Sep. 12, 2014, 4:37 AM
- Burger King (NYSE:BKW) will meet with leaders next week to discuss a $7.25B loan package, including a $6.75B seven-year term loan and a $500M five-year revolver, to back its $11.5B purchase of Tim Hortons (NYSE:THI).
- The loan, being arranged by JPMorgan Chase, would be the single biggest term loan for an acquisition by a speculative-grade borrower since 2007.
- Berkshire Hathaway (BRK.A, BRK.B) is also providing $3B of preferred equity financing for the transaction.
Sep. 11, 2014, 8:31 AM
- "I think Einstein needed somebody to talk to," says Charlie Munger, responding to a question about how he and Warren Buffett hooked up in a partnership. "He wouldn't have been as good as he was if he didn't have a talking foil who knew something, and I think I've been very useful in that regard."
- The Chairman of Daily Journal Corp. (NASDAQ:DJCO), Munger was speaking at the annual meeting.
- "Anyone who thinks this is a great tragedy is stark raving mad," says Munger over the hubbub about Berkshire Hathaway's (BRK.A, BRK.B) financing of Burger King's takeover of Tim Hortons, and the subsequent relocation to Canada. He notes Berkshire's tax bill will go up as a result of its involvement.
- Elon Musk? He's a genius, says Munger, "and I don't use that word lightly ... He’s also one of the boldest men who ever came down the pike. So put me down as saying I’ve always been afraid of the guy whose IQ is 190 and he thinks it’s 250.”
Sep. 4, 2014, 5:58 PM
- Senior execs from rail operators BNSF (BRK.A, BRK.B) and Canadian Pacific (NYSE:CP) pleaded with regulators today not to force them to take other operators’ trains on their networks in areas of the northern plains plagued by severe freight delays.
- Today's hearing discussed how farmers faced severe delays moving last year’s bumper harvest because of rail congestion, and there is growing concern over the potential for similar delays for this year’s harvest, which already is starting for some crops and also is expected to be large.
- "Any decision that forces more railcars on to our already congested system will not create more capacity,” BNSF chief marketing officer Stevan Bobb warned. “It will reduce capacity to some BNSF customers.”
Aug. 26, 2014, 2:00 AM
- In a surprise twist which lands Warren Buffett in the middle of the Burger King (NYSE:BKW)-Tim Hortons (NYSE:THI) deal, Berkshire Hathaway (BRK.A, BRK.B) is now expected to provide about 25% of the financing for the merger, WSJ reports.
- The exact structure of Buffett's participation remains unclear, but sources say he will invest in the form of preferred shares.
- Due to deal being structured as a tax-inversion, the new move also shoves the billionaire into a heated debate over U.S. taxes.
- THI +1.7% AH
Aug. 25, 2014, 9:58 AM
- "I am perfectly willing to spend whatever it takes to get everyone in the country to check our price," says Warren Buffett. Berkshire Hathaway's (BRK.A, BRK.B) Geico's ubiquitous ads - the company spent $1.2B last year (and Buffett says it will be more in 2014) - account for nearly 25% of all U.S. insurance companies' advertising spending. And it made Berkshire Hathaway the 7th largest advertiser in the country in 2013.
- Since shortly after current CEO Tony Nicely took the top job at Geico in 1993, the insurer's market share in personal auto insurance has about quadrupled to 10%, and last year the company became the 2nd largest U.S. auto insurer - behind State Farm, but ahead of Allstate and Progressive. Pretax underwriting profit of $393M in 2013 was up 17% from a year earlier.
- One reason for the need for the lavish ad spending for this otherwise thrifty company: Geico doesn't use agents, but instead sells policies directly to consumers via the Web or the phone.
- Geico execs are "cost-conscious connoisseurs," says the author of an upcoming book on Berkshire. "At headquarters, they're as thrifty as can be….Geico is the quintessential Berkshire company."
Aug. 21, 2014, 11:43 AM
- Hedge funds are having a difficult time of it again this year, up 1% vs. a 7.5% gain for the S&P 500, according to Goldman Sachs, which crunched the numbers on 775 funds with $1.9T in AUM.
- Nevertheless, Goldman's list of 50 stocks which "matter most" to hedge funds has outperformed the S&P 500 on a quarterly basis 66% of the time since 2001. The stocks this quarter (posted in order of the number of funds in which a name is a top-10 holding):
- ACT, AAPL, FB, AGN, AAL, GM, TWC, AIG, MSFT, HTZ, CHTR, MU, WMB, LNG, C, DAL, HCA, APC, CBS, ALLY, GOOGL, APD, NRF, BAC, EBAY, LBTYK, PCLN, VRX, BIDU, DTV, DISH, DG, EQIX, MA, WAG, ARCP, GILD, LINTA, MON, FOXA, VC, AMZN, BRK.A, BRK.B, SUNE, CMCSA, JPM, MIC, CCI, HES, LAMR.
- A special call-out to Northstar Realty (NYSE:NRF), Visteon (NYSE:VC), SunEdison (NYSE:SUNE), Macquarie Infrastructure (NYSE:MIC), and Lamar Advertising (NASDAQ:LAMR) for making the list of hedge fund hotels despite their relatively tiny market caps.
Aug. 20, 2014, 3:25 PM
- "Berkshire had owned convertible notes of USG since 2008 and was effectively forced to convert the notes when they were called for redemption by USG in December 2013," says Warren Buffett in a statement. "This event triggered a filing requirement for Berkshire (BRK.A, BRK.B) and we were late in realizing that fact.”
- Previously: Berkshire Hathaway to pay fine over reporting violation
Aug. 20, 2014, 11:42 AM| 14 Comments
Aug. 19, 2014, 7:17 PM
- Among Warren Buffett's (BRK.A, BRK.B) Q2 moves was a pullback in oil company investments, selling off the vast majority of his stake in ConocoPhillips (NYSE:COP) and dumping some of his holdings in Phillips 66 (NYSE:PSX) and National Oilwell Varco (NYSE:NOV).
- The move looks prescient, as U.S. crude prices have dropped from ~$107/bll in mid-June to less than $95 today, and energy stocks went from being among the best performers on Wall Street to the middle of the pack.
- West Texas crude for September delivery fell $1.93 to $94.48/bbl, the lowest settlement for a front-month contract since Jan. 17, and Brent crude traded near 14-month lows.
- ETFs: USO, OIL, UCO, SCO, BNO, DTO, DBO, CRUD, USL, UWTI, DWTI, DNO, SZO, OLO, OLEM
Aug. 15, 2014, 3:38 AM
- Berkshire Hathaway (BRK.B), (BRK.A) disclosed a $366M stake in cable TV operator Charter Communications (NASDAQ:CHTR) in the second quarter, according to a new regulatory filing. Shares of Charter have now rose more +2% in after-hours trading.
- The filing also detailed other new investments including a 1.3% raised stake in Wal-Mart (NYSE:WMT), and other increased holdings including IBM (NYSE:IBM) and Suncor Energy (NYSE:SU).
- However, Berkshire Hathaway reduced its stake in several companies, among them DirecTV (NASDAQ:DTV).
Aug. 13, 2014, 3:44 AM
- Berkshire Hathaway (BRK.B), (BRK.A) has hired two senior executives from AIG's (NYSE:AIG) Asia operations to boost its insurance business in the region.
- The company has recently put a large effort on expanding its businesses by moving beyond its core reinsurance operations. In July, it entered the fiduciary insurance business and hired AIG's VP of fiduciary liability.
- Additionally, Berkshire Hathaway Specialty Insurance, the company's commercial insurance business, is applying for licenses from regulators in Sydney, Hong Kong, Singapore and Europe.
Aug. 4, 2014, 10:05 AM
- Cash residing in Berkshire Hathaway's (BRK.B +1.3%), (BRK.A +1.1%) coffers rose to $55.5B as of June 30, more than double the amount Warren Buffett has said he likes to keep on hand should the company's insurance units face unusually large claims.
- Berkshire's size is not just a hindrance to finding a needle-moving deal, but so is the perky stock market. Also, Berkshire isn't the only one out there looking for deals. "The amount of dry power is unprecedented," says a private-equity advisor, and the pile of money (estimated at $1.16T) has led to warnings from Blackstone's Tony James and Apollo Global's Josh Harris about paying too much for acquisitions.
- Previously: Berkshire Hathaway reports Q2 results
Aug. 1, 2014, 6:28 PM
- Berkshire Hathaway (BRK.A, BRK.B): Q2 operating earnings per Class A equivalent share of $2,634 (+10% Y/Y) beats by $149.
- Net earnings per Class A equivalent share of $3,889 (+41% Y/Y).
- Revenue of $49.76B (+11% Y/Y).
- Book value per Class A equivalent share of $142,483 (+3% Q/Q).
- Press Release, 10-Q Filing
Jul. 25, 2014, 6:36 PM
- Berkshire Hathaway Energy's (BRK.A, BRK.B) application to buy SNC-Lavalin's (OTCPK:SNCAF) AltaLink power transmission unit wins preliminary approval from Canada's government.
- As part of the approval, Berkshire agrees not to cut jobs and that AltaLink - Alberta's largest regulated electricity transmission company - will remain locally managed with headquarters, senior management and operations remaining in the province.
- The C$3.2B purchase still needs approval from Alberta's utilities commission.
Jul. 23, 2014, 1:01 PM
- One of The Oracle's crisis-era high-yield investments could soon end as a post-earnings rally for Dow Chemical (DOW +3.4%) brings the stock above $53.72 for the first time in nine years. Should the shares close above that price for 20 trading days in a 30-day window, Berkshire's (BRK.A, BRK.B) $3B preferred stake in Dow could be converted into common stock.
- The preferred stock is expensive for Dow as it carries an 8.5% yield, meaning $255M in dividends annually paid to Berkshire. Of course a conversion would mean dilution, but "people have come to view the dilution from the preferreds as a manageable issue," says UBS's John Roberts, thanks to strong earnings and share repurchases.
- Previously: Dow Chemical beats estimates amid sales gains across businesses
Jul. 1, 2014, 12:02 PM
- Miami-based WPLG-TV is added to Berkshire Hathaway's (BRK.A, BRK.B) media holdings after a roughly (tax-advantaged) $1.1B share swap deal. In addition to the ABC affiliate, Berkshire got back 2,107 of its own Class A shares, 1,278 of its Class B shares, and roughly $328M in cash from Graham Holdings (GHC +0.2%). In return, Berkshire delivered 1.62M shares of Graham Holdings back to Graham Holdings.
- The Berkshire shares are valued at about $400M and the TV station at $364M.
- The deal ends Warren Buffett's long association with Graham Holdings, known as the Washington Post Co. before selling its flagship newspaper to Jeff Bezos. Buffett first bought into the company in 1973.
- Previously: Buffett and Graham put deal on paper
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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