Berkshire News Briefs - 11/24/15

The quarterly 13F came out last week, detailing the changes in Berkshire Hathaway's portfolio last quarter. Dataroma has a convenient chart to visually show what changed.

Berkshire Hathaway Reduces Goldman Sachs, Wal-Mart Stakes (ABC)

Buffett told CNBC on Monday that the main reason he reduced Berkshire's stakes in Wal-Mart Stores Inc. and Goldman Sachs Group Inc. was to generate cash for his $32 billion acquisition of Precision Castparts Corp. that's expected to close next year. [...]

Warren Buffett is having an unusually bad year (CNBC)

Warren Buffett has seen shares of his Berkshire Hathaway fall more than 11 percent this year. Even worse, Berkshire shares have underperformed the S&P 500 by more than 10 percent.

What makes this highly unusual is that Berkshire famously tends to underperform when the S&P skyrockets and outperform when the stocks as a whole do less well, which makes sense given Buffett's long-term time frame. [...]

Buffett Doubles Down on Big Blue (Fool)

To me, and presumably Buffett, as well, there's a readily identifiable disconnect with IBM's very gradually declining core business and the huge discount the market has placed on the company's future outlook. For context, IBM stock currently trades at a remarkably low 9.5x its LTM earnings, and yields 3.9%. Wall Street analysts expect IBM's revenue to continue to fall into next year, but believe that Big Blue will actually return to EPS growth in 2016. That reversal alone could be enough to inject some much-needed optimism into IBM shares, even as its broader business realignment requires more time to fully materialize.

Is Warren Buffett Still a Bargain Hunter? (CNN Money)

Consider Axalta Coating Systems, which makes automobile finishes and other coatings. [...] Axalta sells for a whopping 130 times its past 12 months of earnings and sports a price/earnings ratio of 22 based on future estimated profits. [...]

On paper, this would hardly seem like a stock that a vaunted bargain hunter would gravitate to. Yet Axalta isn’t the only example.

Berkshire Hathaway [Travel Insurance] expanding again (Insurance Business)

Insurance giant Berkshire Hathaway Travel Protection (BHTP) teamed up with VacationGuard, a specialist provider of vacation rental insurance, this week to create customized travel insurance products for timeshares, travel clubs, resorts and vacationers.

Targeted at both property owners and vacation renters, the products protect against trip cancellation, delays, injuries and accidental damage to rental units.

Fire at Leetsdale chemical plant leads to 70 homes being evacuated (Pittsburgh Post-Gazette)

Residents were evacuated from more than 70 Leetsdale homes Tuesday after a fire at a chemical manufacturing plant filled the sky with black smoke and noxious fumes.

Four workers at the Lubrizol Corp. Oilfield Chemistry site in the Leetsdale Industrial Park were adding chemicals used in gas well fracturing to a production tank about 10 a.m. when the fire exploded to life, a company spokesman said. The workers — and about 36 other employees — escaped the buildings, though five of the workers were injured.

Buffett’s Grandson Seeks Own Investment Route: Social Change (NY Times)

At 32, Howard Warren Buffett, the grandson of the Berkshire Hathaway founder Warren E. Buffett, has already enjoyed a diverse career. He teaches at Columbia University, runs a farm in Nebraska, previously oversaw his family’s foundation and worked on economic redevelopment efforts in Afghanistan for the Defense Department. [...]

Now, that is changing. Mr. Buffett has co-founded a permanently capitalized operating company with big ambitions [...] The plan is for the new company, called i(x) Investments, to invest in early-stage and undervalued companies that are working on issues such as clean energy, sustainable agriculture and water scarcity. [...]

Berkshire gets flak from ClimateTruth, others for solar panel policy (Omaha World-Herald)

A climate activist group said Tuesday that Berkshire Hathaway Inc.’s utility division favors policies that would hinder the spread of rooftop solar energy panels.

Outside Omaha’s Kiewit Plaza, where Berkshire has its offices, representatives of ClimateTruth.org and other groups gave a security guard what they said was an electronic copy of an online petition with about 100,000 signatures. The petition, addressed to Berkshire Chairman Warren Buffett, said, “End your profit-driven challenges to net metering programs in Nevada and all over the country.”

Prominent film company focuses documentary lens on Buffett (Omaha World-Herald)

Kunhardt Films of Pleasantville, New York, is gathering information, photos and videos about the chairman and chief executive of Omaha-based Berkshire Hathaway Inc.

When the project airs, possibly within two years, Buffett would join a long list of prominent Americans profiled by the film company headed by Emmy winner Peter Kunhardt.

Berkshire News Briefs - 12/23/14

Merry Christmas, Happy Hanukkah, and Seasons Greetings!

Berkshire Hathaway’s Citizenship: Culture, Scale and the Future (Triple Pundit)

This is an excerpt from the book, "Berkshire Beyond Buffett: The Enduring Value of Values."

The companies owned by Berkshire Hathaway, the huge conglomerate that Warren Buffett built, follow their leader in embracing corporate social responsibility, stewardship and sustainability. But the breadth and scale of the sprawling conglomerate can hide both the commitments and periodic problems. [...] While Berkshire has won plaudits for good corporate citizenship, critics complain about the absence of conglomerate-wide reporting on items such as social responsibility and sustainability. Many Berkshire subsidiaries — including Brooks, Johns Manville, Lubrizol and Shaw — are in the vanguard of such corporate stewardship. They join elite global companies in the practice of issuing formal responsibility and sustainability statements and audited reports on the corporate treatment of stakeholders, especially employees at home and abroad, and of the environment.

All of Buffett's bad bets add up to a big year (CNBC)

Some of Warren Buffett's big stocks bets have tanked in 2014, and the market hasn't let it pass unnoticed. In fact, anytime a stock Buffett owns declines, the "billions being lost" by Warren makes it into the headlines. With all the fuss over Warren Buffett's stock-picking prowess, or lack thereof, you might think Berkshire Hathaway has suffered mightily. You'd be wrong, though—way wrong. In fact, Buffett has plenty of reason to smile: Berkshire Hathaway is crushing the S&P 500. [...] While the headlines may not overstate the actual size of potential losses on individual stocks, they do overstate the importance of those losses to Berkshire Hathaway as a corporation. "Most investors overestimate the significance of Berkshire's equity portfolio," said Meyer Shields, Stifel analyst.

Buffett’s Backup Stock Pickers Stumble as GM Declines (Bloomberg)

At least half a dozen stocks that Ted Weschler and Todd Combs probably picked for Berkshire Hathaway Inc.’s portfolio are poised to end the year lower than where they started. They include energy companies that have slumped with oil prices; automaker General Motors Co., which has struggled with recalls; and Chicago Bridge & Iron Co., an engineering and construction firm that’s down more than 50 percent since Dec. 31. “It appears, on first glance, that Todd and Ted have underperformed the S&P 500 this year,” said David Kass, a professor at the University of Maryland’s Robert H. Smith School of Business who has studied Berkshire’s portfolio.

Buffett Reminds His Top Managers: Reputation Is Everything (WSJ MoneyBeat)

Warren Buffett‘s “All-Stars” are getting their biennial reminder this month that they need to guard Berkshire Hathaway Inc.'s reputation–and plan for the future. Mr. Buffett, who’s run Berkshire for the past five decades, sends a memo every other year to the managers of each of Berkshire’s 80-plus subsidiaries that emphasizes those two points. [...] The latest memo also reminds the managers–who he’s dubbed “The All-Stars”–to keep him in the loop about “who should take over tomorrow if you should become incapacitated overnight.” Generally, the managers operate with a large degree of autonomy, and Mr. Buffett says elsewhere in the letter that they can “talk to me about what is going on as little or as much as you wish.” But Mr. Buffett himself takes responsibility for keeping a roster of potential replacements for each of the leaders of Berkshire’s far-flung operations.

See’s Candies CEO eyes East Coast expansion (San Francisco Business Times)

See's Candies President and CEO Brad Kinstler, speaking after appearing on a Stanford University panel discussion this month, said he's eager to one day replicate the company's California success on the East Coast. But he's not saying when that will happen, noting that See's Candies shops can be found as far east as Pittsburgh. The South San Francisco-based company also operates temporary locations in East Coast cities during holidays when chocolates are in demand.

BYD Says Berkshire Hathaway Has No Intention to Cut Stake (Morningstar)

Chinese electric-car maker BYD Co. Ltd. (1211.HK), which is backed by investor Warren Buffett, Friday said Mr. Buffett's Berkshire Hathaway Inc. (BRKA) has no present intention to cut its stake in the company. BYD also said it wasn't aware of a substantial share sale by Mr. Buffett, who holds 225 million H shares in the company. The car maker's statement comes a day after its Hong Kong-traded shares plunged as much as 47%. BYD said its business operations remain normal and that it hasn't incurred substantial foreign exchange losses despite the weaker Russian ruble.

Berkshire Energy Fined for Eagle Deaths at Wyoming Wind Farms (Bloomberg Businessweek)

PacifiCorp, one of the utilities owned by Berkshire Hathaway Inc.’s energy unit, agreed to pay $2.5 million to settle charges that its wind facilities in Wyoming killed eagles and other birds. The deaths near the Seven Mile Hill and Glenrock/Rolling Hills wind farms violated the Migratory Bird Treaty Act, according to a statement today from the utility. PacifiCorp said it will pay $400,000 in fines, $200,000 in restitution to the Wyoming Game and Fish Department and $1.9 million to the National Fish and Wildlife Foundation to help protect golden eagles near the facilities.

More information in their Press Release:

PacifiCorp Settles With Federal Government Over Migratory Birds (Press Release)

PacifiCorp has been cooperating with federal authorities to reduce migratory bird mortality, particularly eagles, at its wind facilities. Following guidelines issued by the U.S. Fish and Wildlife Service in 2012, PacifiCorp drafted migratory bird protection plans and hired qualified wildlife observers to monitor the wind sites for eagle activity. Operators were notified to shut down turbines to reduce risks when eagles were observed in the area. Other measures the company took included removing features from the project landscape that attract prey species. As part of the settlement, PacifiCorp will take measures at the company’s wind facilities in Wyoming to increase eagle populations.

Pacific Corp To Close Deer Creek Mine (Press Release)

Following an unsuccessful 18-month attempt to sell the Deer Creek coal mine, PacifiCorp announced today it will close the mine in Emery County, Utah, because it has become too costly to operate for customers. PacifiCorp also signed a long-term coal supply agreement with Bowie Resource Partners LLC to supply coal for the Huntington power plant. Energy West Mining Company, PacifiCorp’s subsidiary operator of the mine, notified the mine’s 182 workers of the pending closure. [...] The Deer Creek mine has an estimated five years or less of reserves, but much of the remaining coal has higher ash and sulfur content that has made mine production considerably more expensive and has made it more expensive to comply with air quality standards. Bowie Resource Partners LLC has signed a contract to provide the coal needed for the Huntington power plant, and will source the plant from its mines in Utah. Rapidly escalating pension liabilities for the mine’s represented workforce was a large factor in the economic viability of the mine.

Buffett’s Smart-Grid Idea Takes Over Your Washing Machine (Bloomberg)

Buffett’s Northern Powergrid Holdings Co. is working with Siemens AG to test a so-called smart grid that has the ability to control when consumer appliances will be used in the home. Being able to better manage when electricity flows allows utilities to lower consumer costs by reducing the need for new equipment, and to better handle surges and gaps from intermittent sources such as wind and solar. The pilot program, known as the Customer-Led Network Revolution, involves just 12,000 households in the U.K. and is one of only a few such projects being tested worldwide.

Warren Buffett said 'I loved it' when LeBron James rejoined the Cleveland Cavaliers (Cleveland Plain Dealer)

Buffett was seated on the baseline near the Cavaliers bench as a guest of James and, perhaps more so, of owner Dan Gilbert, who sat next to Buffett. He watched James score 27 points, dish out 13 assists, and grab seven rebounds, then chatted with James and Gilbert in the locker room afterwards. Buffett, 84, chief executive officer of Berkshire Hathaway, is the second-richest man in the United States with a net worth of $71.6 billion, according to Forbes.com. He was donning a white No. 23 Cavaliers jersey Monday night. On Sunday, he attended a Detroit Lions football game and wore a No. 90 jersey for the Lions' Ndamukong Suh.