At this point, Buffett said, he and Donegan had talked for about 25 minutes in total.

How does a deal like this come together so quickly? "We basically do no due diligence," Buffett said. "Our due diligence is basically looking into their eyes." [...]

Lubrizol acquires Particle Sciences (Today's Medical Developments)

The Lubrizol Corporation announces that it has acquired Particle Sciences, a leading contract drug development and manufacturing organization with a comprehensive suite of services for the formulation, analysis and production of complex drug delivery solutions. Headquartered in Bethlehem, Pennsylvania, Particle Sciences is a global leader in complex formulations including drug eluting device product development as well as sterile and particulate drug products. This acquisition further expands Lubrizol LifeSciences' pharmaceutical development capabilities, providing full service drug delivery solutions to the market across a variety of dosage forms.

Goldman Sachs is planning to ditch a Warren Buffett-owned news wire for earnings releases (Business Insider)

When Goldman Sachs announces its third-quarter earnings on October 15, it is planning to do so with a release on its own website and a tweet linking to the release.

It does not plan to release its results on Business Wire as it did in the second quarter, however, according to people familiar with the matter. [...]

Buffett's Portfolio Takes Another Hit as Wal-Mart Shares Plunge (Bloomberg)

Billionaire Warren Buffett’s stock portfolio suffered another setback as Wal-Mart Stores Inc. plunged after predicting profit would decline in its next fiscal year.

Wal-Mart fell $6.70, or 10 percent, to $60.03 at 4:15 p.m. in New York. That translates to a one-day paper loss of more than $450 million for Buffett’s Berkshire Hathaway Inc., which had about 67.7 million shares as of June 30. [...]

Warren Buffett expected to win over regulators on reinsurers (Financial Times)

Regulators will drop proposals to hit the world’s biggest reinsurance companies with tougher safety rules, thanks in large part to the influence of veteran investor Warren Buffett, the head of one top reinsurer has predicted. [...]

Mr Kieholz said Mr Buffett’s status in US financial and political circles seemed to have helped global reinsurers fend off inclusion in the systemically important insurers list. [...]

Mr Buffett’s office denied suggestions he had directly lobbied contacts in Washington. But he has been outspoken in speeches and interviews, arguing that it would be illogical to apply a systemic label to Berkshire Hathaway, but not to the likes of Apple, ExxonMobil or Walmart.

MasterCard Send Streamlines Berkshire Hathaway Travel Pay (Pymts)

A new partnership was announced yesterday (Oct. 14) between Berkshire Hathaway Travel Protection and MasterCard that’s aimed at taking the hassle out of paying travel insurance claims.

Because those payments are traditionally made online, through EFT transaction or paper checks, there’s typically a lag of a few days — or even a few weeks. By using MasterCard Send, Berkshire Hathaway Travel Protection can streamline that process by facilitating the payments for those claims nearly instantly. This solution then sends funds directly to a personal account through a debit card. [...]

Warren Buffett (still) doesn't want to be an activist investor (Fortune)

Chatting with Carol Loomis, Fortune’s retired senior editor-at-large, Buffett said that activism is a profitable and "salable form," which happens to be attracting big money right now. But it’s spurred a wave of activism that may have gone about as far as it can go. "They stretch for targets, and you’re seeing that now," he said.

A famous buy-and-hold investor, Buffett compared activism—where investors push companies to make major changes to increase shareholder returns—to an old saying: "If you want to guarantee yourself a life of misery, marry someone with the expectations of changing them."

Warren Buffett dumped on hedge funds for a promise that lasts long enough to get them rich (Business Insider)

Billionaire investor Warren Buffett, the chief executive of Berkshire Hathaway, dumped on hedge funds during Fortune's Most Powerful Women Summit.

He said that as hedge fund assets grow in size, the fund managers don't really need to worry as much about performance. [...]

Berkshire News Briefs - 9/11/15

Warren Buffett says Berkshire Hathaway still shopping abroad (Reuters)

Billionaire investing icon Warren Buffett said on Tuesday there are dozens of countries in which his sprawling Berkshire Hathaway Inc conglomerate would be interested in buying new businesses.

Berkshire earlier this year agreed to acquire a German motorcycle apparel and accessories retailer - a purchase that Buffett described as an advertisement to markets that he is shopping abroad. [...]

Berkshire Hathaway Inc. Increases Holdings in Phillips 66 (Business Finance News)

Berkshire Hathaway Inc. increased its investment in Phillips 66. The purchase of another 3.51 million shares of US oil refiner has sum the total number of stakes to 11.4%. Berkshire now holds about 61.5 million shares in the company, with net worth of $4.98 billion. [...]

Another reason for Mr. Buffet’s investment might be that Phillips is one of the customers of Berkshire’s Burlington Northern Santa Fe (BNSF) railroad division. With the supply glut in the economy, more refining opportunities existed for refiners. In order to get the oil to the markets, Phillips turned towards BNSF for service. An increased stake in Phillips 66 might be in best interest of BNSF. [...]

Of would-be $1B fees, trips to Omaha and hardball negotiating: Behind the scenes of the Precision-Berkshire deal (Portland Business Journal)

A new Securities and Exchange Commission document outlining specifics of the pending Precision Castparts Corp. sale to Berkshire Hathaway offers insights into the worlds of two upper-echelon business leaders. [...]

Before the companies reached that point, though, many pieces needed to all into place. Here's a truncated timeline, based on last week's SEC filing. [...]

Follow Buffett Reinsurance Guru’s Sage Advice (WSJ)

When Ajit Jain can’t see value in reinsurance, investors across the industry should worry.

The man who runs Warren Buffett’s reinsurance business told The Wall Street Journal this summer that Berkshire Hathaway would be putting more money into normal commercial and retail insurance instead.

Mr. Jain’s views are almost as influential among reinsurers as Mr. Buffett’s are among investors. [...]

Symmonds' stand a boost for Seattle-based Brooks Running (King 5)

[...] Symmonds, after all, is a two-time Olympian and six-time U.S. Champion. He won the 800-meter race at the U.S. Nationals earlier this year and was poised to be a part of last week's events.

That was until he was asked to sign a document.

"I'm outspoken and some would say brash, arrogant, I don't know," he said. But he felt like he needed to take a stand, when USA Track and Field required him to sign a Statement of Conditions to take part in the competition. He declined. "I wasn't going to sign a contract without all the terms defined."

That's because Symmonds felt the contract required him to wear Nike branded Team USA gear all the time in Beijing. He's sponsored by Seattle-based Brooks Running and says he's a loyal guy.

"I'm a businessman and when you have partners you try to protect those partners. I want to run for Brooks for another 10 years."

Nevada solar update: Senator Harry Reid takes on Warren Buffet’s Berkshire Hathaway in net metering debate (Lexology)

Nevada’s solar net metering policies will continue until year end, perhaps in part thanks to Senator Reid (D-NV) who threatened to intervene in the state’s Public Utilities Commission’s (PUC) review of the policy. Senator Reid, a staunch renewable energy advocate, believed that residential solar in Nevada had gotten a “lousy deal,” and pointed the finger at Warren Buffet’s Berkshire Hathaway. [...]

While NV Energy is promoting policies that make roof top solar potentially uneconomic, Warren Buffet has boosted his holding company’s massive investments in large-scale renewable energy—an attractive investment in the state due to Nevada’s ample solar incentives for industrial sized installations for businesses and power companies. [...]

Richline Debuts Wearable Style News Website (IDEX)

The Richline Group has announced the launch of a wearables news website. The company says that WearableStyleNews.com “brings a unique ‘function needs fashion’ perspective to the rapidly growing world of wearables.”

The site will focus on the designers, technologists, and manufacturers who are leading the wearable industry. The blog features curated and original content, including interviews with industry talent such as Uri Keren, CEO and co-founder of Hermes Innovation, Scott Amyx of Amyx+McKinsey and Amanda Parkes, Chief of Technology & Research for Manufacture NY. [...]

Warren Buffett On LTCM, Blind Spots, Leverage, and Unnecessary Risk (Alpha Architect)

Notes and highlights from a Buffett talk from 2007. The full talk and Q&A is on YouTube.

Here's an excerpt of Buffett talking about the collapse of Long-Term Capital Management (LTCM):

The whole story is really fascinating because if you take John Merriwether, and Eric Rosenfeld, Larry Hilibrand, Greg Hawkins, Victor Haghani, the two Nobel Prize winners, Merton and Scholes, if you take the 16 of them, they probably have as high an average IQ as any 16 people working together in one business in the country…an incredible amount of intellect in that room. Now you combine that with the fact that those 16 had had extensive experience in the field they were operating in…In aggregate, the 16 had probably had 350 or 400 years of experience doing exactly what they were doing. And then you throw in the third factor that most of them had virtually all of their very substantial net worths in the business. So they had their own money up. Hundreds and hundreds of millions of dollars of their own money up. Super high intellect, working in a field they knew. And essentially they went broke. And that to me is fascinating. [...]

Berkshire News Briefs - 8/21/15

This was 13F week, where Berkshire Hathaway submits its portfolio changes to the SEC each quarter. As always, you can find updated holdings and activity details at Dataroma.

Berkshire Hathaway hints at new purchase, ups Charter stake (Reuters)

Warren Buffett's Berkshire Hathaway Inc on Friday said it boosted its stake in cable TV operator Charter Communications Corp, and signaled it may have another large investment planned after agreeing to buy Precision Castparts Corp in its largest-ever purchase. [...]

Berkshire kept some details about its holdings confidential. The SEC sometimes lets the Omaha, Nebraska-based company delay disclosures of new stakes so Buffett can build them quietly, rather than have investors piggyback on him before he finishes. [...]

Berkshire reported lower stakes in conglomerate Chicago Bridge & Iron Co, media company Viacom Inc and Wabco Holdings Inc, which sells braking and suspension systems for commercial vehicles.

Warren Buffett’s Berkshire Hathaway Sells Off Shares in Phillips 66, National Oilwell Varco (WSJ Moneybeat)

Warren Buffett’s Berkshire Hathaway Inc. sold off its shares in Phillips 66 and National Oilwell Varco Inc. in the second quarter, as it continued to cut its positions in energy companies amid a global supply glut that has sent crude prices into a tail spin.

Berkshire had already sold most of its stake in National Oilwell Varco in the first quarter, when it slightly raised its Phillips 66 holdings. [...]

Berkshire’s only new stake in the quarter was a 20 million share investment in auto-paint maker Axalta Coating Systems Ltd., which Berkshire bought from Carlyle Group LP for $28 a share.

Buffett’s Precision Castparts Deal Will Boost Berkshire Hathaway’s Value (Barron's)

Precision Castparts, a once fast-growing supplier to the airline industry, looks to be a good—not great—deal for Berkshire. Its profits have been pressured due to the company’s exposure to the energy industry. The shares were down 20% year to date before the Berkshire announcement, although the company has been a huge winner under CEO Mark Donegan. [...]

Berkshire is paying $235 a share, or about 19 times Precision’s earnings for the fiscal year ending March 2016. That implies an earnings “yield” of 5.5%, well above the near-zero yield Berkshire has been earning on its cash, which totaled $60 billion on June 30. Berkshire’s return could be closer to 7% initially because it will issue about $10 billion of low-cost debt to finance the deal.

After hacking scheme, it's time to rethink how companies use wire services (PR Week)

Business Wire sent an e-mail to its clients with a letter from CEO Cathy Baron Tamraz. It began, "We understand your concerns surrounding this week’s federal indictment of a global hacking…We would like to take this opportunity to provide you with the story behind the headlines."

The letter explained that government investigators asked Business Wire about fewer than 85 releases, and pointed out that no examples listed in the indictments and the SEC complaint were Business Wire releases.

"Despite our extreme vigilance, today's reality is that no one today is immune from hacking," it continued. "We want to reassure you that Business Wire’s systems are safe and secure. We continue to work closely with a leading cybersecurity firm to ensure that they remain so."

Warren Buffett's Berkshire Hathaway gets special ASX treatment in IAG deal (Sydney Morning Herald)

The Australian Securities Exchange has granted billionaire Warren Buffett's Berkshire Hathaway poll position in any future capital raisings by Insurance Australia Group, which has raised the hackles of some investors, and proxy adviser group Ownership Matters.

IAG, which has one of the biggest shareholder bases of companies listed on the local exchange, was granted a waiver that would permit Berkshire anti-dilution rights for its shares in the insurer.

The initial deal between IAG and Berkshire, which saw the insurance giant sign away 20 per cent of its business to the US group, was announced in June but not many investors were aware of the waiver. [...]

Sure, but what does that mean in layman's terms?

The hidden catch to Berkshire Hathaway’s Insurance Australia Group Ltd investment (Fool Australia)

If IAG were to issue say, one new share for every thirty held, this would normally dilute NICO who currently holds one share in every twenty (5%) on issue. However, as it has this anti-dilution protection, NICO will be entitled to buy one share for every twenty it holds.

If NICO happened to hold 10%, it would be entitled to 10% of the new shares to be issued.

Buffett-Backed Kraft Heinz Cuts 2,500 Jobs as Hees Targets Costs (Bloomberg)

Kraft Heinz Co., the food company that counts Warren Buffett’s Berkshire Hathaway Inc. as its largest shareholder, is eliminating about 2,500 jobs in the U.S. and Canada under the new management. [...]

Kraft Foods and H.J. Heinz merged in July in a deal orchestrated by Buffett and 3G Capital, which jointly controlled the ketchup company. 3G’s Bernardo Hees, who is now running the combined foodmaker, cut more than 7,000 jobs in 20 months after taking over at Heinz. Berkshire Vice Chairman Charles Munger has endorsed the job cuts, saying such measures are essential to a productive capitalist system.

The alternative to reducing staff is “what happened in Russia,” Munger said at Buffett’s annual meeting in May. “The whole damn economy didn’t work.”

How Much Is Warren Buffett’s $5 Billion Investment in Bank of America Worth Today? (Fool)

At the low point of Bank of America's post-financial crisis struggles, Warren Buffett became its biggest advocate by investing $5 billion of Berkshire Hathaway's money into the nation's second biggest bank by assets. [...]

When you include the $5 billion in preferred stock, Berkshire Hathaway's investment in Bank of America is worth a total of $12.2 billion. That equates to a 144% gain in four years -- 168% if you also account for the roughly $1.2 billion in cumulative dividend payments on its preferred stock.

How rich Warren Buffett was at your age (Business Insider)

By age 43, Buffett's personal net worth was at a high of $34 million. He used some of this capital the year prior to purchase See's Candies for $25 million, reports The Motley Fool, and it became an investment that's still profitable in 2015. But, the mid-1970s proved to be a rough period for Berkshire. By 1974, its decreasing share price lowered Buffett's net worth to $19 million when he reached 44, reports Dividend.

Never one to let his savvy investment skills fall by the wayside, Buffett was able to recover financially. By the end of the decade, he had increased his net worth to $67 million at age 47. By the close of the 1970s, the median U.S. household income was $16,530.