Berkshire News Briefs - 10/12/16

Mars Cashes Out Warren Buffett to Take Control of Wrigley

Mars Inc. has finally taken full control of Wrigley, formally putting M&Ms and Altoids mints in the same division — and cashing out its partner, Warren E. Buffett, in the process. [...]

Berkshire Hathaway helped Mars buy Wrigley for about $23 billion in 2008. It was a classic deal for the billionaire, who has traditionally favored acquisitions involving well-known names and strongly performing businesses.

But there was a lucrative element in the way Mr. Buffett participated in the transaction. As part of the arrangement, Berkshire received preferred shares worth about $2.1 billion, which paid a 5 percent annual dividend, and $4.4 billion worth of bonds that carried a hefty 11.45 percent interest rate. [...]

Berkshire Is Bigger Than Buffett

We think two big concerns--a belief that Berkshire Hathaway's size will prevent it from growing at a decent clip in the future and that the company's shares will get pummeled once Buffett no longer runs the show--have kept some investors on the sidelines. Although we believe that the wide-moat firm is unlikely to consistently grow its book value per share at a double-digit rate, something that happened nine times during 2001-15 and 40 times during 1965-2015, we think that Berkshire can grow its book value per share at a high-single- to double-digit rate going forward, much as we've seen since the start of the new millennium. This type of growth should leave returns solidly and consistently above the firm's cost of capital [...]

Cash is piling up faster than Warren Buffett can invest it

Warren Buffett has the kind of money problem most people would envy: a growing mountain of cash.

Nearly $73 billion piled up at Berkshire Hathaway by mid-summer, more than Buffett’s conglomerate has ever held before.

And the total continues growing every day Buffett doesn’t make a major investment because Berkshire’s 90-odd businesses generate roughly $1.5 billion in cash every month. [...]

Yahoo Finance to Host Exclusive Live Stream of Berkshire Hathaway Shareholders Meeting for Second Year

Yahoo! Inc. today announced that it will host the exclusive live stream of Berkshire Hathaway’s annual shareholders meeting on Saturday May 6, 2017, for the second year in a row. Approximately 40,000 Berkshire Hathaway shareholders from around the world attend the highly anticipated annual event. In 2016, Yahoo Finance opened the meeting to the general public via live stream, for the first time ever, with more than 1 million viewers tuning in. [...]

Berkshire Hathaway Eyes Growth Despite Cat Loss Concerns

Berkshire Hathaway’s non-insurance businesses like utilities and & energy, and manufacturing, service & retail, have been reporting favorable results. In fact, total revenue from manufacturing, service and retail has improved substantially over the past several quarters. The strong results across most of the units can be attributed to better economic conditions and higher consumer demand.

Also, the company’s book value has been improving consistently. The insurer’s already robust book value growth is expected to be boosted further with the turn of the economy, increased gains from the value of the derivatives positions, and continued positive contribution from earnings growth in insurance operations. [...]

Atlas Bolt & Screw President Ridenour to retire

Randy Ridenour, President of Atlas Bolt & Screw Company LLC, has decided to retire at the end of 2016 after 32 years with the company. [...]

Atlas Bolt & Screw Company, a Marmon/Berkshire Hathaway company, offers a wide range of construction fasteners that reduce installation costs and extend the lives of metal buildings worldwide. [...]

Shaw Contract eyes smaller town, to raise investment limit

Shaw Contract, a business unit of Shaw Industries Group Inc which is a wholly-owned subsidiary of the Warren Buffet's Berkshire Hathaway, is looking to penetrate into the small towns and also raise investment limit in the country. The Bengaluru [India]-based Shaw Contract India has been in operations for over two decades and is the second-largest supplier of commercial carpet tiles in the country with a market share of around 22 percent, the company claimed. [...]

Berkshire can't resist India any more, to return with reinsurance business

Warren Buffett, who had exited India three years back citing regulatory suffocation, can’t resist India any more. Berkshire Hathaway is in fact returning to India with a plan to set up a reinsurance branch which would be much bigger than what it was when it was into insurance broking. [...]

Currently, Berkshire is present in India as a services company and is a leader of reinsurance treaty — purchased by insurers from one or more other companies — of large insurance companies including Bajaj Allianz General Insurance.

The company provides support services such as data collection, market research and training to insurance companies. As a leader of the treaty, it reinsures vast portions of the risk underwritten by these companies. [...]

Berkshire Hathaway Specialty Insurance Company Expands to Macau, Makes Local Office Appointments

Berkshire Hathaway Specialty Insurance Company (BHSI) today announced that it has received a license to provide insurance and reinsurance in Macau and filled key positions in its newly established Macau office. [...]

Berkshire News Briefs - 9/21/16

Warren Buffett: I won't comment on the Wells Fargo scandal until November (Business Insider)

Warren Buffett is waiting until after the election to weigh in on Wells Fargo.

Buffett told Fox Business' Liz Claman that he will not comment on the bank's scandal until November. Buffett is the largest shareholder of Wells Fargo and recently petitioned the Federal Reserve to increase his ownership stake above 10%. [...]

Wells Fargo recently settled with regulators for $185 million after it came to light that employees had opened around 2 million accounts without the knowledge of customers. About 5,300 of the bank's employees were fired as a result of the scandal. [...]

Buffett Now Phillips 66's Top Owner (Investopedia)

Shares of Phillips 66 rose after the news this week that billionaire Warren Buffett had increased Berkshire Hathaway Inc.'s holdings of the energy company by 1,019,974 shares, making Berkshire the largest holder. Berkshire now owns about 15.4% of the stock outstanding, or a total of 80,671,982 shares. [...]

Nevada Approves SolarCity’s Deal With Berkshire’s NV Energy

Nevada regulators have approved a deal between Berkshire Hathaway Inc.’s NV Energy utility and SolarCity Corp. that will roll back rate hikes for existing rooftop solar customers. The Nevada Public Utilities Commission voted 3-0 on Friday in favor of a settlement that will shield more than 32,000 rooftop solar customers in the state from increased fees that took effect in January. Earlier this week, NV Energy and SolarCity had asked the commission to approve an agreement that would grandfather those who signed up to use home solar prior to January under more favorable rates for 20 years. [...]

Berkshire Hathaway Will Do Just Fine After Buffett (Fortune)

Investment research firm Morningstar released a note on Sept. 2 that eased a widespread fear that without the now 86-year-old Oracle of Omaha and his partner, 92-year-old Charlie Munger, Berkshire Hathaway would collapse.

“The key to Berkshire’s success over the years has been Buffett’s ability to not only find fruitful ways to put the firm’s excess capital to work but in paying close attention to culture and fit when acquiring companies,” wrote Greggory Warren, senior equity analyst at Morningstar. “Berkshire’s culture of management autonomy and entrepreneurship has to a large degree become institutionalized.” [...]

Berkshire Hathaway firm CTB to buy 80% stake in Cabinplant (Packaging Business Review)

Berkshire Hathaway company CTB has agreed to purchase 80% stake in Danish company Cabinplant for an undisclosed sum. Based in Haarby, Cabinplant provides processing and weighing / packing solutions for the food industry. [...] The company, which has around 300 employees, carries out operations in about 30 countries. CTB said that the Cabinplant’s poultry processing equipment complements its Meyn poultry processing subsidiary.

Pasta Equipment Maker Dominioni Joins Marmon (BusinessWire)

Marmon Food, Beverage & Water Technologies Company, part of Berkshire Hathaway Inc., today announced the acquisition of the assets of Dominioni Punto & Pasta S.r.l., a leading Italian supplier of commercial pasta equipment, by Marmon Pasta Solutions S.r.l. Terms were not disclosed.

Founded in 1968 by Pietro Dominioni, the family-run business designs and produces professional pasta equipment for the restaurant, hospitality, and catering markets, as well as high-volume pasta manufacturers. The business will continue to operate under the Dominioni brand name and its operations will remain based in Lurate Caccivio (Como). Fabrizio Dominioni, son of the founder, will continue to manage the business. [...]

J.P. Morgan Names Berkshire Hathaway Investment Manager Combs to Board (NASDAQ)

J.P. Morgan Chase & Co. on Tuesday said it named Berkshire Hathaway Inc. investment manager Todd Combs to its board, bringing into the fold an heir-apparent of billionaire investor Warren Buffett's enterprise.

Mr. Combs, 45 years old, is a former hedge-fund manager who began working at Berkshire in 2011. He and a counterpart, Ted Weschler, manage portfolios of about $9 billion each, but they will take over all stock-picking duties when Mr. Buffett is no longer running the firm.

Mr. Combs has served as a director at Precision Castparts since late January, according to a regulatory filing. [...]

Berkshire Hathaway and underwriting unit sued for running ‘reverse Ponzi scheme’ (MarketWatch)

A New York City-based courier service has sued Berkshire Hathaway Inc. and one of its companies, saying they’ve been running a “fradulent scheme” by misusing premiums that were supposed to be used for funding its workers’ compensation coverage.

Breakaway Courier Systems in a lawsuit filed Friday said Berkshire and its Applied Underwriters company have engaged in what was “essentially a reverse Ponzi scheme.” [...]

Berkshire Agrees to Stop Selling EquityComp Policies in California (Insurance Journal)

California Insurance Commissioner Dave Jones on Tuesday approved an order agreed to by California Insurance Co. and Applied Underwriters Captive Risk Assurance Company Inc. under which they will stop selling workers’ compensation policies that the two Berkshire Hathaway companies used without filing key addendums to the policies. [...]

Jones’ action stemmed from his decision that a complex insurance scheme in a case involving a company called Shasta Linen. [...] Jones found that the insurance companies issued the policies and rates without his approval. He also ruled that the companies designed the program with the intent of avoiding the review of insurance regulators.

World’s Smartest Investor Outperforms With Boring Utilities (Oil Price)

[...] But several years ago, Buffet began steering Berkshire into investments unusual for a financial concern. He purchased a number of regulated electric utilities and a railroad, the Burlington Northern. These investments have much in common. They provide essential services in slow growing markets. They generate steady albeit modest returns. They require ongoing, large capital investments to maintain current levels of service and, as long as investment takes place, they generate substantial income tax deferrals that can also be invested profitably. Since these businesses are growing, at least in term of their assets--and some level of profitability is virtually assured--the owner or investor can still reinvest their capital at a reasonable return. They don’t have to worry about the vagaries of public markets equity or fixed income. They can invest in themselves so to speak. [...]

A psychologist reveals the persuasive tactic Warren Buffett uses to make his shareholders trust him (Business Insider)

[...] This unabashed recounting of Berkshire Hathaway's setbacks isn't unique to the 2012 letter; in fact, Buffett frequently opens his letters this way.

According to psychologist Robert Cialdini, this strategy is brilliant. Cialdini is a professor emeritus of psychology and marketing at Arizona State University, the CEO and president of Influence at Work, and the author of the new book "Pre-Suasion," in which he highlights the invisible interpersonal forces behind our behavior.

In the book, he highlights Buffett's letter-writing strategy as a prime example of a "pre-suasive" tactic, or a way to influence people to behave a certain way in the moments before they make their decision. In this case, the decision might be whether to start or continue investing in Berkshire Hathaway. [...]