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  • Thu, Oct. 20, 11:32 AM
    • Reinsurers sell coverage to other insurance companies for natural disasters and such. While they wait for loss-triggering events to happen, the reinsurers collect premiums which they can then invest. Warren Buffett (BRK.A, BRK.B) credits this "float" as a big factor behind his great fortune.
    • But business isn't what it used to be, write Sonali Basak and Noah Buhayar in Bloomberg, and Buffett sold stakes in Swiss Re and Munich Re last year, saying prospects over the next decade don't look great. He also put new leadership in charge of Berkshire's General Re to try and reverse more than a decade of shrinking float.
    • Among the issues are what's turned into years of barely visible interest rates. “It is no fun,” says The Oracle, to “find out that a great many of the things that you were buying a few years ago now have negative yields.” It's also become a more crowded field with the entrants first of David Einhorn (NASDAQ:GLRE) and more recently Dan Loeb (NYSE:TPRE) helping to create a price war, with premiums down 40% over the past decade.
    • Insurers can also now turn to investment banks to lay off risk by issuing catastrophe bonds - a market that's grown from $9.2B to $25B over the last ten years.
    • A shakeout is already underway as there have been a number of sector mergers. What might further shake things up would be a catastrophe big enough to cause significant industry losses.
    • Interested parties: CB, RNR, AHL, ENH, AXS, ACGL, RGA, UNM
    | Thu, Oct. 20, 11:32 AM | 1 Comment
  • Fri, Oct. 7, 3:50 AM
    • Mars Inc. has finally taken full control of Wrigley, formally putting M&Ms and Skittles in the same division to create the Mars Wrigley Confectionery.
    • In so doing, Mars is buying out the minority stake that Berkshire Hathaway (BRK.A, BRK.B) has owned in Wrigley since Warren Buffett helped engineer the $23B takeover in 2008.
    • Financial terms of the deal weren't disclosed, though previous preferred-stock investments by Berkshire charged a premium if they were cashed out ahead of schedule.
    | Fri, Oct. 7, 3:50 AM | 10 Comments
  • Thu, Sep. 29, 4:35 PM
    • "We spoke for five minutes. I told him the problem was bigger than he thought," says Warren Buffett, confirming to CNBC's Becky Quick that he's talked to Wells Fargo (NYSE:WFC) CEO John Stumpf. The call to Stumpf, says Buffett, came after the CEO's appearance on Mad Money, which Buffett thought didn't go well. The Oracle says he has not spoken to other board members.
    • As for whether he's buying or selling here, Buffett says regulatory limits currently prevent Berkshire (BRK.A, BRK.B) from adding to its position. He reminds he's never told anyone whether he would stick around in this or any other position.
    • Shares -0.3% after hours following a 2.1% decline in the regular session.
    • Previously: Buffett denies report he wants big changes at Wells Fargo - CNBC (Sept. 29)
    | Thu, Sep. 29, 4:35 PM | 85 Comments
  • Thu, Sep. 29, 12:00 PM
    • Doug Kass earlier today said Warren Buffett (BRK.A, BRK.B) "expressed his extreme dissatisfaction" to the Wells Fargo (WFC -0.7%) board, and called for "a radical transformation of the bank's ethics.
    • However, a spokesperson for The Oracle tells CNBC's Becky Quick the claim Buffett expressed "extreme dissatisfaction" to the board is not true.
    | Thu, Sep. 29, 12:00 PM | 45 Comments
  • Wed, Sep. 21, 3:50 PM
    • Reached by Fox Business for his thoughts on the Wells Fargo (NYSE:WFC) scandal, the bank's largest shareholder says he's going to stay mum until November. For good measure, he says he's also going to stay silent on the presidential election.
      "If I start commenting on that or anything else, it will lead down too many paths so I will wait until November to speak about it, the election or any other subject."
    • The owner of nearly 10% of Wells Fargo, Berkshire Hathaway (BRK.A, BRK.B) this summer applied to the Fed for permission to raise its holdings above that threshold, so it's possible rules related to that process prevent Buffett from speaking out.
    • Looking back at The Oracle's reaction to an ethical lapse at Salomon Brothers 25 years ago could give a hint. Buffett took over as CEO, and in Congressional testimony said, "Lose money for my firm and I will be understanding; lose a shred of reputation for the firm, and I will be ruthless."
    • With stocks and the big banks solidly in the green, Wells is underperforming again, down 1.6% on the session.
    | Wed, Sep. 21, 3:50 PM | 91 Comments
  • Tue, Sep. 20, 3:21 PM
    • Yet to be heard from since the account opening scandal hit Wells Fargo (WFC +2.1%) is its largest shareholder, and Dick Bove suggests The Oracle may be rethinking his investment.
    • It's no coincidence, says Bove, that on the day of Stumpf's Capital Hill grilling, it was announced that key Buffett lieutenant Todd Combs was joining the board of JPMorgan - a bank in which Berkshire (BRK.A, BRK.B) has no stake. "[Buffett] is clearly walking away from Wells Fargo," says Bove.
    • How exactly Buffett is going to just "walk away" from a 9.5% stake in the bank is another story, of course. There's also Buffett's long history - the man seems far more likely to be a buyer, rather than seller, in these sorts of situations (see the American Express salad oil scandal).
    • Bove cuts his price target to $40 from $44.
    | Tue, Sep. 20, 3:21 PM | 134 Comments
  • Tue, Sep. 20, 7:21 AM
    • Berkshire Hathaway (BRK.A, BRK.B) investment officer Todd Combs - rumored to be part of the Buffett succession plan - has been elected to the Board of Directors at JPMorgan (NYSE:JPM), effective September 19.
    • Prior to joining Berkshire in 2010, Combs was the founder and CEO of Castle Point Capital. Warren Buffett has called his hiring "one of my best moves."
    | Tue, Sep. 20, 7:21 AM | 9 Comments
  • Fri, Sep. 16, 3:57 PM
    • Charlie Gasparino is reporting those close to Wells Fargo (NYSE:WFC) John Stumpf as saying his job is in jeopardy over the account opening scandal.
    • With pressure mounting and two congressional appearances set for the next couple of weeks for Stumpf and team, a vote of confidence from Warren Buffett (BRK.A, BRK.B) might be in order, but The Oracle has been curiously silent for now.
    • A new story from the WSJ's Emily Glazer describes conditions at Wells Fargo branches in which tremendous pressure was put on employees to meet sales targets for the bank which championed itself as king of the cross-sell.
    • Managers suggested workers hunt for prospects at bus stops and retirement homes, and branch bosses are described as constantly monitoring progress towards sales goals, sometimes hourly. Numbers at the branch level were reported to higher-ranking mangers as many as seven times a day.
    • In Tucson, a common tactic was to tell wealthier, existing customers that the bank was going to send them a new credit card as a "thank you" for their business. If the customer didn't want the card, they could cut it up, but in the meantime, credit was pulled, which could ding the customer's credit score.
    • Shares are down another 1.6% today, again underperforming Wells' big bank peers.
    | Fri, Sep. 16, 3:57 PM | 134 Comments
  • Fri, Sep. 16, 2:57 PM
    • A deal between Berkshire Hathaway’s NV Energy (BRK.A, BRK.B) and SolarCity (NASDAQ:SCTY) that will roll back rate hikes for existing rooftop solar customers is approved by the Nevada Public Utilities Commission.
    • The vote was expected after the companies earlier this week asked the PUC 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.
    • The agreement will protect more than 32K Nevada rooftop solar customers from higher fees that took effect in January.
    | Fri, Sep. 16, 2:57 PM | 18 Comments
  • Tue, Sep. 13, 5:36 PM
    • Berkshire Hathaway's (BRK.A, BRK.B) NV Energy, Solar City (NASDAQ:SCTY) and Nevada regulators reportedly reach an agreement to grandfather eligible customers under older, more favorable rates for customers who installed residential rooftop solar systems before this year.
    • The grandfathering agreement will apply to ~32K customers, including those who had a pending application on Dec. 31, 2015; the rates had been raised in December and retroactively applied to existing customers.
    • The deal still must be approved by the Nevada Public Utilities Commission, which is expected to vote on it on this week.
    | Tue, Sep. 13, 5:36 PM | 13 Comments
  • Mon, Sep. 12, 3:50 PM
    • A lawsuit filed late on Friday by Breakaway Courier Systems - a New York bicycle courier company - accuses Berkshire Hathaway's (BRK.A, BRK.B) Applied Underwriters of "siphoning" premiums through a web of illegal shell companies, with diverted premiums going to unlicensed out-of-state insurers.
    • It amounts to a "reverse Ponzi scheme," says Breakaway, where employers expecting to buy affordable policies instead bought costly reinsurance requiring them to cover each other's losses, and leaving taxpayers on the hook when too many were injured on the job.
    • "Berkshire's schemes break multiple laws, including that you cannot collect insurance premiums if you are not licensed," says Breakaway's attorney Raymond Dowd.
    • The suit comes three days after Applied agreed to stop selling disputed workers' comp policies in California.
    • Source: Reuters' Jonathan Stempel
    | Mon, Sep. 12, 3:50 PM | 9 Comments
  • Wed, Sep. 7, 8:20 AM
    • Things are back to normal for Berkshire Hathaway (BRK.A, BRK.B) in 2016 as its 13.5% advance year-to-date is topping the S&P 500 by nearly 700 basis points.
    • This comes after a rough 2015, in which The Oracle's company slipped 12% versus the S&P's near-flat performance.
    • Helping in 2016 is the strong relative performance of the financial sector over the past few months, not to mention value names in general this year outperforming growth stocks.
    | Wed, Sep. 7, 8:20 AM | 5 Comments
  • Wed, Aug. 31, 4:56 PM
    • The issue, according to analysis by Yale's Yair Listokin, is that the stock rarely seems to ever close above $53.72 - just seven times since April 2014 despite a range from the low-$40s to low-$50s. This compares to more than 50 closes at just below $53.72, and a full 91 closes from $52.71-$53.71.
    • Why is this important? Dow Chemical (NYSE:DOW) has the option to buy back $3B worth of preferred shares from Berkshire Hathaway (BRK.A, BRK.B) only if the stock closes above $53.72 enough times. Some executives at Dow believe a short seller keeps knocking it back, and they've got fuel for that argument from Listokin.
    • “The probability that this would happen by chance is essentially zero ... [it's] pretty clear evidence of manipulation," he says.
    | Wed, Aug. 31, 4:56 PM | 86 Comments
  • Mon, Aug. 29, 8:16 AM
    • A strong pace of EV sales helped lift net profit at BYD Company (OTCPK:BYDDF, OTCPK:BYDDY) by 38% to 2.26B yuan ($340M) for the six-month period ending on June 30.
    • Revenue was up 44% to 43.74B yuan during the period.
    • BYD says "new energy" sales accounted for 35% of the tally. The company expects new energy vehicle sales to double to 120K this year, although a planned scaling down of subsidies from the Chinese government could slow momentum over the next several years if they aren't reversed.
    • Berkshire Hathaway (BRK.A, BRK.B) holds a 9.89% stake in BYD.
    • BYD's shares in Hong Kong closed up 2.45% to HKD$52.25.
    | Mon, Aug. 29, 8:16 AM | 4 Comments
  • Thu, Aug. 25, 3:59 PM
    • Berkshire Hathaway (BRK.A, BRK.B) now controls more than 15% of Phillips 66 (PSX +1.8%) after buying more shares in the oil refiner this week, bringing its total number of PSX shares close to 79.5M as Warren Buffett continues his steady buildup of shares since 2012.
    • Buffett bought 704,181 shares at an average price of $77.45/share between Aug. 22 and Aug. 24, which would be valued at ~$6.17B.
    | Thu, Aug. 25, 3:59 PM | 40 Comments
  • Thu, Aug. 25, 12:40 PM
    • One "overarching issue has emerged over the last 90 days, and that is Gen Re's costs problem," says Ajit Jain in an internal memo seen by Bloomberg.
    • Jain took on oversight of Berkshire Hathaway's (BRK.A, BRK.B) Gen Re earlier this year. "The ratio of expenses to premiums is not where it should or could be," he continues.
    • While Berkshire's reinsurance operation generates billions in profits, and plenty of float for Warren Buffett to invest, the Gen Re experience has been more rocky since being purchased in 1998 for $22B.
    • Underwriting losses began soon after, and float has been falling for more than a decade. This year, premium revenue of $2.78B in H1 was down 7% from 2015's level. Pretax underwriting gain of $132M in 2015 was down more than 50% from the year prior.
    • Among the items noted by Jain is pay, where employees have an incentive to shun some potentially profitable business because compensation is tied to margins, rather than overall earnings. He also takes note of the "gradual creep of corporate bureaucracy," and suggests reducing management layers to three or four from the current six, overhauling the budget process, and cutting travel and entertainment expense. “I happen to think that my distaste for complexity and bureaucracy is appropriate and ordinary, although others have called it rabid and overzealous."
    | Thu, Aug. 25, 12:40 PM | 13 Comments