Feb. 20, 2014, 9:37 AM
- As Berkshire Hathaway (BRK.A, BRK.B) gets bigger, investors increasingly need to rely on Warren Buffett's reputation rather than data, says KBW's Meyer Shields. "It's a critical issue ... You don't really know what you're getting with Berkshire Hathaway." It's no big deal right now, says Jeff Matthews, but "once [Buffet's] gone, people are going to say, 'What's here? What do I really own?'"
- Take Lubrizol, for instance, writes Noah Buhayar. Until being purchased by Berkshire in 2011, the company filed long, detailed annual reports with regulators. Now its results are lumped in with several other Berkshire manufacturing businesses.
- Regulators have noticed and have successfully pushed Buffett for more disclosure as it relates to insurance operations. “The fact that they wouldn’t on their own reflects an attitude of very, very limited disclosure,” says Shields.
- There are no bright lines as to what constitutes material information, says a top securities lawyer. Instead there are rules of thumb, such as whether a unit contributes more than 10% of total revenue. Going back to Lubrizol, its 2012 revenues were $6.1B, well below the $16B that would make up 10% of Berkshire's top line.
Feb. 12, 2014, 6:53 PM
- Berkshire Hathaway (BRK.A, BRK.B) is in talks with Graham Holdings (GHC) about a possible share exchange, according to an SEC filing.
- GHC, the company that was renamed after selling the Washington Post newspaper, would create a unit that would own a business and assets to be determined, possibly including Berkshire stock; the two companies haven't agreed on any terms of such a transaction, which would be structured as a tax-free split-off.
- GHC says no deal will be completed "unless it is in the interest of both parties."
- Warren Buffett’s company owns 1.73M GHC shares, a stake of ~28%, valued at ~$1.1B.
Feb. 4, 2014, 6:33 PM
- Berkshire Hathaway (BRK.A, BRK.B) says it plans to spend a record $5B at its BNSF railroad this year, a ~25% increase from the target set a year ago, to buy locomotives and maintain track.
- Part of the 2014 investment will go toward handling more crude oil, which helped drive an 11% volume increase in industrial products volumes last year; intermodal shipments, which can move by a combination of rail, road and sea, rose 8%.
- Earlier: Berkshire an underperformer so far this year.
Feb. 4, 2014, 3:59 PM
- Underperforming the S&P 500 this year by 220 basis points is Berkshire Hathaway (BRK.A, BRK.B) which is down 7.2% since January 1. At $165,150, the A-class shares are trading for just 1.3x September 30 book value of $126.8K.
- Seeing as it's likely book value is higher today than it was more than 4 months ago, Berkshire could well be below the 1.2x book at which Warren Buffett has said it makes sense to buy back stock.
Jan. 27, 2014, 9:30 AM
- Both owned by Noel Group, MyAssist is a live-agent personal-assistance and telematics service provider, and Insure America is a niche program administrator providing insurance products to the travel industry.
- They are being purchased by the Specialty Insurance group within Berkshire Hathaway (BRK.A, BRK.B).
- Press release
Jan. 24, 2014, 7:27 AM
- What was the CEO of a company you're an owner of up to this week? An index of companies whose execs regularly attend Davos has vastly underperformed the market since 2009.
- Attendance at the gathering tends to be dominated by the financials, with GS, C, HSBC, JPM, LAZ, MS, SCBFF, BAC, ITUB, and UBS leading the way to prove their bona fides as thought leaders. Also spotted were the heads of DOW, and PEP.
- Notably absent: Buffett (BRK.A, BRK.B) , Tim Cook (AAPL) (Jobs never attended either), Jeff Immelt (GE), and Virginia Rometty (IBM). Google's (GOOG) founders and Mark Zuckerberg (FB) stopped going a couple of years ago.
Jan. 23, 2014, 3:33 PM
- Crude oil shipped by rail requires stronger tank cars and safer routes, transportation investigators in the U.S. and Canada say following a series of accidents in North America.
- The U.S. National Transportation Safety Board and Canada's Transportation Safety Board issued recommendations today as part of a probe into last July's derailment of rail cars filled with oil in Quebec.
- "The large-scale shipment of crude oil by rail simply didn't exist 10 years ago, and our safety regulations need to catch up with this new reality," NTSB chief Deborah Hersman says.
- CNI, CP, BRK.A, BRK.B, CSX, UNP, NSC, KSU, GWR.
Jan. 23, 2014, 3:31 AM
- The U.S. Financial Stability Oversight Council is considering whether to designate Berkshire Hathaway (BRK.A) as a systemically important financial institution (SIFI), Bloomberg reports.
- The holding company is the world's fourth-largest reinsurer, and had $458.1B of assets and $5.8B in derivative liabilities as of September 30. As of Friday, the firm had $31.4B in credit-default swaps linked to its debt.
- Berkshire also owns major stakes in Wells Fargo and American Express.
Jan. 19, 2014, 2:48 AM
- Portfolios managed by Berkshire Hathaway (BRK.A) investment managers Todd Combs and Ted Weschler did better last year than Warren Buffett's and the S&P 500, the WSJ reports.
- That's the second consecutive year that both men, who were hired as part of Berkshire's succession plan, have beaten Buffett and the index.
- Combs and Weschler have begun 2014 with over $7B each to manage, up from $3B at the start of 2012.
- However, in 2013, Berkshire Hathaway fell short, for the first time, of Buffett's target of increasing the company's net worth more quickly than gains on the S&P over five years. Still, Berkshire's stock price jumped 30% in 2013.
Jan. 2, 2014, 12:25 PM
- Sell-siders scratched their heads when in May 2012 Berkshire Hathaway (BRK.A, BRK.B) agreed to buy 63 newspapers for $142M from Media General (MEG -1.3%), and provide $445M in loans to the company. Was The Oracle's love of newspapers interfering with his business judgement?
- It turns out Berkshire received 4.65M "penny warrants" as part of the deal which it exercised in September 2012 - the stock's about a 5-bagger since, and Berkshire's 17% stake is worth $105M. Buffett could sell today and recover most of the $142M paid for the newspapers while still owning them.
Jan. 2, 2014, 8:34 AM
Jan. 2, 2014, 8:24 AM
- Following a 2013 in which the number of natural and man-made disasters fell by half, reinsurers could be hit with up to a 25% decline in premium revenue this year, according to broker Willis Re.
- Combining with the lack of catastrophes is a market in oversupply as pension funds and hedge funds (like GLRE and TPRE) rush into the business - a $50B increase in industry capital, says Willis CEO John Cavanagh.
- U.S. property casualty reinsurance faces the biggest hit - 10-25% - while European premiums could fall 10-15%.
- Hannover Re (HVRRY) last week said it expected premiums to fall this year, fueling concern about a price war with competitors like Swiss Re (SSREY) and Berkshire Hathaway (BRK.A, BRK.B).
- Among U.S. reinsurers: ACE, XL, PRE, RE, RNR.
Dec. 31, 2013, 2:24 PM
- The town of Casselton, N.D., narrowly escaped tragedy yesterday when a train carrying crude oil derailed and exploded, and its mayor says shipping oil by pipeline would be a safer option.
- Residents said explosions continued for hours after the derailment, and BNSF Railway (BRK.A, BRK.B) said ~20 cars caught fire after its oil train left the tracks; the cars are being allowed to burn out.
- The incident could draw more regulatory scrutiny to rail shipments of crude, but analysts say the soaring use of trains to move oil is a long-term trend that isn't likely to change soon.
- "Rail will be the long-term transportation solution out of the Bakken to the U.S. east and west coasts due to the lack of pipeline infrastructure to those refining centers," Tudor Pickering says.
Dec. 31, 2013, 12:33 PM
- For Berkshire Hathaway (BRK.A, BRK.B), the purchase of Phillips 66's (PSX +2.9%) specialty products unit has a lot to do with the tax treatment; the financial terms of the deal look like the cash-rich spinoffs used by Liberty Media when it acquired interests in businesses such as the Atlanta Braves and DirecTV.
- The cash-rich split is a way for a holder of appreciated stock - PSX has gained 45% YTD - to dispose of it in a very tax efficient way, tax expert Robert Willens says, calling the acquisition a "great transaction" for Berkshire.
- But Barron's Ben Levisohn wonders what the purchase might say about PSX: BRK chose to pay with ~19M PSX shares it already owns and not with cash - is it a sign Warren Buffett thinks PSX has run too far?
Dec. 30, 2013, 6:09 PM
- A Burlington Northern (BRK.A, BRK.B) train carrying crude oil derailed this afternoon just west of Casselton, N.D. near the city's ethanol plant; no injuries are reported but few details have been provided so far.
- Crews at the scene say as many as a dozen railcars that were carrying ethanol or oil had left the tracks, with some bursting into flames.
- BNSF hauls ~750K bbl/day of oil from places like the Bakken in North Dakota and the Permian Basin in west Texas to refineries, and executive chairman Matthew Rose says the railroad should hit 1M bbl/day by year-end 2014.
Dec. 30, 2013, 5:28 PM
- Berkshire Hathaway (BRK.A, BRK.B) agrees to acquire the flow improver business of Phillips 66 (PSX) in exchange for PSX stock Berkshire already owns; the specific number of shares will be determined by the share price at deal closing, expected sometime during H1 2014.
- The unit, Phillips Specialty Products, makes polymers designed to reduce drag and increase the flow potential in pipelines; Warren Buffett calls it "a high-quality business with consistently strong financial performance," and he plans to install Lubrizol CEO James Hambrick to oversee strategic direction.
- Berkshire owns a 27.2M-share stake in PSX, or 4.5% of outstanding shares; Reuters reports Berkshire will use ~19M shares, or ~$1.4B.
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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