Berkshire Hathaway: Trading At An Estimated 11.6x Earnings With An Intrinsic Value Of $180/Share
Left Shark Investing • 232 Comments
Left Shark Investing • 232 Comments
Jul. 25, 2014, 6:36 PM
- Berkshire Hathaway Energy's (BRK.A, BRK.B) application to buy SNC-Lavalin's (OTCPK:SNCAF) AltaLink power transmission unit wins preliminary approval from Canada's government.
- As part of the approval, Berkshire agrees not to cut jobs and that AltaLink - Alberta's largest regulated electricity transmission company - will remain locally managed with headquarters, senior management and operations remaining in the province.
- The C$3.2B purchase still needs approval from Alberta's utilities commission.
Jul. 23, 2014, 1:01 PM
- One of The Oracle's crisis-era high-yield investments could soon end as a post-earnings rally for Dow Chemical (DOW +3.4%) brings the stock above $53.72 for the first time in nine years. Should the shares close above that price for 20 trading days in a 30-day window, Berkshire's (BRK.A, BRK.B) $3B preferred stake in Dow could be converted into common stock.
- The preferred stock is expensive for Dow as it carries an 8.5% yield, meaning $255M in dividends annually paid to Berkshire. Of course a conversion would mean dilution, but "people have come to view the dilution from the preferreds as a manageable issue," says UBS's John Roberts, thanks to strong earnings and share repurchases.
- Previously: Dow Chemical beats estimates amid sales gains across businesses
Jul. 1, 2014, 12:02 PM
- Miami-based WPLG-TV is added to Berkshire Hathaway's (BRK.A, BRK.B) media holdings after a roughly (tax-advantaged) $1.1B share swap deal. In addition to the ABC affiliate, Berkshire got back 2,107 of its own Class A shares, 1,278 of its Class B shares, and roughly $328M in cash from Graham Holdings (GHC +0.2%). In return, Berkshire delivered 1.62M shares of Graham Holdings back to Graham Holdings.
- The Berkshire shares are valued at about $400M and the TV station at $364M.
- The deal ends Warren Buffett's long association with Graham Holdings, known as the Washington Post Co. before selling its flagship newspaper to Jeff Bezos. Buffett first bought into the company in 1973.
- Previously: Buffett and Graham put deal on paper
Jun. 24, 2014, 12:48 PM
- Warren Buffett’s BNSF Railway (BRK.A, BRK.B) and Canadian Pacific Railway (CP) face a June 27 deadline to say how they will clear a backlog of grain shipments that has frustrated farmers for months.
- The U.S. Surface Transportation Board is ordering the railroads to outline by then how they will deal with service disruptions, including a timeline for doing so, and to subsequently provide weekly updates about their progress.
- This year's unusually cold winter slowed rail networks in the U.S. and Canada, forcing railroads to run shorter trains and aggravating congestion on a system already dealing with increased shipments of crude oil from North Dakota's Bakken Shale region.
Jun. 23, 2014, 3:11 PM
- Large investments in common and preferred stocks, as well as an "aggressive acquisition strategy," pose risks, but earnings stability offsets those concerns, says S&P, affirming its ratings on Berkshire Hathaway (BRK.A, BRK.B) - AA/A-1 counterparty credit, and AA+ insurance financial strength - but boosting the outlook to stable from negative.
Jun. 19, 2014, 12:03 PM
- The system will be the only real-time, regional one of its kind in the West, and will be able to automatically dispatch power every five minutes from plans with enough power to supply 51.6M homes. The California Independent System Operator and PacifiCorp expect this to be a first step toward an organized market across the entire West, where 38 authorities now manage their own grids.
- PacifiCore is a subsidiary of Berkshire's (BRK.A, BRK.B) Berkshire Hathaway Energy Co. Its sister in Nevada, NV Energy - also now owned by Berkshire - is applying to join the same "energy imbalance market" next year.
Jun. 9, 2014, 3:41 PM
- “We’ve poured billions and billions and billions of dollars in retained earnings, and several billion of additional equity,” into the energy business, says Warren Buffett, speaking at the Edison Electric Institute convention in Las Vegas. “And we’re going to keep doing that as far as the eye can see.”
- Reducing Berkshire Hathaway's (BRK.A, BRK.B) reliance on things like insurance and stock-picking, Buffett has moved toward capital-intensive industries like energy and transportation over the past decade-plus, and Berkshire Hathaway Energy has $70B in assets today. "So far we've stayed rich," he says.
Jun. 9, 2014, 12:31 PM
- With a 2.91% gain in May, REITs outperformed the Dow, S&P 500, and Russell 2000, but fell shy of the Nasdaq's 3.1% gain. Leading the way for REITs were infrastructure plays, returning 6.55% thanks to strong demand from wireless carriers as they transition from 3G to 4G, writes Trepp's Susan Persin.
- Speaking last week at NAREIT's REIT Week, Crown Castle's (CCI) Ben Moreland also noted boosted demand from first responder/public safety networks.
- Manufactured housing REITs returned 5.03 in May, and UMH Properties management - also at REIT Week - noted shipments are low by historical standards and financing remains a challenge even with Warren Buffett being a fan of the sector: Berkshire Hathaway (BRK.A, BRK.B) owns the two dominant lenders. Other players in manufactured housing: SUI, ELS.
- ETFs: IYR, VNQ, DRN, REZ, URE, SRS, ICF, RWR, SCHH, DRV, ROOF, KBWY, RTL, REK, FRI, FTY, PSR, IFNA, WREI
Jun. 5, 2014, 11:41 AM
- Union Pacific (UNP) and BNSF Railway (BRK.A, BRK.B) are seeking to prevent disclosure of details about oil shipments through Washington state, despite a U.S. government order to provide the information in the wake of several oil train accidents.
- The two railroad companies last Friday sent the state confidentiality agreements aiming to restrict the information to emergency response groups for planning purposes only; the state's Emergency Response Commission instead presented alternative agreements the railroads say they are reviewing.
- BNSF says it would comply with the federal order but believes the information is "security sensitive and confidential, intended for people who have ‘a need to know’ for such information, such as first responders and emergency planners."
May 28, 2014, 4:37 PM
- A joint venture of Berkshire Hathaway (BRK.A, BRK.B) and Leucadia National (LUK), Berkadia Commercial Mortgage purchases Phoenix-based Keystone Commercial Capital, which has mortgage banking offices in Boston and San Diego, as well as its hometown.
- Keystone co-founder Charlie Williams will continue to run the company.
- Berkadia is third-largest commercial and multifamily mortgage servicer, with a portfolio of over $229B as of March 31. It was created by Berkshire and Leucadia from the ashes of bankrupt Capmark Financial Group in 2009.
May 27, 2014, 11:27 AM
- Noting that Berkshire Hathaway's (BRK.A, BRK.B) Warren Buffett has suggested he will hunt for his next big acquisition among energy companies, Reuters speculates that strong candidates that fit Buffett's style could include Baker Hughes (BHI), Williams Partners (WPZ) and Pinnacle West Capital (PNW).
- BHI has a fat ~$30B market cap but is trading at a discount to peers on several key metrics, WPZ sports the competitive advantage of its ownership of the Transco gas mainline which runs from Texas to New York, while PNW may be on the smallish side but offers strong cash flow from operations and reasonable debt.
May 22, 2014, 8:34 AM
- The move by Susep - Brazil's insurance regulator - allows Berkshire Hathaway (BRK.A, BRK.B) to operate in the country as an "eventual reinsurer," i.e. to do business there without having a representative office.
- In Brazil, there are three classes of reinsurers - local, admitted, and eventual. Eventual reinsurers must have global net assets of at least $150M and be rated a notch above the minimum investment-grade rating.
May 9, 2014, 8:58 AM
- BNSF Railway (BRK.A, BRK.B), the main railroad moving crude oil out of the Bakken formation in North Dakota, says a new federal emergency order on rail shipments will not affect its shipments.
- The U.S. Department of Transportation will require railroads to inform state emergency management officials about the movement of large shipments of crude oil, and will ask companies shipping oil from the Bakken to stop using older generation tank cars that have been involved in several fiery derailments.
- BNSF says it will comply with the new reporting requirements but does not foresee any impact of service.
- Related rail/oil stocks: CSX, UNP, NSC, KSU, CP, GWR, OAS, NOG, KOG, CLR, WLL, EOX.
May 3, 2014, 7:51 PM
- He didn't want to "go to war" with management, says Warren Buffett, responding to the first question asked of him at the Berkshire Hathaway (BRK.A, BRK.B) annual meeting: Why did he abstain from voting on the controversial equity compensation plan for Coca-Cola (KO) executives?
- "You keep belching at the dinner table, you'll be eating in the kitchen," says Buffett, describing the clubby culture of corporate boards where being agreeable keeps you on the inside and being confrontational gets you blackballed. "I've voted for compensation plans in various places that are far from what I would have designed myself ... That is the way boards work."
- A shareholder proposal requesting Berkshire board consideration of a dividend received less than 2% of the vote, pleasing to Buffett who believes he and Charlie Munger can do a better job of allocating company capital than returning it to shareholders. Still, with $40B and rising in Berkshire's coffers, even Buffett concedes the day is coming when the company has "more cash than we can intelligently invest."
- "That error that they made doesn't bother me," says Buffett of Bank of America (BAC), which had to suspend its capital return plan after miscalculating capital levels. "It doesn't change my feeling about Bank of America's risk management one iota."
- Mungerisms: Comparing Berkshire book value to the S&P 500 is "insane" and makes it harder for Buffett to look good. "Warren sets a ridiculously high standard. The last couple of years added $60B in value ... If that's failure, then I want more of it."
May 2, 2014, 5:25 PM
- Berkshire Hathaway (BRK.A): Q1 operating earnings per Class A share equivalent of $2,149, misses by $22.
- Revenues: $45.45B (+3.6%).
- Book value per share: $138,426 (+2.6%).
May 1, 2014, 7:07 PM
- Berkshire Hathaway (BRK.A, BRK.B) agrees to acquire SNC-Lavalin's (SNCAF) AltaLink, the operator of electric transmission lines in Canada, for $3.24B, as Warren Buffett’s company expands its investment in energy.
- Buffett’s power unit, renamed just this week as Berkshire Hathaway Energy, has been expanding through acquisitions under CEO Greg Abel; SNC is moving away from infrastructure investments to put resources into engineering and construction.
Berkshire Hathaway, Inc. engages in diverse business activities including property and casualty insurance and reinsurance, utilities and energy, freight rail transportation, finance, manufacturing, retailing and services. Its insurance and reinsurance business activities are conducted through... More
Industry: Property & Casualty Insurance
Country: United States
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