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
Fri, Apr. 17, 4:47 PM
- Trains carrying crude oil will be restricted to a 40 MPH speed limit in populated areas such as New York, one of the steps required by an order from the U.S. Department of Transportation in response to a series of derailments.
- The emergency order makes the agreement mandatory for all railroads hauling 20 or more tank cars linked together or 35 cars in total that are filled with oil or other flammable liquids, and applies to both older model DOT-111 tank cars and CPC-1232s the industry has been voluntarily building since 2011.
- The DoT also issued an advisory to railroads to use the latest technology to check for flaws in train wheels that can cause a crash; a broken train wheel is suspected of causing the March 5 derailment near Galena, Ill., of a BNSF Railway (BRK.A, BRK.B) train hauling 103 cars of Bakken crude.
- Other relevant tickers: CSX, UNP, NSC, KSU, GWR, CNI, CP
Mon, Apr. 13, 10:02 PM
- The scorecard since the Bank One/JPMorgan (NYSE:JPM) merger in 2004 - with Jamie Dimon taking the helm of the merged company - is a remarkable one, writes The Brooklyn Investor.
- Dimon has grown tangible book value per share at a rate of 14.1% annually. As comparison (though it isn't a perfect one), BVPS at Berkshire Hathaway (BRK.A, BRK.B) and Markel (NYSE:MKL) - hall of fame compounders - has grown by 10.1% and 12.5% respectively per year over the same time frame. Keep in mind that JPMorgan turned in this record during the period that includes the financial crisis.
- As for stock performance, someone owning Bank One when Dimon became CEO in 2000 and holding through the merger would have had a total return of 10.4% annually since - 170 basis points per year better than Berkshire Hathaway. The S&P Financials Index over that time has returned just 2.2% per year, and the S&P 500 only 4%.
- As for Dimon's defense against those arguing for a break-up of JPMorgan, BI's buying it, excerpting the CEO: "Our long-term view means that we do not manage to temporary P/E rations - the tail should not wag the dog."
- And finally, BI notes Jamie Dimon comes pretty cheap - the average percentage of profits paid to the JPMorgan CEO over the three years ended in 2013 was 0.09%, the lowest among the Too Big To Fail U.S. banks.
Tue, Apr. 7, 7:27 AM
- Berkshire Hathaway (BRK.A, BRK.B) agrees to buy 20M shares of Axalta (NYSE:AXTA) from The Carlyle Group for $560M, or $28 per share, and agrees not to sell anything for 90 days following the deal, after which Axalta will provide Berkshire with certain registration rights.
- Source: Press Release
- Based in Philadelphia, Axalta offers coating and painting systems, and has a market cap of about $6.4B.
- Shares are higher by 4.1% premarket to $29.50.
Mon, Apr. 6, 6:51 PM
- The exploding growth in oil train shipments fueled by the U.S. energy boom has sputtered in recent months, hurt by safety problems and low crude oil prices, WSJ reports.
- Railroads have been a major beneficiary of the U.S. energy boom, as some oil companies turned to trains to move crude to refineries from North Dakota and other areas underserved by pipelines, but WSJ says ~1.38M bbl/day of oil and fuels such as gasoline rode the rails in March vs. an average of 1.5M bbl/day in the same period a year ago.
- BNSF Railway (BRK.A, BRK.B), which is responsible for ~70% of U.S. oil train traffic, operated as many as 10 trains a day last year but now is averaging nine a day.
- Shipping oil across the U.S. by train can cost $6-$12/bbl, which makes sense only when the price of U.S. crude is significantly cheaper than oil pumped overseas; in recent weeks, the price gap between U.S. and Brent has narrowed to ~$7/bb, making some oil train shipments too costly at this time, but Barclays thinks U.S. crude may sell for $13/bbl less than Brent, which would boost oil train shipments later this year.
- Other relevant tickers: CSX, UNP, NSC, KSU, GWR, CNI, CP
Mon, Apr. 6, 10:24 AM
- "Clayton Homes relies on predatory sales practices, exorbitant fees, and interest rates that can exceed 15%, trapping many buyers in loans they can't afford and in homes that are almost impossible to sell or refinance," according to The Center for Public Integrity in a report titled: "Warren Buffett's (BRK.A, BRK.B) mobile home empire preys on the poor."
- Since Buying Clayton in 2003 for $1.7B, Berkshire has moved consolidate the fragmented mobile-home lending industry, with Clayton at a 39% market share in 2013 vs. just 13% in 2005. The company had pre-tax income of $558M last year, according to the report, which details a number of hard-luck stories from Clayton customers.
Tue, Mar. 31, 2:54 PM
- Could CarMax (NYSE:KMX) or AutoNation (NYSE:AN) be next? Larry Van Tuyl, chairman of Berkshire Hathaway Automotive (BRK.A, BRK.B), tells CNBC he hopes to purchase more U.S. auto dealerships.
- Berkshire closed on its purchase of Van Tuyl - which has 81 dealerships in 10 states - earlier this month.
- Previously: Berkshire closes on auto dealer purchase (March 10)
Mon, Mar. 30, 7:25 PM
- BNSF Railway says it is cutting the speed of crude oil trains in some urban areas to as slow as 35 miles/hour, a 30% reduction, to improve safety following recent high-profile derailments in the U.S. and Canada.
- BNSF, owned by Berkshire Hathaway (BRK.A, BRK.B), says it also is stepping up efforts to find and repair defective wheels before they can cause derailments.
- The company says it already has doubled the frequency of track inspections near waterways, and now will inspect the track 2.5x more often than regulations require.
- BNSF hauls much of the oil produced in the Bakken region.
Wed, Mar. 25, 10:19 AM
- Berkshire Hathaway (BRK.A, BRK.B) owns 51% of Heinz, and Berkshire/3G will own 51% of the new Kraft Heinz, meaning Berkshire will wind up with a bit more than 25% of the combined entity.
- Where this deal differs from Heinz is that existing Kraft shareholders will keep their stock, and will own 49% of the merged - publicly traded - firm.
- It's a score for Buffett, as Berkshire will own more than 300M shares of the new firm, and will have paid less than $30 each for them. Pulling out the $16.50 per share special dividend due to Kraft owners as part of deal, Berkshire has more than doubled its money, based where Kraft is currently trading.
- Naturally, The Oracle has no intention of taking profits. “You won’t see Berkshire reduce its interest,” says Buffett. “We will be in this stock forever.”
- Source: WSJ
- Previously: Kraft, Heinz announce merger (March 25)
Wed, Mar. 25, 6:23 AM
- H.J. Heinz, owned by P-E firm 3G Capital and Berkshire Hathaway (BRK.A, BRK.B), and Kraft (NASDAQ:KRFT) have entered into a definitive merger agreement to create The Kraft Heinz Company, forming the third largest food and beverage company in North America.
- Heinz shareholders will own a 51% stake in the combined company, while Kraft shareholders will hold a 49% stake and receive a special cash dividend of $16.50 per share.
- Together the new company will have eight $1B+ brands and five brands between $500M-$1B.
- "I am delighted to play a part in bringing these two winning companies and their iconic brands together. This is my kind of transaction," said Berkshire Hathaway CEO Warren Buffett.
- 3G previously took Burger King private in 2010, bought Tim Hortons last year through the holding and teamed up with Berkshire Hathaway two years ago to buy Heinz for $23B.
- Kraft’s revenue last year was effectively flat at $18B and net profit fell 62% to $1B, due to higher commodity costs and big charges related to its post-employment benefit plans.
- Previously: Kraft now +16.5% on buyout report; MDLZ, CAG also gain (Mar. 24 2015)
- KRFT +15.8% premarket.
Tue, Mar. 17, 10:58 AM
- The Keystone pipeline disappointment is hardly a death knell for TransCanada (NYSE:TRP), as the company remains one of the top holdings in Skip Aylesworth’s Hennessy Gas Utility fund, which climbed 21% last year as distribution gains trumped price drops.
- TRP is "a fine, healthy company and, yes, this is a hiccup, and they would love to see Keystone happen, but it is just a part of their business," Aylesworth tells Barron's.
- Of one Aylesworth's favorite energy investments actually is Berkshire Hathaway (BRK.A, BRK.B), which is heavily involved in the distribution of natural gas and owner of Burlington Northern, which is exploring using natural gas to fuel long-distance freight trains.
- Other favorites: ENB, WMB, LNG, NJR, KMI, SE
Tue, Mar. 17, 8:59 AM
- BNSF Railway (BRK.A, BRK.B) is sued by a trade group for 400 U.S. refining and petrochemical makers objecting to a $1,000 surcharge the company tacked onto older model tank cars.
- The American Fuel & Petrochemical Manufacturers says the surcharge is designed to encourage shippers to retrofit or scrap older tank cars in favor of safer “jacketed” models that are not required by federal regulators.
- The surcharge adds $1.50/bbl to shipping costs, according to the trade group, which represents ~95% of U.S. refining capacity; BNSF began adding the fee on Jan. 1.
- BNSF hauls more than 600K bbl/day of crude, including more than half of the oil pumped from the Bakken formation in North Dakota and Montana.
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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