Jun. 24, 2014, 12:48 PM
- Warren Buffett’s BNSF Railway (BRK.A, BRK.B) and Canadian Pacific Railway (CP) face a June 27 deadline to say how they will clear a backlog of grain shipments that has frustrated farmers for months.
- The U.S. Surface Transportation Board is ordering the railroads to outline by then how they will deal with service disruptions, including a timeline for doing so, and to subsequently provide weekly updates about their progress.
- This year's unusually cold winter slowed rail networks in the U.S. and Canada, forcing railroads to run shorter trains and aggravating congestion on a system already dealing with increased shipments of crude oil from North Dakota's Bakken Shale region.
Jun. 23, 2014, 3:11 PM
- Large investments in common and preferred stocks, as well as an "aggressive acquisition strategy," pose risks, but earnings stability offsets those concerns, says S&P, affirming its ratings on Berkshire Hathaway (BRK.A, BRK.B) - AA/A-1 counterparty credit, and AA+ insurance financial strength - but boosting the outlook to stable from negative.
Jun. 19, 2014, 12:03 PM
- The system will be the only real-time, regional one of its kind in the West, and will be able to automatically dispatch power every five minutes from plans with enough power to supply 51.6M homes. The California Independent System Operator and PacifiCorp expect this to be a first step toward an organized market across the entire West, where 38 authorities now manage their own grids.
- PacifiCore is a subsidiary of Berkshire's (BRK.A, BRK.B) Berkshire Hathaway Energy Co. Its sister in Nevada, NV Energy - also now owned by Berkshire - is applying to join the same "energy imbalance market" next year.
Jun. 9, 2014, 3:41 PM
- “We’ve poured billions and billions and billions of dollars in retained earnings, and several billion of additional equity,” into the energy business, says Warren Buffett, speaking at the Edison Electric Institute convention in Las Vegas. “And we’re going to keep doing that as far as the eye can see.”
- Reducing Berkshire Hathaway's (BRK.A, BRK.B) reliance on things like insurance and stock-picking, Buffett has moved toward capital-intensive industries like energy and transportation over the past decade-plus, and Berkshire Hathaway Energy has $70B in assets today. "So far we've stayed rich," he says.
Jun. 9, 2014, 12:31 PM
- With a 2.91% gain in May, REITs outperformed the Dow, S&P 500, and Russell 2000, but fell shy of the Nasdaq's 3.1% gain. Leading the way for REITs were infrastructure plays, returning 6.55% thanks to strong demand from wireless carriers as they transition from 3G to 4G, writes Trepp's Susan Persin.
- Speaking last week at NAREIT's REIT Week, Crown Castle's (CCI) Ben Moreland also noted boosted demand from first responder/public safety networks.
- Manufactured housing REITs returned 5.03 in May, and UMH Properties management - also at REIT Week - noted shipments are low by historical standards and financing remains a challenge even with Warren Buffett being a fan of the sector: Berkshire Hathaway (BRK.A, BRK.B) owns the two dominant lenders. Other players in manufactured housing: SUI, ELS.
- ETFs: IYR, VNQ, DRN, REZ, URE, SRS, ICF, RWR, SCHH, DRV, ROOF, KBWY, RTL, REK, FRI, FTY, PSR, IFNA, WREI
Jun. 5, 2014, 11:41 AM
- Union Pacific (UNP) and BNSF Railway (BRK.A, BRK.B) are seeking to prevent disclosure of details about oil shipments through Washington state, despite a U.S. government order to provide the information in the wake of several oil train accidents.
- The two railroad companies last Friday sent the state confidentiality agreements aiming to restrict the information to emergency response groups for planning purposes only; the state's Emergency Response Commission instead presented alternative agreements the railroads say they are reviewing.
- BNSF says it would comply with the federal order but believes the information is "security sensitive and confidential, intended for people who have ‘a need to know’ for such information, such as first responders and emergency planners."
May. 28, 2014, 4:37 PM
- A joint venture of Berkshire Hathaway (BRK.A, BRK.B) and Leucadia National (LUK), Berkadia Commercial Mortgage purchases Phoenix-based Keystone Commercial Capital, which has mortgage banking offices in Boston and San Diego, as well as its hometown.
- Keystone co-founder Charlie Williams will continue to run the company.
- Berkadia is third-largest commercial and multifamily mortgage servicer, with a portfolio of over $229B as of March 31. It was created by Berkshire and Leucadia from the ashes of bankrupt Capmark Financial Group in 2009.
May. 27, 2014, 11:27 AM
- Noting that Berkshire Hathaway's (BRK.A, BRK.B) Warren Buffett has suggested he will hunt for his next big acquisition among energy companies, Reuters speculates that strong candidates that fit Buffett's style could include Baker Hughes (BHI), Williams Partners (WPZ) and Pinnacle West Capital (PNW).
- BHI has a fat ~$30B market cap but is trading at a discount to peers on several key metrics, WPZ sports the competitive advantage of its ownership of the Transco gas mainline which runs from Texas to New York, while PNW may be on the smallish side but offers strong cash flow from operations and reasonable debt.
May. 22, 2014, 8:34 AM
- The move by Susep - Brazil's insurance regulator - allows Berkshire Hathaway (BRK.A, BRK.B) to operate in the country as an "eventual reinsurer," i.e. to do business there without having a representative office.
- In Brazil, there are three classes of reinsurers - local, admitted, and eventual. Eventual reinsurers must have global net assets of at least $150M and be rated a notch above the minimum investment-grade rating.
May. 9, 2014, 8:58 AM
- BNSF Railway (BRK.A, BRK.B), the main railroad moving crude oil out of the Bakken formation in North Dakota, says a new federal emergency order on rail shipments will not affect its shipments.
- The U.S. Department of Transportation will require railroads to inform state emergency management officials about the movement of large shipments of crude oil, and will ask companies shipping oil from the Bakken to stop using older generation tank cars that have been involved in several fiery derailments.
- BNSF says it will comply with the new reporting requirements but does not foresee any impact of service.
- Related rail/oil stocks: CSX, UNP, NSC, KSU, CP, GWR, OAS, NOG, KOG, CLR, WLL, EOX.
May. 3, 2014, 7:51 PM
- He didn't want to "go to war" with management, says Warren Buffett, responding to the first question asked of him at the Berkshire Hathaway (BRK.A, BRK.B) annual meeting: Why did he abstain from voting on the controversial equity compensation plan for Coca-Cola (KO) executives?
- "You keep belching at the dinner table, you'll be eating in the kitchen," says Buffett, describing the clubby culture of corporate boards where being agreeable keeps you on the inside and being confrontational gets you blackballed. "I've voted for compensation plans in various places that are far from what I would have designed myself ... That is the way boards work."
- A shareholder proposal requesting Berkshire board consideration of a dividend received less than 2% of the vote, pleasing to Buffett who believes he and Charlie Munger can do a better job of allocating company capital than returning it to shareholders. Still, with $40B and rising in Berkshire's coffers, even Buffett concedes the day is coming when the company has "more cash than we can intelligently invest."
- "That error that they made doesn't bother me," says Buffett of Bank of America (BAC), which had to suspend its capital return plan after miscalculating capital levels. "It doesn't change my feeling about Bank of America's risk management one iota."
- Mungerisms: Comparing Berkshire book value to the S&P 500 is "insane" and makes it harder for Buffett to look good. "Warren sets a ridiculously high standard. The last couple of years added $60B in value ... If that's failure, then I want more of it."
May. 2, 2014, 5:25 PM| 7 Comments
May. 1, 2014, 7:07 PM
- Berkshire Hathaway (BRK.A, BRK.B) agrees to acquire SNC-Lavalin's (SNCAF) AltaLink, the operator of electric transmission lines in Canada, for $3.24B, as Warren Buffett’s company expands its investment in energy.
- Buffett’s power unit, renamed just this week as Berkshire Hathaway Energy, has been expanding through acquisitions under CEO Greg Abel; SNC is moving away from infrastructure investments to put resources into engineering and construction.
Apr. 28, 2014, 2:01 PM
- "Berkshire's (BRK.A, BRK.B) insurance business generates substantial no-cost float ($77B at year-end 2013) available for investing and will benefit from the Heinz acquisition," says Barclays' Jay Gelb, calling now a good time to buy the stock. "Importantly, Berkshire has significant cash available for additional acquisitions (we estimate about $25B) to supplement organic growth."
- Gelb also notes Berkshire has substantial leverage to an improving economy and housing market, with non-insurance operations now accounting for two-thirds of operating earnings. The stock trades at 1.41x book, just above the 1.2x at which Buffett says he's buying back stock.
Apr. 24, 2014, 8:17 AM
- "Any time a large financial institution starts promising regular earnings increases, you're going to have trouble," Warren Buffett famously said in 2010, explaining why he dumped stakes in Freddie Mac (FMCC) and Fannie Mae (FNMA) many years before the housing bust.
- As for whether Berkshire Hathaway (BRK.A, BRK.B) has any interest in the GSEs at this point, the answer is "no," says Buffett in a Bloomberg interview. Buffett does though, see a role for government in housing finance. "The 30-year fixed-rate mortgage is very good for the American public and I think that you will need government participation in some way to bring the costs down.”
Apr. 23, 2014, 9:02 AM
- Since 2009, Berkshire Hathaway (BRK.A, BRK.B) has invited six journalist/analyst questioners to the Woodstock of Capitalism to join shareholders in querying Warren Buffett and Charlie Munger for several hours. Last year, Buffett added a twist by inviting "credentialed bear" (i.e., provably short Berkshire stock) Doug Kass.
- Hunting for a bear for this year's show, Buffett has been unable to find one.
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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