Sep. 20, 2013, 3:19 PM
- "We have a track record. We're there in good times and bad," says Bob Benmosche on Berkshire Hathaway's (BRK.A, BRK.B) push into AIG's commercial insurance turf. Corporate buyers appreciate AIG's decade-long history in the business, says Benmosche. It's not something the house of Buffett can match.
- Berkshire has hired nearly 20 top people from AIG this year, and Warren Buffett has big plans for the unit, expecting the business to reach "into the billions." Last week, the WSJ reported on a tenuous truce between the companies as Berkshire agreed not hire any more from AIG for a little while, and AIG has backed off plans to sue.
- Earlier: Benmosche on the NY regulator.
Sep. 20, 2013, 9:33 AM
- "Basically we love the position of being an owner," says Buffett of the 10-year warrants Berkshire (BRK.A, BRK.B) received when it purchased a $5B preferred stake in Bank of America (BAC) in 2011. The warrants are struck at $7.14 each and allow the purchase of 700M shares of BofA common up to the year 2021 (last night's close was $14.61; bravo, Mr. Buffett).
- Buffett expects to hold the warrants until near-expiration and then convert them to common stock, though that calculation could change were the bank to institute a significant dividend.
- On redeeming Buffett's preferred stake, BofA CEO Moynihan says the bank has more expensive capital to retire first. "There will be some day that we’ll talk about this, but that’s far out there."
Sep. 20, 2013, 7:47 AM
- "We're having a hard time finding things to buy," says Warren Buffett (BRK.A, BRK.B), who feels the stock market is essentially fairly priced at the moment. Appearing with Bank of America (BAC) CEO Brian Moynihan, Buffett stumps for his choice for next Fed chief: Ben Bernanke. "He's done a terrific job."
- Buffett does allow that higher interest rates have inflated stock prices and warns about a QE exit - "Buying securities is usually easier than selling securities."
- Moynihan doesn't rock his large investor's boat: "You have an economy ... growing at 1.5-2% ... until unemployment is down, (Bernanke) has to keep this economy going in the right direction."
Sep. 18, 2013, 12:56 PM
- Narrowing oil price spreads aren't stopping railroads such as Union Pacific (UNP) and Warren Buffett’s Burlington Northern (BRK.A, BRK.B) from planning more capacity, optimistic that crude-by-rail shipments will keep boosting revenue even with the risk of stiffer regulations.
- Brent crude, the benchmark for U.S. imports, traded at a premium to domestic WTI oil by nearly $28/bbl in late 2011, but the spread has narrowed and is now ~$3; it generally costs an extra $12-$15 to ship a barrel of oil by rail vs. slower pipelines, but the economics aren't as attractive once the difference falls below that range.
- “Spreads go up, spreads go down, but just looking at the geography of oil production and refining capacity, railroads will play a strategic role in moving crude from the shale for years to come," a Susquehanna analyst says.
Sep. 13, 2013, 10:00 AM
- It's a "war" says one person close to the issue as Berkshire Hathaway (BRK.A, BRK.B) pushes into the commercial insurance market dominated by AIG. The initial bomb was dropped with Berkshire's April poaching of four senior AIG executives to start a new commercial insurance unit.
- Berkshire has since hired about 15 more from AIG, but agreed not to hire any more for a year, and the companies have also agreed not to disparage one another.
- Buffett has made no secret of his ambitions: "I think you will see us become a very significant factor world-wide in the commercial insurance business. It could be a business that reaches into the billions ... We've got the right people. We've got capital like no one else has."
- AIG publicly brushed off the initial poachings, but privately seethed, with some executives wanting to sue. Ultimately, the two companies reached an agreement outside of the courts. AIG is also taking its reinsurance business elsewhere.
- Marsh & McLennan (MMC) U.S. insurance chief David Bidmead says the new Berkshire unit has been winning plenty of business, but doesn't see it as "uniquely troublesome to AIG."
Sep. 6, 2013, 1:02 PM
Aug. 19, 2013, 11:41 AM
- The Oracle and the Bank of America (BAC -1.1%) CEO had a private dinner together in Omaha earlier this month at which Buffett praised the bank's turnaround efforts.
- Berkshire (BRK.A, BRK.B) gets a 6% dividend on the $5B of preferred shares it purchased in 2011, but the real cheese is the warrants struck to buy $5B of common stock at $7.14 each. With the shares at $14.27, they're more than a little bit in the money.
- What's not known are the details of any discussion about Berkshire's exit from its BofA stake. It wasn't the purpose of the dinner, but it "very likely came up," reports CNBC, citing sources.
Aug. 15, 2013, 2:32 PM
- Warren Buffett's (BRK.A, BRK.B) new ~$524M stake in Suncor (SU +3%) is a declaration of support for controversial Canadian oil sands and could be the start of something bigger, perhaps plays in other Canadian oil sands projects, 24/7's Jon Ogg speculates.
- The SU purchase will help ensure a steady supply of oil for Buffett's BNSF railroad to move; oil accounts for ~4% of BNSF's freight and is expected to double during the next several years.
- SU doesn't have the same transportation issues as some other oil sands producers, a Morningstar analyst says; it has locked up more than enough pipeline and rail capacity to move its current and planed production for several years.
Aug. 15, 2013, 6:20 AM
Aug. 14, 2013, 2:51 PM
- Berkshire Hathaway's (BRK.A, BRK.B) HomeServices of America adds to its realtor stable, buying Prudential Fox & Roach with more than 4K brokers and 62 offices in Southeastern Pennsylvania, New Jersey, and Deleware.
- Betting on a housing rebound, HomeServices has been busy on the acquisition trail the last two years, and is now the country's 2nd largest residential broker (Realogy Holdings is #1).
- Included in the purchase is Trident Group - a mortgage and insurance broker.
- Press release.
Aug. 9, 2013, 4:58 PM
- A U.S. appeals court vacates a lower court's decision to certify a class action against railroad companies, a procedural win for the companies in a case about whether they illegally colluded to fix the price of fuel surcharges.
- Thousands of freight-shipping customers are suing four major railroads - Berkshire Hathaway's (BRK.A, BRK.B), BNSF, CSX, Union Pacific (UNP) and Norfolk Southern (NSC) - over the alleged conspiracy, seeking potentially billions of dollars in damages.
Aug. 6, 2013, 10:44 AM
- Berkshire's (BRK.A, BRK.B) bond sale of 3 and 5 year notes, reports Bloomberg, could come as early as today, and would be the company's first debt offering since May. The 5-year part of that sale was priced to yield 57 bps more than similar maturity Treasurys (they now have a spread of about 36 bps).
- The offering is expected to be rated Aa2 by Moody's and the proceeds will be used to repay other debt.
Aug. 5, 2013, 9:04 AM
- If you have a couple of hundred thousand to spare, shares of Berkshire Hathaway (BRK.A) are a steal at 176.5K each, Nomura thinks.
- Analyst Clifford Gallant raises his price target to $192K (from $187K), citing BRK's Q2 results. "The company [is] levered to benefit from an improving US economy," he notes.
- FY13, and FY14 EPS estimates are raised from $9,060.51 to $9,328.55 and from $9,793.98 to $9,928.01 respectively.
Aug. 2, 2013, 7:57 PM
- Berkshire Hathaway (BRK.A) posts a solid Q2 as the company was helped by investment gains, and strong revenue growth across its businesses.
- Operating profit at the company's non-insurance units rose 7.8% to $2.37B, as railroad Burlington Northern Santa Fe continued to post earnings growth.
- Investment income from the insurance operations rose 7.1% to $1.14B.
- The company also booked an investment gain of $322M, compared with a gain of $81M a year earlier, as the latest quarter included derivatives gains of $300M versus a loss of $693M a year ago.
Aug. 2, 2013, 5:17 PM
Aug. 2, 2013, 5:13 PM
BRK.A vs. ETF Alternatives
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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