Thu, Jul. 2, 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.
Wed, Jul. 1, 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)
Tue, Jun. 16, 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."
Thu, May 21, 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
Thu, May 21, 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)
Fri, May 15, 5:07 PM
- Berkshire Hathaway (BRK.A, BRK.B) owned 6.2M shares of 21st Century Fox (NASDAQ:FOXA) at the end of Q1, up from 4.7M at the end of Q4, the quarter in which the stake was established.
- Warren Buffett's firm also upped its stake in Precision Castparts (NYSE:PCP) to 4.2M shares from 2.9M, and in Phillips 66 (NYSE:PSX) to 7.5M from 6.6M. Berkshire's positions in IBM, Wells Fargo, Deere, and U.S. Bancorp were modestly increased. Dan Loeb cut his Phillips 66 stake in Q1.
- Berkshire cut its stake in oil/gas equipment maker National Oilwell (NYSE:NOV) to 2M shares from 5.3M at the end of Q4. Positions in MasterCard, Visa, Charter, WABCO, Bank of New York, Liberty Global, and Viacom were modestly cut.
- No new positions were taken in Q1, nor were any positions fully liquidated. Wells Fargo ($25.6B stake at the end of Q1) remains Berkshire's biggest holding, followed by Coca-Cola ($16.2B), IBM ($12.8B), American Express ($11.8B), and Wal-Mart ($5B).
- Berkshire's Q1 13F filing
- Two weeks ago: Notes from Berkshire's annual meeting
Wed, May 13, 11:24 AM
- The U.S. oil industry is challenging new rules aimed at improving the safety of moving crude oil by rail, as the American Petroleum Institute petitions the U.S. Court of Appeals for the D.C. Circuit to block key provisions of rules unveiled earlier this month.
- The petition seeks to block a requirement that older tank cars be retrofitted with new safety features designed to prevent them from spilling oil or rupturing in a derailment, and challenges a requirement that tank cars be equipped with new electronic braking systems or face operational restrictions.
- Environmental groups say the new rules do not go far enough, and are considering their own legal challenge.
- Relevant tickers: CSX, NSC, UNP, CNI, CP, KSU, BRK.A, BRK.B, GBX, WAB, TRN, ARII, RAIL
Wed, May 6, 11:44 AM
- A BNSF (BRK.A, BRK.B) train carrying crude oil derailed and burst into flames this morning near Heimdal, N.D., forcing the evacuation of the small town.
- The derailment involved a train with 109 cars, five of which reportedly are burning; 6-7 cars were derailed in the incident, although the cause is not yet known.
- The derailment occurred less than a week after the U.S. government proposed new rules to improve the safe transportation of crude oil.
Tue, May 5, 5:43 PM
- Norfolk Southern (NYSE:NSC) CEO Wick Moorman says the rail industry will challenge the U.S. government’s new crude-by-rail regulations, worried that the new rules could make shipping crude oil by train prohibitively expensive.
- The Department of Transportation last Friday called for the installation of new braking systems on trains hauling more than 70 cars of crude oil by 2021, a requirement Moorman says took the rail industry by surprise.
- The CEO tells WSJ that the new rules place railroads in a difficult spot because railroads do not own the vast majority of tank cars and thus have no control over whether the costly new brakes are installed; also, the brake requirement is not a mandate for tank car owners, only railroads, he says.
- Moorman says he is sure the industry will challenge the new rules either in court or petition the DoT for reconsideration.
- Relevant tickers: CSX, UNP, CNI, CP, KSU, BRK.A, BRK.B, GBX, WAB, TRN, ARII, RAIL
Sun, May 3, 6:36 AM
- Warren Buffett also rejected the idea that Berkshire Hathaway (BRK.A, BRK.B) was "too big to fail" at yesterday's annual shareholders meeting, stating that the sprawling conglomerate does require tighter regulatory oversight.
- "There is no reason, in logic or in terms of what we've heard, to think that Berkshire would be designated as a SIFI," the Oracle declared. "I do not think Berkshire comes within miles of qualifying as a SIFI."
- A SIFI (systemically important financial institution) designation subjects firms to additional regulatory requirements that can impede on their growth and profitability.
- Previously: Notes from 2015's "Capitalist Woodstock" (May. 02 2015)
- Previously: Bank of England: How come Berkshire not a SIFI? (Apr. 20 2015)
Sat, May 2, 4:24 PM
- "I make no apologies whatsoever for Clayton's lending practices," says Warren Buffett, responding to a Berkshire Hathaway (BRK.A, BRK.B) shareholder who says he's disgusted Berkshire would support Clayton Homes' allegedly predatory lending practices. "Clayton," says Buffett, "has behaved very well."
- Previously: Berkshire mobile homes unit accused of predatory tactics (April 6)
- Only about 3% of Clayton's $12B in mortgages on 300K homes fail, says Buffett, noting Clayton does not securitize the paper, but instead holds the notes on its books.
- The Oracle also defended his partnership with 3G - an outfit which has won a well-deserved reputation for ruthless cost-cutting, seemingly at odds with Buffett's distaste for layoffs and other expense reductions.
- See: Zero-Based Budgeting, 3G's secret sauce
- Buffett: “I don’t know of any company that says, as a policy, ‘we will have more people than we need,’ but a lot of companies ended up that way." Layoffs at 3G-run companies have spurred those companies to perform "exceedingly well."
- On American Express (NYSE:AXP): While the payments industry is subject to innovation, AmEx has an incredible history of adapting.
- On IBM: Asked if this is a "cigar butt" company - a great old company on the slide, but still a couple of puffs left (like Berkshire Hathaway when Buffett bought) - Charlie Munger says it isn't. He reminds that IBM was the dominant player in punch cards and has adapted over the years. It helps, says Munger, that Berkshire bought its stake at a reasonable price. "If people weren't often so wrong, we wouldn't be so rich."
- Live blog of the meeting at the WSJ
Fri, May 1, 5:41 PM
- Berkshire Hathaway (BRK.A, BRK.B): Q1 operating profit per Class A share of $2,583 beats by $210. Operating profit rose 20% Y/Y to $4.24B.
- Net profit rose 10% Y/Y to $5.16B, or $3,143 per Class A share. Revenue rose 7% Y/Y to $48.6B.
- Book value per Class A share rose to $146,963 from $146,186 at the end of Q4. Insurance float was $83.5B vs. $84B at the end of Q4.
- Press Release, 10-Q filing
Fri, May 1, 2:36 PM
- U.S. regulators issue tough new rules for safer transportation of crude oil by trains, introducing a new tank car standard and mandating the use of new braking technology.
- The rules require that the oldest, least safe tank cars be replaced within three years with new cars that have thicker shells, higher safety shields and better fire protection; a later generation of tank cars, built since 2011 with more safety features, will have to be retrofitted or replaced by 2020.
- Regulators are not asking railroads to notify communities of any oil train traffic but will require a “point of contact” for information related to the routing of hazardous materials.
- Shares of tank car makers are higher: GBX +7.2%, WAB +7.4%, TRN +7.4%, ARII +7.2%, RAIL +5.7%.
- Other relevant tickers: CSX, NSC, UNP, CNI, CP, KSU, BRK.A, BRK.B
Mon, Apr. 27, 12:59 PM
- Declining output from shale oil fields has in turn cut demand for key types of railroad cars, according to new industry figures, in the latest sign of the fallout from lower crude oil prices.
- Buyers ordered 4,470 new railway tank cars during Q1, down 6% Y/Y and ~70% below the nearly 15K tank cars ordered during Q4, according to the Railway Supply Institute trade group.
- Q1 orders for covered “hopper” cars, used mostly to deliver fracking sand to drill sites, also fell to 131 cars from 11.5K a year ago and 8,627 cars during Q4.
- Tank car orders had surged with shale oil output, generally transported to refineries by rail, but output from North Dakota’s Bakken Shale field dropped in both January and February, and the U.S. Energy Department predicts continued declines in output there for April and May.
- Relevant tickers: TRN, ARII, GBX, WAB, CSX, NSC, UNP, CNI, CP, KSU, BRK.A, BRK.B
Fri, Apr. 24, 4:44 PM
- Canada issues an emergency directive aimed at slowing crude oil trains traveling through urban areas to a maximum of 40 mph and requiring increased inspections and risk assessments along key routes used for transporting dangerous goods.
- The directive is the latest in a series of steps by the Canadian government to boost rail safety in the wake of derailments as crude-by-rail shipments rise.
- Canada’s two biggest railroad operators - Canadian National (NYSE:CNI) and Canadian Pacific (NYSE:CP) - already have restricted train speeds to 35 mph in urban locations; in the U.S., rail operator BNSF (BRK.A, BRK.B) said last month it had begun slowing crude-carrying trains to 35 mph in cities with more than 100K residents.
Mon, Apr. 20, 3:13 PM
- The Bank of England months ago penned a letter to the U.S. Treasury asking why The Oracle's reinsurance operation has been left off of Financial Stability Board's provisional list of too big too fail institutions.
- MetLife (NYSE:MET) - which has sued the U.S. government over its curious designation as a SIFI - would also probably like to know, as would a number of other primary insurers that have been so tagged.
- Berkshire (BRK.A, BRK.B) is part of a group of reinsurers - Swiss Re (OTCPK:SSREY) and Munich Re also come to mind - which have thus far escaped such scrutiny, even though primary insurers might argue the reinsurers are more important to the global financial system. The Basel-based FSB was supposed to make a reinsurance list public last year, but postponed the effort in November "pending further development of the methodology."
- Insurance is Berkshire's most significant business - accounting for 27% of net earnings last year - and providing Warren Buffett with the capital to invest in stocks and acquisitions.
- Source: FT
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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