Berkshire News Briefs - 11/20/17

What Warren Buffett's Berkshire Hathaway has been buying and selling lately

Adding to one of its largest positions, Berkshire bought another 3.9 million shares of Apple, bringing the company's total stake to 134.1 million shares, which represents a 2.6% stake in the tech giant. Buffett and company have been accumulating Apple shares over the past two years or so and are sitting on a nice gain, especially with the stock recently reaching a new record high.

Synchrony Financial was one of Berkshire's most recent stock investments, with the position initiated during the second quarter. In the third quarter, Berkshire purchased another 3.3 million shares of the credit card issuer.

Berkshire also bought another 832,000 shares of Monsanto, which increases that stake by about 10%. [...]

Stock sales included IBM, Wells Fargo, Charter Communications, and WABCO. For a complete look at the changes in Berkshire Hathaway's 13F filing of stock holdings, visit Dataroma for updated holdings and activity.

Taking a longer view:

Here's How Warren Buffett's Stock Portfolio Has Changed Over the Past 2 Years

Berkshire's stock portfolio consists of more than 45 positions but is heavily weighted toward its largest holdings. So here's a look at how Berkshire's "top 10" stocks have changed since the third quarter of 2015. [...]

NV Energy seeks OK for 3 new power purchase agreements

NV Energy is requesting that three new long-term power purchase agreements totaling 100 megawatts — enough energy to serve about 60,000 average customer homes — be approved by the Public Utilities Commission of Nevada. [...]

The largest of the three new projects is the 50-megawatt Turquoise Nevada solar project, to be built in the Reno Technology Park in Washoe County. The project will benefit from a 25-year power purchase agreement with NV Energy and is expected to be operational by the end of 2020.

The other two new proposed 25-year power purchase agreements are the result of a request for proposals issued June 14 by NV Energy. The 25-megawatt Techren Solar 3 project will benefit NV Energy customers in Southern Nevada and the 25-megawatt Techren Solar 4 project will benefit customers in Northern Nevada. If approved, the new solar energy projects will be operational on or before Sept. 1, 2020. [...]

The 25 year purchase agreement for the Reno project is a deal with Apple.

Berkshire Hathaway's 14-Year Winning Streak Is Coming to an End

A 14-year winning streak at Berkshire Hathaway will likely come to an end this year, as its insurance companies are set to post their first full-year underwriting loss since 2002. It's an unfortunate end to an incredible run, but insurance remains one of Berkshire's best businesses, regardless of recent losses. [...]

Here's How Berkshire Hathaway Crushed It in 2017

We're not at the end of 2017 quite yet, but it's safe to say that Berkshire Hathaway has had a solid year. Warren Buffett's investment vehicle made a number of splashy, value-enhancing moves, and strengthened its already formidable portfolio, this year.

Of course, not every play Buffett and company made was a win, but for the most part Berkshire did very well. Here's a look at the more impressive highlights of its 2017. [...]

Electronics distributor is hiring to staff massive Fort Worth warehouse

TTI, a global distributor of electronic components, is moving into a new 641,000-square-foot distribution center in north Fort Worth with plans to expand its workforce.

The new building [...] will consolidate and replace TTI’s current warehouse operations. When construction began in 2016, the estimated price tag was $40 million.

TTI, which is owned by Warren Buffett’s Berkshire Hathaway, already “is actively hiring for the new location” along with transferring employees from other facilities [...] The company employs 1,020 workers locally, up from about 870 in 2014.

The company, founded in 1971, is a major distributor of electronic components for industrial, military, aerospace and consumer electronics manufacturers worldwide. [...] TTI and its subsidiaries, Mouser Electronics, Sager Electronics and Symmetry Electronics, employ more than 4,700 workers at more than 100 locations in North America, Europe and Asia.

Warren Buffett announces changes at Berkshire Hathaway's Ben Bridge Jeweler

Ben Bridge Jeweler, the distinguished family-run fine jeweler with over 90 retail stores in 11 states and one province, announced today that Co-CEO and General Counsel Jonathan (Jon) Bridge is retiring, and current President and Co-CEO, Edward (Ed) Bridge will become Chairman and CEO. As of November 1, 2017, Lisa Bridge C.G., the company's Vice President of Education and the creator of the Lisa Bridge Collection, has been appointed as the company's President and Chief Operating Officer.

8 Warren Buffett Deals That Won Big

Warren Buffett is widely considered to be the best investor of all time, and for good reason. Since he took control of Berkshire Hathaway, the company has generated annualized returns of nearly double those of the S&P 500, mainly on Buffett's sound ability to make great investment deals.

With that in mind, here are eight examples of investments, acquisitions, and other deals that Warren Buffett has made over the years that have worked out especially well. [...]

Berkshire News Briefs - 11/6/17

Berkshire Hathaway's 3rd Quarter Earnings release: PDF

Hurricanes Drag Down Berkshire's Quarterly Earnings

Bad weather weighed on results at Warren Buffett's Berkshire Hathaway Inc, as losses from insurance claims tied to Hurricanes Harvey, Irma and Maria and an earthquake in Mexico contributed to a 43 percent drop in third-quarter profit.

Berkshire on Friday said net income fell to $4.07 billion, or $2,473 per Class A share, from $7.2 billion, or $4,379 per share, a year earlier.

Operating profit, which excludes investment and derivative gains and losses and which Buffett says better reflects company performance, fell 29 percent to $3.44 billion, or $2,094 per Class A share, from $4.85 billion, or $2,951 per share.

Berkshire said it incurred $1.95 billion of after-tax underwriting losses attributable to the hurricanes and earthquake. [...]

Berkshire Hathaway’s Third-Quarter Operating Profit Falls 29%

Berkshire Hathaway's (NYSE:BRK-A)(NYSE:BRK-B) third-quarter operating earnings declined to $3.44 billion, down from $4.85 billion in the year-ago period, due primarily to large insurance underwriting losses from natural disasters. Third-quarter weather events were particularly troublesome for Berkshire Hathaway Reinsurance, which posted a massive $1.3 billion pre-tax underwriting loss in the third quarter.[...]

• Insurance -- $395 million net loss
• Manufacturing, service, and retailing -- $1.7 billion profit
• BNSF railroad hauls it in -- $1 billion profit
• Utilities and energy -- $963 million profit
• Finance and financial products -- $341 million profit
• Berkshire cash pile -- $109 billion

Under the Hood of Berkshire Hathaway’s Pilot/Flying J

Pilot was founded in 1958 when Jim Haslam purchased a single gas station for $6,000. It dramatically increased in size when it purchased competitor Flying J out of bankruptcy. Because the bankruptcy proceedings are public, there’s valuable information within the filings made at the time, 2009. A value of $3.3 billion was placed on Pilot and Flying J was to be acquired for $300 million – $500 million in cash plus equity in the new company, valuing it in total at $1.8 billion. Post-merger, the combined entity had revenue in excess of $30 billion and would reasonably have an enterprise value of about $5.1 billion. [...]

The segment of the North American gas station industry has three main competitors: Pilot/Flying J, Love’s, and TravelCenters of America. Pilot/Flying J is the largest with $20 billion in revenue and 750 locations, while family-owned Love’s is not far behind at 430 locations and $16 billion in revenue. Travel Centers of America is the only one of the three that’s publicly traded and has 250 locations and $6 billion in annual revenue. [...]

That still leaves the question of how much Pilot is earning and what it’s worth. Margins are slim in this business – operating income is probably no more than 2% of sales, or maybe $500 million a year in total. Using a multiple of 12x operating income (a discount of about a third to the higher margin consumer gas stations of Couche-Tard and Casey’s) gives an enterprise value of $6 billion. That is roughly consistent with the value placed on the company in the Flying J bankruptcy filings in 2009. Subtracting $2.5 billion in estimated remaining debt would value the equity at about $3.5 billion. [...]

PacifiCorp facing regulatory blowback on wind power plans

Staff advisers at Oregon's utility regulator threw cold water on PacifiCorp's plan to spend $3.5 billion, one of its biggest upgrades ever, on wind turbines and a new transmission line.

The Public Utility Commission staff say the utility had failed to justify the need for the massive capital investments, whether to meet its capacity, energy or reliability needs. [...]

"There is no need for the proposed resources at all," said the staff recommendation. "PacifiCorp's existing resources are able to meet its resource needs."

That's not a universally held opinion. Some environmentalists support the wind investments, if not the transmission. And PacifiCorp insists it needs it all. But if commissioners agree with its advisory staff, it would be a big setback for the company. [...]

Carpet maker Shaw acquires Chattanooga-based digital sample provider

Shaw Industries, the country's biggest carpet maker, is buying a Tennessee-based producer of digital carpet samples and design tools.

Shaw, a subsidiary of Warren Buffett's Berkshire Hathaway, acquired Tricycle Inc. for an undisclosed sum.

Tricycle was founded in Chattanooga in 2002 and works with commercial manufacturers, interior designers and architects to visualize carpet designs and colors digitally. The company says its three-dimensional, color corrected digital images reduce waste by removing the need to produce physical samples. [...]

Warren Buffett – Mistakes of the First Twenty-Five Years

One of the best resources available to investors are the Berkshire Hathaway shareholder letters. One of my personal favorites is the 1989 letter in which Warren Buffett wrote a piece called – Mistakes of the First Twenty-five Years (A Condensed Version). It’s a great insight into how even the greatest investors can make mistakes. The lesson of course is not to make the same mistake twice. But it seems even Buffett did make the same mistake over and over in buying some of his cigar-butt companies simply because they were cheap. This of course changing when he met Charlie Munger and he coined the phrase, “It’s far better to buy a wonderful company at a fair price than a fair company at a wonderful price.”

Let’s take a look at some of the mistakes that Buffett highlighted from his first 25 years of investing [...]

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 - 9/20/17

JPMorgan becomes just seventh bank to cover Buffett's Berkshire Hathaway, calling it a screaming buy

Despite Berkshire being the sixth-largest company in the S&P 500 by market cap, there are just seven analysts covering the company, according to FactSet. This compares to the No. 5 most valuable company in the index, Amazon, which has 41 analyst ratings. Wall Street doesn't really bother to cover Buffett because of Berkshire's low relative trading volumes as Street research often gets paid from trading commissions. [...]

The analyst established a year-end 2018 price target of $210 for Berkshire Hathaway B shares, representing 17 percent upside from Wednesday's close. [...]

The analyst also mentioned Berkshire utility executive Greg Abel is currently the "most likely" successor to replace Warren Buffett as CEO of the company. [...]

Buffett Fails in Bid to Boost Stake in Canada's Home Capital

Warren Buffett’s bid to double his stake in Home Capital Group Inc. was rejected by shareholders of the Canadian mortgage lender in a vote Tuesday.

About 89 percent of investors voted against the offer, which would have boosted Berkshire Hathaway Inc.’s stake to 38 percent from about 20 percent. Stockholders including CIBC Asset Management had objected to the deal, arguing it would dilute the stock by selling shares to Berkshire at an almost 30 percent discount. [...]

Rocky Mountain Power Invests $3.5 Billion for Wyoming Energy

A long-term view of electrical generation -- not politics or fads -- drives Rocky Mountain Power's decision to invest $3.5 billion in transmission capability, wind power and other infrastructure in Wyoming by 2020, company officials said Friday. [...]

The Salt Lake City-based Rocky Mountain Power is a part of the Portland, Ore.-based PacifiCorp, a subsidiary of Berkshire Hathaway. Rocky Mountain Power has nearly 1.1 million customers in Wyoming, Utah and Idaho [...]

Rocky Mountain Power's energy-generating capacity is about 55 percent coal, 25 percent natural gas, 10 percent hydroelectric, and 10 percent wind and other sources [...]

Irma's Impact on Insurers

[...] Because of the limited presence of national primary carriers in the homeowners market in Florida, we think the biggest industry impact of large privately insured losses would probably be in reinsurance. Reinsurers have faced weak pricing in recent years due to an overabundance of capital and the rise of the catastrophe bond market. In our view, major catastrophe losses could be a catalyst for an industry shakeup and a return to more normalized pricing conditions. For disciplined and well-capitalized reinsurers such as Berkshire Hathaway, the positive impact on pricing should provide a material long-term offset to the near-term losses.

Oriental Trading’s MindWare buys Peaceable Kingdom, game maker that aims to 'inspire cooperation and cultivate kindness'

MindWare, a division of Oriental Trading Co. of La Vista, has acquired Peaceable Kingdom, a company that develops cooperative games and related products, for an undisclosed amount.

Peaceable Kingdom, based in Berkeley, California, was founded in 1983 by the family of Clement Hurd, illustrator of the “Good Night Moon” children’s book. [...]

The company makes games with the goal to “inspire cooperation and cultivate kindness,” including Bunny Bedtime, Mole Rats in Space, Friends and Neighbors, You Guessed It, Say the Word and What’s It? [...]

Warren Buffett's son Howard to become Illinois county sheriff

Howard Buffett, son of billionaire investor Warren Buffett, is adding to his job titles that of interim sheriff of Macon County in central Illinois.

Macon County Sheriff Thomas Schneider said Friday that he is retiring early ahead of an election next fall for his replacement. He has chosen Buffett, whose charitable foundation has contributed more than $55 million in the region over the past two decades, to serve in the meantime.

Howard Buffett has been a Macon County undersheriff since September 2014 and has completed more than 3,300 hours of patrol and training. [...]

Billionaire Warren Buffett sings a duet with Stevie Wonder at star-studded Forbes 100th anniversary party

The Berkshire Hathaway CEO joined pop music legend Stevie Wonder for a duet at a star-studded gala honoring Forbes magazine at Manhattan's Chelsea Piers on Tuesday.

Wonder and Buffett sang a duet of the classic hit The Glory of Love, a single written by Billy Hill and first recorded by Benny Goodman in 1936. [...]

Berkshire News Briefs - 9/8/17

Billionaire Warren Buffett says hurricane damage will linger

Billionaire Warren Buffett says the storm damage in Texas is staggering, but he isn't sure yet how much insurance companies will have to pay in claims. [...]

The investor expects that 50,000 of the roughly 500,000 vehicles Geico insures in the area will be total losses. But Buffett predicted there will also be large uninsured losses after this storm.

Buffett said Berkshire hasn't written much catastrophe insurance in recent years because prices were too low, so that will limit the Omaha, Nebraska-based company's exposure. By contrast, Berkshire recorded $3.4 billion in hurricane-related losses in 2005 when Hurricanes Katrina, Rita and Wilma struck the Gulf Coast. [...]

Berkshire Hathaway leads Florida auto insurance

As Category 5 Hurricane Irma looks set to make landfall in Florida after wreaking havoc in the Caribbean, The Insurance Insider looked at the most exposed primary carriers in the Sunshine State's commercial multi-peril and auto insurance markets in 2016. [...]

Berkshire Hathaway was Florida's leader in auto with a market share of 20.7 percent - equivalent to $4.1bn of premiums written. [...]

Watch CNBC's full interview with investing icon Warren Buffett (24 min video)

Warren Buffett, Berkshire Hathaway, speaks with CNBC's Becky Quick about Hurricane Harvey, the U.S. economy and his stock holdings.

Market Folly has a page of notes and summaries if you don't have time to watch the video.

Buffett spins $5 billion BofA investment into $12 billion profit

Berkshire Hathaway made good on its plan to convert warrants into 700 million shares of Bank of America common stock, the bank announced on Tuesday. [...]

Berkshire's agreement was to convert the warrants to Bank of America shares at $7.14 each. The shares closed Tuesday at $23.58, meaning Berkshire's paper profit on the stake is about $12 billion. [...]

Thousands of rail workers back at Buffett's BNSF as volumes rise

BNSF, the top U.S. coal carrier, laid off roughly 5,000 employees from mid-2015 to early 2016. The Texas-based company and its peers faced cost pressures from plunging coal volumes as the strong U.S. dollar hurt exports of the fuel and utilities switched to burning cheaper natural gas.

BNSF brought back roughly 4,000 of those workers as coal volumes rose this year, along with high levels of grain and upticks in intermodal containers and trailers, and sand used in hydraulic fracturing, spokesman Zak Andersen said. [...]

NetJets re-ups with PGA Tour

NetJets has extended its contract as the official private-jet provider of the PGA Tour.

The agreement, originally signed in 2014, now extends through 2022. It calls for NetJets to provide flights, marketing support and charitable contributions to the tour, its tournaments and its players. [...]

Travelex Insurance Services and Berkshire Hathaway Travel Protection Form Partnership

Travelex Insurance Services (Travelex) and Berkshire Hathaway Specialty Insurance Company’s Berkshire Hathaway Travel Protection (BHTP) have formed a strategic relationship. This partnership brings together the financial strength, product underwriting, and claims handling of BHTP with the extensive sales and marketing and travel provider network of Travelex. [...]

Travelex Insurance Services, a leading travel insurance provider in the United States, develops and distributes a comprehensive suite of travel protection products for travel agencies, tour operators, cruise lines, vacation clubs and timeshare operators. [...]

Berkshire Hathaway News Briefs - 8/8/17

Berkshire Hathaway: Insurance Losses Drag Down Second-Quarter Operating Earnings

Berkshire Hathaway reported that operating earnings, a figure which excludes volatile investment gains and derivative fluctuations, declined 11% to $4.1 billion in the second quarter compared to the year-ago period. Net income, which includes investment gains, fell 15% to $4.3 billion. A drop in insurance underwriting profit led the decline in operating earnings and net income.

Berkshire Posts Mixed Results as Expenses Rise

Wide-moat-rated Berkshire Hathaway released second-quarter results that were more mixed than we had expected, with the company reporting solid top-line but weaker bottom-line results. We do not expect to change our $290,000 ($193) per Class A (B) share fair value estimate.

Second-quarter (first-half) revenue increased 6.0% (15.3%) to $57.5 ($122.7) billion. Excluding the impact of investment and derivative gains (losses), second-quarter (and first-half) revenue increased 7.3% (and 16.5%). With expenses increasing at a higher rate than revenue during the second quarter, operating earnings declined 10.6% during the period, leaving first-half operating earnings down 8.0%. Net earnings, which includes the impact of investment and derivative gains (losses) were down 14.8% and 21.4% during the second quarter and first half of the year, respectively.

That said, we remain impressed with Berkshire's ability to increase its book value per Class A equivalent share--which rose 14.3% year over year to $182,816 (better than our own estimate of $182,525)--aided primarily by the strong performance of its equity investment portfolio during 2017. The company closed out the second quarter with $99.7 billion in cash on its books, up from $96.5 billion at the end of March and $86.4 billion at the end of 2016.

Berkshire Hathaway Energy Earnings Up on Solar Rebound

Berkshire Hathaway Energy reported a $38 million increase in earnings for the second quarter over a year earlier, largely because of improved performance of BHE Renewables.

The renewable unit saw net income increase $39 million due primarily to higher generation at the Solar Star projects, which were hobbled by transformer-related forced outages in 2016. It also benefited from earnings from tax equity investments reaching commercial operation and additional wind and solar capacity placed in service. [...]

Warren Buffett's Old Retail Businesses Are Oddly Doing Well as Amazon Runs Over Everyone

While bricks-and-mortar retail is largely a disaster, billionaire investor Warren Buffett seems to have struck gold again—in Berkshire Hathaway Inc.'s retail businesses. [...]

Berkshire, too, reported, within its retail segment, that revenue from its home-furnishing retailers [such as Star Furniture and Jordan's Furniture], online kitchen and cooking supplies seller Pampered Chef and candy maker See's Candies, rose in the second quarter. [...]

Berkshire's retailers are set up primarily as standalone stores or are online, and are not tied to malls, which makes the business less exposed to the downturn in the industry. [...]

With e-commerce hurting malls, See’s Candies seeks way forward

[...] Nearly half of See's 240 stores are located in malls, a format suffering from dwindling traffic and the financial stress of anchor tenants like department stores. [...]

The company does not release financial results, but CEO Brad Kinstler tells me See's annual sales typically grow in the mid-single digits. IBISWorld research firm estimates that See's generated about $485.3 million in revenue last year, representing 5 percent annualized growth rate over the past 5 years.

The synergies between making and selling chocolate, combined with low cocoa prices, affords See's with robust profit margins, IBISWorld says. The firm estimates that See's controls about 31.4 percent of the specialty chocolate retail market, far ahead of Godiva (18.4 percent) and Lindt & Sprungli (10 percent). [...]

Kinstler insists that See's draws its own traffic, independent of the mall anchors. But he does acknowledge that the struggles of malls pose potential problems for his company.

"It’s a tough time to operate a business inside a mall," Kinstler said. "It will take a while before we know what indoor malls look like in the future." [...]

Berkshire Hathaway sets up specialist insurer in Dublin

Berkshire Hathaway has established a speciality insurance business in Ireland aimed at winning a share of the commercial insurance market here . The company will target larger business clients in sectors such as commercial property, general commercial liability, healthcare liability and finance. [...]

BHSI [Berkshire Hathaway Specialty Insurance] is part of the global empire of Berkshire Hathaway, the giant US company led by Warren Buffett, which has stakes in major businesses worldwide. The move to Ireland is an expansion of its existing European speciality insurance business, run from London, which provides commercial property, casualty, executive and professional lines, including cyber and healthcare liability insurance. [...]

Paxton shoots down loophole for Buffett’s Texas dealerships

Texas Attorney General Ken Paxton is declining to come to the rescue of Warren Buffett’s automobile dealerships in the state.

In an opinion issued late Monday afternoon, Paxton essentially said that legal semantics are unlikely to be successful in helping Buffett’s Berkshire Hathaway conglomerate maneuver around a Texas law that appears to prohibit it from owning dealerships in Texas because it also owns an Indiana-based manufacturer of recreational vehicles. [...]

Buffett's Profit From This Paint Company Has Been Almost Wiped Out

Warren Buffett’s profits from a 2015 investment in Axalta Coating Systems Ltd. have been fading.

Axalta, the maker of paint for autos, plunged 7.9 percent Thursday in New York to $29.25. That compares with the $28 price that Buffett’s Berkshire Hathaway Inc. agreed to pay two years ago for 20 million shares, for a total of $560 million. His Omaha, Nebraska-based company acquired the stock from affiliates of Carlyle Group LP. [...]

Berkshire was the largest investor in the coatings company as of Dec. 31, with a stake of more than 9 percent, according to a filing from Philadelphia-based Axalta. [...]

Berkshire Hathaway Inc. Stock Is Increasingly Less About Buffett

Berkshire Hathaway was so big, and commanded so much capital, that many of his ideal picks might only end up as a rounding error on the book value of the stock. So he changed course. He hired two “young guns,” as he called them, and turned over two small portions of Berkshire Hathaway’s capital to manage.

Todd Combs and Ted Weschler continue to out-gun their boss, not by being particularly better, but rather by doing what Buffett used to do when Berkshire Hathaway was new and small. They bought stocks that were classic Buffett. And since their funds were relatively small — at a billion dollars or so — they could at least make an impact on their portion of Berkshire’s stock value. [...]

But now, Buffett as well as Combs and Weschler are changing course. The new course will be to de-emphasize stock selection and in turn run the company as a collection of its operating businesses. This will effectively make Berkshire Hathaway more of a traditional big conglomerate company rather than a stock-picking investment company. [...]

Berkshire News Briefs - 8/1/17

Berkshire and Blue Chip Stamps

Rick Guerin, an early partner of Buffett and Munger's, realized Blue Chip shares were quite attractive (at this time, the market cap was approximately $40 million). It is worth noting Blue Chip Stamps was already in decline by the late 1960s. From 1970 to 1980, revenues would decline by more than 85%. [...] Despite the significant drop-off in revenues mentioned above, float only declined by around 30% (cumulatively) from 1970 to 1980. Pabrai estimates the “permanent float” at Blue Chip was somewhere around $60 million.

But the float was of limited value in the wrong hands. Buffett, Guerin and Munger thought it was being mismanaged. One way to effect change was to effectively take control of the company: between 1967 and 1970, they invested $24 million in Blue Chip – good for 60% ownership [...]

Now they had roughly $60 million to work with. In 1972, they took $25 million and bought 99% of See’s Candies. In 1973, they took another $25 million and bought 80% of Wesco Financial. Finally, in 1977, they took another $35.5 million and bought the Buffalo Evening News (with roughly 70% of the purchase price funded with the retained earnings from See’s Candies). [...]

Warren Buffett is building up a 'recession resistant' energy powerhouse

From California to the Midwest, billionaire investor Warren Buffett is steadily building an energy powerhouse.

Buffett’s Berkshire Hathaway Energy subsidiary has gobbled up utilities and natural gas pipelines and tapped into clean energy production, including from Southern California’s abundant geothermal resources. [...]

Berkshire Hathaway appears to be doing all it can to counter a purported death spiral of economic harm that power companies face because of growing energy efficiency regulations, consumers generating their own power with rooftop solar panels and the advent of electricity storage options in homeowners’ garages. [...]

Berkshire Is in Talks to Buy a Stake in IRB Brasil Resseguros

Berkshire Hathaway Inc., the firm run by billionaire investor Warren Buffett, is in talks to buy a stake in Latin America’s biggest reinsurer, IRB Brasil Resseguros SA, after an initial public offering of stock, according to two people with direct knowledge of the matter.

No deal is likely to be completed before July 27, IRB’s IPO pricing date, the people said, asking not to be named because the discussions are private. The acquisition could be made through Berkshire’s General Re unit, they said. JPMorgan Chase & Co. is advising Rio de Janeiro-based IRB, according to the people. [...]

Home Capital repays $2 billion line of credit from Berkshire Hathaway

Home Capital Group, the Toronto-based alternative mortgage lender that was on the verge of collapse earlier this year, says it has repaid a $2-billion line of credit from Berkshire Hathaway.

The company was given the financial lifeline last month by Berkshire Hathaway, which is headed by Warren Buffett, as it was trying to regain investor confidence following a run on deposits from customers.

When it provided the line of credit, Berkshire Hathaway also bought a $400 million stake in Home Capital. [...]

Berkshire’s Clayton Homes division expanding into $250,000-and-under housing market

Berkshire Hathaway’s Clayton Homes division, known for its factory-built houses, is expanding into the site-built, $250,000-and-under housing market.

Since October 2015 Clayton has acquired homebuilders in Atlanta; Nashville, Tennessee; Kansas City; Denver; and, earlier this month, Birmingham, Alabama, and is building homes on-site at a rate of 2,500 to 3,000 a year.

Clayton isn’t choosing cities and then looking for homebuilders to buy [...] the idea is to identify builders with the right management and culture, and then check out their growth potential. The acquired builders keep their managements and names.

Walsh said Berkshire’s financial strength and Clayton’s buying power — imagine the lumber needed for 45,000 factory-built homes each year — are advantages that can give the acquired companies an edge over the competition. [...]

Elliott Tries a Texas Charm Offensive to Outdo Berkshire's Oncor Bid

While Elliott Management Corp. tries to cobble together enough money to beat Berkshire Hathaway Inc.’s $9 billion bid to buy one of America’s largest transmission operators, it has another problem to deal with: the state of Texas.

The New York hedge fund run by billionaire Paul Singer is trying to convince Texas stakeholders that its deal to buy their biggest power distributor, Oncor Electric Delivery Co., will be superior to Berkshire’s. [...]

Duracell to close South Carolina battery plant by end of 2018

Duracell has filed a notice with labor officials that it will close a South Carolina battery plant sooner than projected.

The shutdown of the Lancaster factory was announced one year ago, a few months after the company after being acquired by Warren Buffett’s Berkshire Hathaway conglomerate. [...]

The Lancaster factory manufactures AA batteries. Duracell is consolidating North American production of those to LaGrange, Ga. [...]

Keeping Tabs on the Billions and Billions That Warren Buffett Is Giving Away

In 2006, Warren Buffett famously pledged to give away most of his Berkshire Hathaway stock, saying that the bulk of those holdings would go to the Bill and Melinda Gates Foundation and the rest to the four foundations controlled by his three children.

Since then, Buffett has given away 40 percent of the Berkshire Hathaway shares that he held in 2006, gifts worth about $27 billion. Buffett’s annual gifts to the five foundations, announced this week, were worth a record-breaking $3.17 billion. [...]

[...] while many people are under the impression that all of Buffett’s fortune is earmarked for the Gates Foundation, the gifts to his children’s foundations have turned out to be enormous in their own right—and are bankrolling a wide array of grantmaking both in the United States and abroad. This year, according to Forbes, Buffett sent around $2.4 billion worth of stock to the Gates Foundation. The other $800 million or so went to the family foundations—the Susan Thompson Buffett, Sherwood, Novo, and Howard Buffett foundations. [...]

Also, a story about a different Buffett's charity work:

Howard Buffett's millions help jump-start Decatur's recovery

[...] Nevertheless, the Howard G. Buffett Foundation has given or pledged $55.1 million in the city and surrounding Macon County over the past two decades to help stanch the area's hemorrhaging population. Dozens of grants, including those paying for a new lakefront amphitheater and a law enforcement training facility, aim to help make the area a better place to live.

"The bottom line is, what can you do to make a community more attractive to younger people, and how do you make it attractive so the people that are here stay here?" Buffett said. "A lot of our contributions, if you cut down to the bottom of it, that's what they do." [...]

Berkshire News Briefs - 6/27/17

Berkshire Hathaway extends $1.8B rescue plan for troubled Canadian mortgage lender

Berkshire Hathaway, the conglomerate controlled by Warren Buffett, agreed Wednesday to buy a stake in the troubled Canadian mortgage lender Home Capital Group in a $1.8 billion rescue plan.

Berkshire will pay $300.7 million for a 38.4% stake of the Toronto-based company and extend a $1.5 billion line of credit. [...]

In recent years, Home Capital has repeatedly missed its financial guidance amid weaker loan volumes and declining income. In March, the company also revealed that several executives and directors have received enforcement notices from the Ontario Securities Commission related to its disclosure practices and stock trades. [...]

Buffett's Berkshire Hathaway just became one of the largest shareholders in an obscure real estate firm

Store Capital says Berkshire Hathaway invested $377 million in the company, which represents a 9.8 percent stake in the real estate investment trust.

Berkshire's investment makes the company the third largest holder in Store Capital, after Vanguard Group and Fidelity Management & Research, according to FactSet. [...]

Store Capital has investments in over 1,750 properties in 48 states, according to the company. AMC Entertainment, Applebee's and Ashley Furniture are among its 10 biggest customers, according to an investor presentation. [...]

Texas examines Berkshire Hathaway ownership of RV maker, dealers

In notices of decisions made public last week, the Texas Department of Motor Vehicles recommended revoking the licenses of 30 of Berkshire Hathaway’s auto dealers in Texas and fining them a total of $30,000 because the Omaha-based parent company also owns Forest River, a recreational vehicle manufacturer.

Texas law prohibits direct or indirect ownership of vehicle dealers by vehicle manufacturers, the notices said. The law is intended to protect independent auto dealers from unfair competition by manufacturer-owned dealerships.

The department also recommended a $1,000 fine and revoking the manufacturing license of Forest River, which has a cargo trailer manufacturing facility in Waco, Texas. [...]

Berkshire Hathaway units settle comp dispute with California

Berkshire Hathaway Inc. units have settled with California regulators over alleged "bait and switch" marketing tactics for workers compensation coverage.

According to a statement Thursday by the California Department of Insurance, the insurers have agreed to lower rates for certain coverages and make other changes to coverage terms.

The settlement applies to policies sold by Berkshire units California Insurance Co. and Applied Underwriters Captive Risk Assurance Co.

According to the statement, the insurers "were selling a workers compensation product with illegal side agreements that modified the obligations of the parties under the policy." [...]

Berkshire Hathaway in 3 Charts

Berkshire Hathaway is one of the world's most successful companies. Over the last 52 years -- during which Warren Buffett has been chairman and CEO -- it compounded its investors' wealth at a remarkable rate, turning an original $1,000 investment into nearly $20 million for its earliest investors.

The three charts below explain how Berkshire grew to become as large as it is today, and why the future is likely to yield lower returns for the company's investors going forward. [...]

Berkshire Hathaway Inc.'s Most Brilliant Moves in 2017 So Far

In many ways, Warren Buffett-led conglomerate Berkshire Hathaway has had a rather uneventful 2017. The company hasn't announced any major acquisitions, and other than a few major moves in the stock portfolio, it hasn't really been in the headlines much.

Yet the few major moves Berkshire has made should be good for the company's future. Here's a quick recap of three moves the company has made, why they should be positive long-term catalysts, and the lessons you can learn from each. [...]

The Cost of Lunch With Warren Buffett: $2.68 Million

A bidder pledged $2.68 million to a San Francisco charity in exchange for a lunch date with billionaire investor Warren Buffett.

The winner of the online auction that concluded Friday on eBay Inc.’s website chose to remain anonymous. The final price fell short of last year’s $3.46 million winning pledge, which tied the previous record.

As in years past, the winner gets to bring seven friends to dine with Buffett, 86, at New York’s Smith & Wollensky steakhouse. Proceeds benefit Glide, a San Francisco charity that serves meals to the homeless, hosts support groups through its women’s center for abuse victims and provides treatment for drug addiction. [...]

Berkshire News Briefs - 6/5/17

Why Warren Buffett Took Out an Ad on the Same Page as One for a Strip Club

The billionaire took out a fine-print ad in the New York Daily News to say he’s seeking permission from the Federal Reserve to hold as much as 25 percent of the credit-card issuer’s shares. The notice appeared alongside listings for a Brooklyn co-op, a $2,500 Honda Accord and a liquor license application, plus a quarter-page ad for a strip joint.

Of course, Buffett was just obeying the law. Federal regulations require that shareholders seeking to boost their stakes in banks above certain thresholds publish announcements in “a newspaper of general circulation” in the community where the financial institution is based. (AmEx has its headquarters in lower Manhattan.) Still, in an era when so much information flows to investors through online feeds, the back pages of a metro can feel like a place to bury rather than reveal news. [...]

Berkshire Hathaway buys stake in Lanxess

Warren Buffett (Trades, Portfolio)’s Berkshire Hathaway disclosed a stake in Germany’s Lanxess AG on May 19, worth roughly $179.85 million on the date of filing, a small fraction of his $96.5 billion cash hoard. [...]

Lanxess’ chemicals are used in an array of everyday and industrial products, such as biodiesel, spare wheels, paint pigments, leather manufacturing, white sugar, red wines and tires. Through a partnership with Saudi Arabian oil company Saudi Aramco, it also produces synthetic rubber.

The company has a 6.2 billion euro market cap, with revenue exceeding $7.6 billion in 2016, though revenue had been in decline for four straight years. On April 21, Lanxess completed the acquisition of U.S. company Chemtura, which produced 1.5 billion euro in annual sales, to stabilize the company, increase profitability and expand its footprint in the growth market of North America. [...]

Warren Buffet’s GenRe reinsurer gets India approval

General Re, which is a part of business guru Warren Buffett’s Berkshire Hathaway family of companies, has been given the final approval, called R3 from the Insurance Regulatory and Development Authority of India.

In a report, ieBusiness said that this is Berkshire’s second attempt to capture the Indian market. Berkshire’s initial venture was an online distribution that closed a couple of years after it launched in 2013.

Gen Re is different in that it will "deliver underwriting and risk management expertise locally rather than cross-border. It will facilitate an optimal business model," according to the report.

Gen Re’s area of interest is primarily on the life and health sector. It plans to expand in this segment but will also be looking to grow its presence in the property/ casualty reinsurance market in India which is a huge business opportunity. [...]

Meet Warren Buffett's 2 Trusted Stock Pickers

For much of the time Buffett has been at the helm of Berkshire Hathaway, he has managed the company's stock portfolio all by himself. However, that has changed in recent years with the hiring of two investment managers, Todd Combs and Ted Weschler, who were hired in 2010 and 2011, respectively.

Both men are hedge fund veterans with impressive track records. For example, Weschler's fund delivered 1,236% in gains in just 11 years before he closed it -- roughly 9 times the gain of Buffett's stock portfolio during the same time frame. [...]

Buffett’s Berkshire Hathaway could face fines over Texas dealership law

The billionaire’s holding company – Berkshire Hathaway Inc. – could be liable for civil fines in the range of $350,000 a day if an ongoing investigation by the Texas Department of Motor Vehicles determines it to be in violation of Texas law prohibiting the owner of an automobile manufacturer from also owning automobile dealerships in the state.

Berkshire Hathaway owns Berkshire Hathaway Automotive, which is based in Irving and operates 35 new-car dealerships in Texas, and it also owns Forest River Inc., an Indiana-based manufacturer of recreational vehicles. Owning both businesses potentially puts Berkshire Hathaway in violation of the Texas occupations code preventing ownership of a motor vehicle manufacturer and ownership of dealerships under a single corporate umbrella, even if the vehicles aren’t of the same type. [...]

Warren Buffett's cigar butt lesson: seeing value that others miss

While working in New York City, 20-something-year-old Buffett adopted Benjamin Graham’s practice of spotting companies that were slightly undervalued, such as having more in the bank account than they were worth on the stock market.

Anything with a bit of value that a smart investor could grab. In cigar terms, a mostly used butt ignored by others but with a few risk-free puffs left.

Looking beyond the unsavory image of smoking a used stogie (“The stub might be ugly and soggy,” Buffett once wrote), investors can embrace the idea of cigar butts as a lesson in recognizing value that others miss. Buffett used that ability to build up his personal investments in the 1950s before returning to Omaha and forming the partnerships that led to Berkshire. [...]

Two '90s Fan Favorites are Back at DQ

‘90s trends are in. Fashion, jewelry, shoes, toys and even hairstyles popular during that decade are part of a nostalgic revival taking place in 2017.

The Dairy Queen® system has now added treats to that list. The treat category leader, a Berkshire Hathaway company, is bringing back two popular fan favorites treats with Treatzza Pizza® on May 22 and Misty Slush® on June 26.

"There is an obvious resurgence in everything '90s and both Treatzza Pizza and Misty Slush were fan favorites from that era," said Barry Westrum, Executive Vice President of Marketing for American Dairy Queen Corporation (ADQ). "Those two treats were loved by fans from day one. They asked us to bring them back and we delivered." [...]

Warren Buffett lunch bidding quickly hits $1 million

An auction for well-heeled fans of Warren Buffett to eat lunch with the billionaire in support of a San Francisco charity that helps the homeless and impoverished got off to a fast start, with bidding quickly hitting seven figures.

The top bid was $1 million as of 1 p.m. EDT (1700 GMT) on Monday, and had been made within two minutes of the auction's Sunday night launch.

Bids often surge near the end of the eBay auction, which concludes on Friday at 10:30 p.m. EDT (230 GMT Saturday).

Buffett, the chairman of Berkshire Hathaway Inc, has raised $23.6 million in 17 years of auctions for Glide. [...]

Berkshire News Briefs - 5/17/17

Berkshire’s Earnings Hit Speed Bump on Insurance Businesses

Warren Buffett’s Berkshire Hathaway Inc. hit a speed bump in the first quarter as insurance units posted an underwriting loss, overshadowing gains at the company’s railroad and energy business. [...]

First-quarter operating profit slipped 4.8 percent to $3.56 billion, the company said Friday in a statement. [...]

Berkshire’s war chest totaled $96.5 billion at the end of the first quarter, a record. [...]

Book value, a measure of assets minus liabilities that’s closely tracked by investors, rose 3.5 percent in the first quarter to $178,073 per share. [...]

Berkshire Hathaway press release on 1Q17 Earnings

Berkshire Cuts 21st Century Fox Stake, Adjusts Airline Bets

Warren Buffett’s Berkshire Hathaway Inc. spent the first quarter fine-tuning its investments in airlines and technology companies, and retreating from 21st Century Fox Inc.

In a filing Monday detailing its stock portfolio at the end of the quarter, Berkshire no longer listed Fox. Holdings in American Airlines Group Inc. and Southwest Airlines Co. increased, while a stake in Delta Air Lines Inc. was reduced. Buffett previously disclosed that he boosted a bet on Apple Inc. in the first quarter as he pulled back from International Business Machines Corp. [...]

The new 13F filing is here. Berkshire Hathaway's updated stock holdings in an easy to read format from Dataroma is here.

5 Key Takeaways From Today's Berkshire Hathaway Meeting

So, what would prompt Berkshire to start putting its cash to work? Essentially, Buffett said that Berkshire wants to acquire businesses that will have a competitive advantage over the next five to 10 years, whose management teams are strong, and that are offered at a fair price. [...]

Buffett also said that if there's a persistent shortage of attractive investment opportunities, Berkshire may eventually choose to increase its buyback criteria of 120% of book value or less, but he is still optimistic about finding ways to deploy Berkshire's capital. [...]

Here's the best wit and wisdom from Warren Buffett at this year's Berkshire Hathaway annual meeting

Buffett and long-time business partner Charlie Munger spoke for hours at the Berkshire Hathaway annual meeting Saturday in Omaha.

The pair frequently elicited laughter from the crowd of 40,000 by answering questions from shareholders and journalists with their usual folksy sense of humor and wisdom. [...]

A Comparison of Berkshire Hathaway Class A and Class B Shares

[...] From these tables, institutions and mutual fund holders own only 27% of the A shares, but 64% of the B shares. That can be explained by insiders and 5% owners holding 41% of the A shares and less than 1% of the B shares. According to Berkshire’s Notice of Annual Meeting of Shareholders May 6, 2017, Warren Buffett beneficially owned 38.3% of the A shares as of March 8, 2017. The insiders primarily accumulated their shares in the 1960’s and 1970’s when Berkshire traded at less than $100 per share.

It should be noted, however, that these tables imply that individuals (other than insiders) hold about 31% of the A shares and 35% of the B shares. [...]

Clayton Homes unveils new tiny home series

Clayton, a Berkshire Hathaway company and a builder of manufactured, modular and site-built homes, introduced its new tiny homes collection Saturday at the Berkshire Hathaway’s Annual Shareholders Meeting in Omaha, Nebraska. [...]

The homes are just 464 square feet and offer 270 degrees of window views. They have vaulted ceilings to give the homes a larger feel, and the master bedroom fits a queen-size bed and a full-height closet. [...]

Even in Texas, sometimes the billionaires lose

A bill that would carve out a loophole for Buffett’s chain of auto-dealerships in Texas — put on the fast track last month right after the billionaire’s meetings with Gov. Greg Abbott and Lt. Gov. Dan Patrick — ran into a wall of opposition from prominent Tea Party activists. They burned up the phone lines at the Capitol and publicly criticized what they saw as special treatment for the wealthy and connected.

Not long after those activists spoke out against the carve-out legislation in an open letter to the billionaire, Patrick pulled the “Buffett Bill” off the Texas Senate agenda, effectively killing it for now [...]

John Oliver eviscerates one of Warren Buffett's favorite companies

One of Warren Buffett's favorite stocks has just been attacked by HBO comedian John Oliver.

DaVita operates dialysis centers, and Buffett's Berkshire Hathaway owns a nearly 20% stake in the company. It was the subject of a scathing 24-minute long segment on Sunday's "Last Week Tonight."

Oliver accuses DaVita of pushing patients to continue receiving long and expensive dialysis treatments instead of having kidney transplants, which could eliminate the need for dialysis.

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

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Berkshire Hathaway Is Not Built To Last

Berkshire's Decker Says Buffett Can Take His Time With $85 Billion

Berkshire Misc. Briefs - 1/5/17

There was a lot of news last month, and I fell behind on posting, so there are three posts this time. This is part 3, with miscellaneous news that didn't fit in the other two categories. That doesn't mean these are any less interesting, though!

(Part 1 - General Business | Part 2 - Subsidiaries)

HBO Sets Warren Buffett Documentary Premiere Date

HBO announced the premiere date for upcoming documentary “Becoming Warren Buffett” on Wednesday. The personal profile will premiere on Jan. 30 at 10 p.m./9c and will tell the true story of how an ambitious, numbers-obsessed boy from Nebraska became one of the richest men in the world.

Told primarily in Buffett’s own words, the film features never-before-released home videos, family photographs, archival footage and interviews with family and friends. [...]

Watch the trailer on YouTube.

Why Yahoo Shared an Investor Meeting in Omaha With the World

In April 2016, for the first time Yahoo Finance livestreamed the Berkshire Hathaway annual meeting; a profitable venture for the industry-leading site (Yahoo Finance in November recorded 63 million monthly unique visitors, per comScore). This livestream was Yahoo Finance's longest, most complex endeavor to date, given it hosted the event on its platform. [...]

It all started with an email from Berkshire Hathaway CEO Warren Buffett. "It said, 'Call me,'" recalled Yahoo Finance editor Andy Serwer. "So, I called him up. And he said 'I've got this idea. What do you think about livestreaming my annual meeting?' And I said 'yes' as quickly as I could!" [...]

The first-of-its-kind meeting was Buffett's idea. "I asked him later why he came to us," said Serwer. "He said there were several reasons: you successfully executed an NFL game. (The Buffalo Bills-Jacksonville Jaguars matchup in October 2015 netted 15.2 million viewers.) You have the technology to do it. You have the global platform. And, then he also said, 'I have this relationship with you and I know that I can just call you up anytime and get through to you.'"

Berkshire Hathaway to bet on earthquake insurance in Japan

An insurance company under Berkshire Hathaway of the U.S. is considering making a foray into Japan, betting on the potential of the country's earthquake insurance market.

Berkshire Hathaway Specialty Insurance plans to operate as a reinsurer, purchasing earthquake insurance contracts from casualty insurers in Japan, according to Marc Breuil, a BHSI executive in charge of Asia. [...]

After BHSI starts selling earthquake reinsurance in Japan, earthquake policies may become widespread in the country. Currently, about 10% of Japanese companies are insured against temblors. This is stunted compared to the rate in other earthquake-prone countries.

One major reason for the low percentage is the relatively high premiums for earthquake insurance when compared to fire insurance. Another reason is that insurers have refrained from actively selling earthquake policies to companies, citing unstable prices in the reinsurance market.

Buffett's Berkshire Is Urged to Sell Fossil Fuel Stocks

A Nebraska nonprofit has said it will propose that Warren Buffett's Berkshire Hathaway Inc. sell its investments in oil refiner Phillips 66 and other companies involved in fossil fuels over 12 years.

The Nebraska Peace Foundation, which focuses on anti-war, civil rights and environmental issues, said it submitted a formal proposal for Berkshire shareholders to consider at the Omaha-based conglomerate's annual meeting next May 6.

Buffett’s Son Steps Down From Coke Board to Focus on Charity

Howard Buffett, the son of Berkshire Hathaway Inc. Chairman Warren Buffett, is stepping down from the board of Coca-Cola Co. to spend more time working at his foundation. [...] He runs the Howard G. Buffett Foundation, which supports sustainable agriculture and conflict resolution programs. He also has operated a 1,500-acre (600-hectare) farm in Illinois and has written books on topics such as world hunger and conservation.

Warren Buffett makes appearance at Dolphins-Cardinals game

The Miami Dolphins have a special guest for Sunday’s game against the Arizona Cardinals. Business tycoon Warren Buffett roamed the Dolphins’ sideline pregame to talk to members of the organization and show his support.

Buffett, who is one of the richest people in the world, has attended Dolphins games in the past. He was at last year’s home opener and is friends with four-time Pro Bowl defensive tackle Ndamukong Suh. [...]