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Aug. 10, 2015, 5:47 PM
- Effective with its September rebalance, S&P is going to allow some multiple share class lines to be listed separately in its indices, rather than consolidated lines -- meaning that both classes of Comcast (CMCSA, CMCSK) and Twenty-First Century Fox (FOX, FOXA) will be included in the S&P 500 after the close Sept. 18.
- All multiple-class companies that have listed share class lines will be adjusted for share and float per each line. Multiple share class companies that have an unlisted class line will be adjusted as well.
- There are four companies in the S&P 100 with two or more publicly listed lines: Google is already represented by its two lines. Comcast and Fox will have their additional lines added. Berkshire Hathaway (BRK.A, BRK.B) will be an exception due to liquidity concerns, and share count will be consolidated under the B line.
- With the S&P 500, Discovery Communications (DISCA, DISCK) is also already represented by two lines in the index. News Corp. (NWS, NWSA) will have both its share lines listed. The end result is 500 companies in the index, and 505 trading lines.
Aug. 10, 2015, 11:28 AM
- Berkshire Hathaway's (BRK.A -0.7%; BRK.B -0.6%) $37B purchase of Precision Castparts (PCP +19.1%), combined with Berkshire's FQ2 earnings report that showed profit fell 37% due to higher costs at its insurance units, appear to be striking an off note with the company's investors, sending shares lower.
- It's the biggest deal of Warren Buffett's career: BRK is paying $235/share for PCP, a 21.2% premium over Friday's closing price and 18x projected profit over a 12-month period.
- "I'm not crazy about paying $30B for a $1.5B earnings stream of a cyclical company supplying airplane makers," says Jeff Matthews, a principal at hedge fund Ram Partners and author of a book about Buffett.
- Buffett tells CNBC that Berkshire will use $23B of its own cash and borrow ~$10B to fund the deal, which he says will be the last one his firm undertakes for roughly a year as it rebuilds its cash pile.
Aug. 10, 2015, 7:12 AM
- Berkshire Hathaway (BRK.A, BRK.B) confirms it will acquire Precision Castparts (NYSE:PCP) for $235 per share in a transaction valued at $37.2B, inclusive of debt.
- A closing is expected in Q1 of 2016.
- Previously: Berkshire Hathaway nears $30B deal for Precision Castparts (Aug. 09 2015)
Aug. 9, 2015, 7:54 AM
- Berkshire Hathaway (BRK.A, BRK.B) is nearing an agreement to buy Precision Castparts (NYSE:PCP), in what could be the conglomerate's largest acquisition ever.
- Given typical premiums, the price tag for the industrial firm, which had a market value of $26.7B as of Friday's close, could exceed $30B.
- Berkshire already owns 3% of PCP, and is its largest shareholder. A deal may be announced as soon as this week.
Aug. 7, 2015, 5:54 PM
- Rail traffic fell in July from a year ago as an increase in container volumes could not offset a sharp decline in oil and coal shipments, according to the latest monthly report from the Association of American Railroads.
- The number of carloads carrying oil and petroleum products fell 13.6% Y/Y to 67.9K last month, while coal volumes sank 12.5%; container shipments rose 3.8% to 1.2M, and traffic overall fell 1.8% to 2.7M.
- "Railroads are overexposed, relative to the economy in general, to the energy sector,” the AAR says in its traffic report.
- Relevant tickers: CSX, NSC, UNP, KSU, BRK.A, BRK.B
Aug. 7, 2015, 5:14 PM
Jul. 27, 2015, 6:57 PM
- Some of the biggest and best known U.S. businesses join the Obama administration in trying to build momentum for a deal at the climate change summit in Paris later this year.
- A dozen publicly traded companies - AA, AAPL, MSFT, BAC, BRK.B, KO, GM, GS, GOOG, PEP, UPS and WMT - committed to support a “strong" outcome in Paris, and made new pledges to take a variety of steps to tackle climate change.
- For example, Alcoa says it will reduce absolute greenhouse gas emissions in the U.S. by 50% by 2025, and BRK plans to retire 75% of its coal-fueled generating capacity in Nevada by 2019.
- In addition to company-specific goals, the White House says today's announcements total at least $140B in new low-carbon investment and more than 1,600 MW of new renewable energy.
Jul. 25, 2015, 8:02 AM
- "I'm scratching my head about Berkshire (BRK.A, BRK.B), says Barclays analyst Jay Gelb, who rates the stock an Overweight with a price target 22% higher than the current level. "The earnings power is stronger than ever, the company has done a series of attractive acquisitions, and it just closed on Kraft. None of that is reflected in Berkshire’s valuation.”
- To review: The Oracle invested $4.25B of Berkshire money for a 50% equity stake in the $23B buyout of Heinz two years ago. Berkshire made another $5B equity investment when Kraft purchased Heinz this year, and now has a 25% stake in the new Kraft Heinz (NASDAQ:KHC) worth $25B. It's a $16B gain in two years - a score P-E giants can only dream about, writes Andrew Bary in a bullish front page article in Barron's.
- Berkshire's stock, however, is lower by 6% this year, underperforming the S&P 500 by 700 basis points, and trades at less than 1.5x March 31 book value. The downside here is likely limited, says Bary, thanks to Buffett's promise to aggressively buy back stock at 1.2x book value.
- Succession fears are one obvious reason Berkshire doesn't trade higher, but it also appears as if Buffett's stock-picking skills have eroded. Of Berkshire's four largest holdings - AmEx, Coca-Cola, IBM, and Wells Fargo - only Wells has beaten the S&P 500 over the last three and five years. IBM is worth less than he paid for it in 2011, and Coke still hasn't taken out its 1998 peak. There was also the Tesco boner, which Buffett exited last year. Berkshire has done way better when acquiring whole companies.
- On succession, Bary's bet is with Berkshire Hathaway Energy chief Greg Abel over reinsurance head Ajit Jain. At age 53, Abel is 11 years younger than Jain, has headed a conglomerate, and is comfortable in the public eye.
Jul. 22, 2015, 5:44 PM
- Orders for railroad tank cars during Q2 fell 29% Q/Q and 70% Y/Y, reflecting a broad decline in energy shipments at railroads.
- Carload volume for oil and petroleum products for the week ended July 18 was down 20% from last year and off 2.7% in the first 28 weeks of 2015 from the same period in 2014.
- Kansas City Southern (NYSE:KSU) recently reported a 46% decline in energy shipments, and Canadian Pacific (NYSE:CP) said Q2 revenue from crude oil shipping tumbled 29% Q/Q.
- Other relevant tickers: CSX, NSC, UNP, CNI, BRK.A, BRK.B, GBX, WAB, TRN, ARII, RAIL
Jul. 17, 2015, 11:59 AM
- More than 20 cars on a Burlington Northern Santa Fe (BRK.A, BRK.B) oil train derailed last night in rural Montana, with at least three of them leaking crude and leading some homes to be evacuated.
- There is no estimate yet of how much oil spilled or what caused the cars to derail, but no explosions or fire were reported.
- The train was pulling 106 loaded crude oil cars when it derailed close to Culbertson near the North Dakota border; the cars typically haul ~30K gallons of oil each.
- The derailment came a few hours after rail traffic started moving again following another BNSF derailment further west on Tuesday.
Jul. 9, 2015, 6:08 PM
- MedPro, a malpractice insurer in the portfolio of Berkshire Hathaway (BRK.A, BRK.B), has agreed to buy rival Plico for cash, and is keeping its eye on other targets as well.
- The deal terms were undisclosed, but with a book value of about $60M (it had $30M in premiums and $60M in surplus premiums last year), Plico likely drew $75M to $90M in the deal. It's MedPro's second acquisition since it became part of Warren Buffett's company in 2005.
- The $28B deal between ACE Limited (NYSE:ACE) and Chubb (NYSE:CB) makes a stronger insurance rival for Berkshire's businesses, but not a real threat as there's little overlap between Chubb's mid-market clients and Berkshire's and Geico's bigger targets, says Morningstar's Greggory Warren.
- Meanwhile, the U.S. has fined Forest River, Berkshire's RV-making unit, $5M for delaying two recalls of camper trailers with defects that posed a fire risk.
- Today: BRK.A +0.8%; BRK.B +1.1%; ACE +0.8%; CB +0.7%.
Jul. 2, 2015, 6:58 PM
- Heinz completes its purchase of Kraft Foods (NASDAQ:KRFT), creating the third largest food and beverage company in North America and fifth largest worldwide, and will begin trading Monday under the ticker KHC.
- Berkshire Hathaway (BRK.A, BRK.B) and Brazilian investment firm 3G Capital, which together bought Heinz in 2013, now own 51% of Kraft Heinz and control six of its 11 board seats, including one for Warren Buffett; Alex Behring, 3G's managing partner, is KHC's chairman.
- KHC will pay a $0.55/share cash dividend on July 31, in lieu of the dividend declared on June 22 by KRFT to its shareholders.
Jul. 1, 2015, 12:30 PM
- "This changes almost everything" in P&C, says KBW's Meyer Shields. "Ace (ACE +2%) is a very experienced and successful acquirer." The deal should help Ace better compete with rivals like AIG (AIG +1%) and Berkshire Hathaway (BRK.A, BRK.B).
- Merger presentation slides
- Unlike some other insurers focused on buybacks - including the acquired Chubb (CB +29%) - Ace and its CEO Hank Greenberg have been using capital for purchases, building scale and diversifying risk.
- Chubb CEO John Finnegan - previously set to retire at the end of 2016 - could be in for a nine-digit golden parachute should he be let go prior to that or resigns for reasons such as a reduction in responsibility or pay. Greenberg is set to lead the combined company.
- Previously: P&C stocks on the move after Chubb sale (July 1)
- Previously: ACE buying Chubb in cash and stock deal for $28.3B (July 1)
Jun. 16, 2015, 7:37 AM
- The agreement will give Berkshire Hathaway (BRK.A, BRK.B) 20% of Insurance Australia Group's insurance premium payments, and make it liable to pay 20% of claims over a decade. Berkshire will get a 3.7% stake in the company.
- IAG has an option to place up to a further 5% with Berkshire within 24 months, and a stand-still agreement says Berkshire will not boost its stake in the company above 14.9% for ten years.
- The deal gives Buffett a significant long-term exposure to the Australian market at a reasonable risk, says a local analyst.
- It's a "float play," says KBW's Meyer Shields. "It's a way of rebuilding what's being lost on the reinsurance side."
May 21, 2015, 5:15 PM
- The Association of American Railroads says crude oil carried by big U.S. railroads fell nearly 14% Q/Q to ~113K carloads as oil companies cut back domestic shipments.
- Industry execs have cautioned that lower oil prices could end up slowing volume growth this year because the low prices will not support Bakken Shale crude, which is more expensive to extract and ship than other oil.
- Although total rail cargo volumes have continued to come in below expectations, Morgan Stanley analysts say a rally in energy prices could help boost railroad stock prices.
- Relevant tickers: CSX, NSC, UNP, KSU, BRK.A, BRK.B
May 21, 2015, 9:17 AM
- New additions to Goldman's hedge fund hotels - 50 stocks which most frequently appear among the largest ten holdings of hedge funds: AerCap (NYSE:AER), Assured Guaranty (NYSE:AGO), Baker Hughes (NYSE:BHI), Citizens Financial (NYSE:CFG), Colony Capital (NYSE:CLNY), Dresser-Rand (NYSE:DRC), Family Dollar (NYSE:FDO), Hospira (NYSE:HSP), Netflix (NASDAQ:NFLX), NXP Semi (NASDAQ:NXPI), Pharmacyclics (NASDAQ:PCYC), Visa (NYSE:V), and Walgreens (NASDAQ:WBA).
- Since 2001, the basket has outperformed the S&P 500 in 66% of quarters by an average of 73 basis points. YTD, however, it has underperformed by nine bps. Goldman notes the current basket overweights Consumer Discretionary (22%) and underweights Consumer Staples (2%).
- Looking at the full list, Actavis (NYSE:ACT) leads the way, with 77 funds naming the stock as a top 10 holding. Next up is Apple (NASDAQ:AAPL) with 69, then Facebook (NASDAQ:FB) at 42. For the entire list of 50, the average is 26 funds making a stock a top 10 holding.
- The rest in order: Valeant (NYSE:VRX), Microsoft (NASDAQ:MSFT), DirecTV (NASDAQ:DTV), Citigroup (NYSE:C), Time Warner (NYSE:TWC), Delta (NYSE:DAL), Cheneire (NYSEMKT:LNG), Yahoo (NASDAQ:YHOO), Liberty Global (NASDAQ:LBTYK), AIG, SunEdison (NYSE:SUNE), Air Products (NYSE:APD), Amazon (NASDAQ:AMZN), GM, BofA (NYSE:BAC), JPMorgan (NYSE:JPM), Macquarie Infrastructure (NYSE:MIC), American Airlines (NASDAQ:AAL), Charter Communications (NASDAQ:CHTR), Google (GOOG, GOOGL), Ally Financial (NYSE:ALLY), NorthStar Realty (NYSE:NRF), Priceline (NASDAQ:PCLN), eBay (NASDAQ:EBAY), MasterCard (NYSE:MA), Alibaba (NYSE:BABA), Micron (NASDAQ:MU), Williams (NYSE:WMB), Gilead (NASDAQ:GILD), Berkshire Hathaway (BRK.A, BRK.B), Dolar General (NYSE:DG), NorthStar Asset (NYSE:NSAM), Brookdale Senior (NYSE:BKD), DISH Network (NASDAQ:DISH).
- See also: Goldman updates list of hedge funds most-shorted stocks (May 21)
Berkshire Hathaway Inc is a conglomerate holding company owning subsidiaries engaged in a number of business activities, including property and casualty insurance and reinsurance, utilities and energy, finance, manufacturing, service and retailing.
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