Buffett/Berkshire - general news

[Guest longinvestor]

http://www.bloomberg.com/news/articles/2016-07-18/buffett-buys-1-8-billion-gem-of-a-medical-insurer-in-new-york

 

[scorpioncapital]

http://www.utilitydive.com/news/buffetts-berkshire-hathaway-protests-ferc-market-based-rate-restrictions/423042/

 

Is this likely to have some effects on pricing power during inflation if Berkshire energy cannot charge market rates?

[gfp]

Bloomberg ran an article on Precision Castparts and CEO Donegan today ->

 

http://www.bloomberg.com/news/features/2016-08-03/buffett-s-bet-on-a-relentless-ceo

[John Hjorth]

Bloomberg ran an article on Precision Castparts and CEO Donegan today ->

 

http://www.bloomberg.com/news/features/2016-08-03/buffett-s-bet-on-a-relentless-ceo

Thanks for posting the link to this article, globalfinancepartners. I'm not trying to start some kind of heated discussion here about the content of the article, but I must say that I'm shocked by the picture painted of this Berkshire CEO at some places in the article.

[cubsfan]

I spoke to one of the  managers at the Berkshire meeting. He rose through the ranks under Donegan.

Mark is widely admired by many, but he confirmed that working there is not for the faint of heart.

Performance culture is everything - so it's not for everybody, as it gets rough.

[captkerosene]

Nothing in that article bothered me. Let the guy be himself - he's earned it.

[fareastwarriors]

Nothing in that article bothered me. Let the guy be himself - he's earned it.

 

 

Probably similar to working at a  3G company

[Guest longinvestor]

I spoke to one of the  managers at the Berkshire meeting. He rose through the ranks under Donegan.

Mark is widely admired by many, but he confirmed that working there is not for the faint of heart.

Performance culture is everything - so it's not for everybody, as it gets rough.

Welcome the performance culture at the subsidiaries. Berkshire Hathaway's future performance depends on it. Even better if the culture comes with an acquisition. Here's where the next CEO has a great chance to do better than Buffett. He has admitted to being slow to intervene.

[John Hjorth]

Saturday I spent some hours trying to find out, if SAN had some exposure against Italian banks and/or Italy in general, basicly to no avail, because the needed specifications and notes in the financial statements about the off balance sheet items were not there specified by country. One thing that caught my attention during that work was that SAN has a separate section desribing reputational risk.

 

To me, Mr. Donegan is adding reputational risk to the whole BRK system, if things mentioned in the Bloomberg article are true. If things mentioned in the Bloomberg article are true, and his is not changing behavior going forward after PCP becoming a part of BRK, and I just don't like it.

 

A couple of questions here to my fellow board members participating in this topic:

 

1. What is the overall perception of the credibility of Blomberg as a source? - I was [also] surprised [but not shocked] by Bloomberg taking on hard BRK - so hard - with this article.

2. What do you think might be the reaction [group internally] by Mr. Buffett and Mr. Munger, ref. Mr. Buffetts speaking in interviews and shareholder letters about "the middle of the road"? [Mr. Donegan is not just "some" BRK sub employeé, he is the CEO of a fairly big - and thereby important BRK sub.]

 

My basis for this line of thinking is my local conditions. I live in a zero tolerance society with regard to violence and threats. One of the situations described in the article is embraced in the Danish civil criminal code, and the penalty bracket goes from a fine to 2 years in jail [threat of serious physical violence against another person - most likely doing this sort of thing in front of wittnesses for the second time will result in an so called "insta-verdict", meaning going directly from the court room to the box to get sunshine in stribes, without getting the opportunity to settle your stuff and kissing your partner/spouse/kids goodbye for so or so long time].

 

Third question about the situation that I'm focusing on in the Bloomberg article:

 

3. What does US State or Federal civil criminal code say about punishment for threat of serious physical violence?

 

Any input from fellow board members on those three questions  would be much appreciated. Thank you in advance.

[Charlie]

Good Buffett interview: 

 

http://www.politico.com/story/2016/08/the-playbook-interview-warren-buffett-226892

 

 

Cheers!  :)

[fareastwarriors]

Here’s Why the Pundits Are Wrong About Warren Buffett

 

http://fortune.com/2016/08/25/pundits-wrong-about-warren-buffett/

[gfp]

Here's an article talking about Jain's cost cutting memo at General Re from Insurance Insider:

----------------------------

 

Jain seeks cost cuts at Gen Re: Report

Berkshire Hathaway's reinsurance chief Ajit Jain has told staff at Gen Re to fix the cost "problem" at the subsidiary, according to a memo obtained by Bloomberg.

 

The letter called on employees to tackle the issue "intelligently" to give the carrier "a shot at making a real dent in the expense-to-premium ratio", according to the newswire.

 

It reportedly rounded off by saying: "If we can't, we will need to explore other ways to do so."

 

The executive called for Gen Re to become leaner and less bureaucratic as he looks to slash costs and narrow the expense ratio.

 

He said this could be achieved by handing more autonomy to individual business units as well as accepting modifications to some reinsurance deals in a bid to reduce complexity.

 

Jain reportedly said Gen Re had a "cost problem", adding: "The ratio of expenses to premiums is not where it should or could be."

 

The executive talked about overhauling the reinsurer's compensation structure, arguing that its underwriters had an incentive to turn away business that had the potential to turn a profit.

 

He blamed this on a model under which bonuses were tied to margins and not overall earnings.

 

"We are fortunate that Gen Re has so many employees that place the interests of the company above their personal interests," he reportedly wrote.

 

"But that doesn't justify leaving a plan in place that puts that instinct under stress," he was said to have continued.

 

He suggested countering that structure with discretionary bonuses that were assessed using subjective metrics. This would see high-achievers compensated at the expense of underperformers.

 

He discussed reducing bureaucracy in the business by slashing the number of levels of management from six to just four or three.

 

Also in the crosshairs were travel and entertainment expenses for internal meetings.

 

Jain effectively took the helm of Gen Re earlier this year as his oversight was broadened across Berkshire's reinsurance operations.

 

He appointed long-time Gen Re executive Kara Raiguel as CEO of the unit, replacing Tad Montross, and signaled a change in strategy at the reinsurer to widen its distribution platform from its traditional direct model.

 

The reinsurer subsequently signed a deal with TransRe for the Alleghany subsidiary to act as its MGA in the US broker market.

 

 

[Guest longinvestor]

Here's an article talking about Jain's cost cutting memo at General Re from Insurance Insider:

----------------------------

 

Jain seeks cost cuts at Gen Re: Report

Berkshire Hathaway's reinsurance chief Ajit Jain has told staff at Gen Re to fix the cost "problem" at the subsidiary, according to a memo obtained by Bloomberg.

 

The letter called on employees to tackle the issue "intelligently" to give the carrier "a shot at making a real dent in the expense-to-premium ratio", according to the newswire.

 

It reportedly rounded off by saying: "If we can't, we will need to explore other ways to do so."

 

The executive called for Gen Re to become leaner and less bureaucratic as he looks to slash costs and narrow the expense ratio.

 

He said this could be achieved by handing more autonomy to individual business units as well as accepting modifications to some reinsurance deals in a bid to reduce complexity.

 

Jain reportedly said Gen Re had a "cost problem", adding: "The ratio of expenses to premiums is not where it should or could be."

 

The executive talked about overhauling the reinsurer's compensation structure, arguing that its underwriters had an incentive to turn away business that had the potential to turn a profit.

 

He blamed this on a model under which bonuses were tied to margins and not overall earnings.

 

"We are fortunate that Gen Re has so many employees that place the interests of the company above their personal interests," he reportedly wrote.

 

"But that doesn't justify leaving a plan in place that puts that instinct under stress," he was said to have continued.

 

He suggested countering that structure with discretionary bonuses that were assessed using subjective metrics. This would see high-achievers compensated at the expense of underperformers.

 

He discussed reducing bureaucracy in the business by slashing the number of levels of management from six to just four or three.

 

Also in the crosshairs were travel and entertainment expenses for internal meetings.

 

Jain effectively took the helm of Gen Re earlier this year as his oversight was broadened across Berkshire's reinsurance operations.

 

He appointed long-time Gen Re executive Kara Raiguel as CEO of the unit, replacing Tad Montross, and signaled a change in strategy at the reinsurer to widen its distribution platform from its traditional direct model.

 

The reinsurer subsequently signed a deal with TransRe for the Alleghany subsidiary to act as its MGA in the US broker market.

 

The float generated at BHRG per associate in comparison to General Re is huge. For Berkshire, General Re has brought on way more headaches than it being a gem. Any big benefit could come only after Jain is done righting it.

 

If BHSI turns out to be a gem, the lesson @ Berkshire would be that make is way better than buy in insurance.

 

 

[Guest longinvestor]

http://finance.yahoo.com/quote/PSX/holders?p=PSX

 

Now own 15% of the company. Market cap at $41B. Does this become a wholly owned target?

[fareastwarriors]

http://finance.yahoo.com/quote/PSX/holders?p=PSX

 

Now own 15% of the company. Market cap at $41B. Does this become a wholly owned target?

 

I was thinking the same for DVA.

[Guest longinvestor]

http://finance.yahoo.com/quote/PSX/holders?p=PSX

 

Now own 15% of the company. Market cap at $41B. Does this become a wholly owned target?

 

I was thinking the same for DVA.

 

Seems like the script. Take a stake, watch how it does and buy whole. BNSF, PCP followed the script. To a certain extent, Duracell  was also like that.

 

" Buy shares as if you own the whole thing" . Then own the whole thing.

[John Hjorth]

http://finance.yahoo.com/quote/PSX/holders?p=PSX

 

Now own 15% of the company. Market cap at $41B. Does this become a wholly owned target?

 

I was thinking the same for DVA.

 

Seems like the script. Take a stake, watch how it does and buy whole. BNSF, PCP followed the script. To a certain extent, Duracell  was also like that.

 

" Buy shares as if you own the whole thing" . Then own the whole thing.

longinvestor,

 

To me, this looks like an educated guess. Let's see what the [near?] future brings.

[Libs]

Is Berkshire shorting Dow Chemical?

 

 

Dow Chemical’s Stock Action Works in Warren Buffett’s Favor

By ANUPREETA DAS

Sept. 1, 2016 10:11 p.m. ET

0 COMMENTS

Dow Chemical Co.’s shares are showing clear signs of tinkering, according to an analysis by a Yale University professor.

 

The shares come within cents of an important threshold—$53.72—pretty often, but they have closed above that level so rarely that there’s less than a one-in-a-thousand chance that​it’s happening randomly, according to the analysis.

 

If the stock closes above $53.72 enough times, Dow has the option to buy back $3 billion worth of preferred shares from Warren Buffett’s Berkshire Hathaway. The Wall Street Journal reported last week that people familiar with the matter say that executives at Dow believe someone is selling its stock short—or betting that its price will fall—to keep it from rising above $53.72.

 

In his analysis, Yair Listokin, who teaches contracts at Yale Law School and is a trained economist, picked 48-cent ranges for the daily closing price of Dow stock from April 1, 2014 to Monday. He plotted every 48-cent increment of the share price during this period against the number of times the shares have closed in that range.

 

For instance, the shares have closed just below $53.72 more than 50 times. They have closed in the​$52.71 to $53.71 window 91 times. The number of times they have closed​in the window just above $53.72? Seven times.​

 

This week, the shares closed at $54.13 on Monday and $53.99 on Tuesday after the Journal story was published.

 

Mr. Listokin’s histogram shows the dramatic drop-off. Even accounting for different methods, Mr. Listokin said the chance of this being a random occurrence is remote.

 

“The probability that this would happen by chance is essentially zero,” he said, noting that his findings offer “pretty clear evidence of manipulation.”

 

 

​Mr. Listokin said he’s working on a more detailed paper and plans to make the Dow action part of his class discussion.​

 

Who would benefit from Dow’s share price being below $53.72? Berkshire comes to mind, since it gets a $255 million annual dividend from Dow for helping finance its 2009 takeover of Rohm & Haas. Kuwait’s sovereign-wealth fund also helped fund the deal and owns $1 billion of Dow preferred securities.

 

When asked, Mr. Buffett declined to comment last week on whether he or his deputies at Berkshire were shorting Dow to exert downward pressure on the stock price. Under the original agreement, Berkshire was forbidden from engaging in short selling or hedging its preferred stake in Dow until April 2014. The clause ensured that Berkshire was locked into its investment in Dow and couldn’t reduce “the economic consequence” of ownership through a hedge.

 

 

 

 

http://www.wsj.com/articles/dow-chemicals-stock-action-works-in-warren-buffetts-favor-1472782317

[fareastwarriors]

Is Berkshire shorting Dow Chemical?

 

 

Dow Chemical’s Stock Action Works in Warren Buffett’s Favor

By ANUPREETA DAS

Sept. 1, 2016 10:11 p.m. ET

0 COMMENTS

Dow Chemical Co.’s shares are showing clear signs of tinkering, according to an analysis by a Yale University professor.

 

The shares come within cents of an important threshold—$53.72—pretty often, but they have closed above that level so rarely that there’s less than a one-in-a-thousand chance that​it’s happening randomly, according to the analysis.

 

If the stock closes above $53.72 enough times, Dow has the option to buy back $3 billion worth of preferred shares from Warren Buffett’s Berkshire Hathaway. The Wall Street Journal reported last week that people familiar with the matter say that executives at Dow believe someone is selling its stock short—or betting that its price will fall—to keep it from rising above $53.72.

 

In his analysis, Yair Listokin, who teaches contracts at Yale Law School and is a trained economist, picked 48-cent ranges for the daily closing price of Dow stock from April 1, 2014 to Monday. He plotted every 48-cent increment of the share price during this period against the number of times the shares have closed in that range.

 

For instance, the shares have closed just below $53.72 more than 50 times. They have closed in the​$52.71 to $53.71 window 91 times. The number of times they have closed​in the window just above $53.72? Seven times.​

 

This week, the shares closed at $54.13 on Monday and $53.99 on Tuesday after the Journal story was published.

 

Mr. Listokin’s histogram shows the dramatic drop-off. Even accounting for different methods, Mr. Listokin said the chance of this being a random occurrence is remote.

 

“The probability that this would happen by chance is essentially zero,” he said, noting that his findings offer “pretty clear evidence of manipulation.”

 

 

​Mr. Listokin said he’s working on a more detailed paper and plans to make the Dow action part of his class discussion.​

 

Who would benefit from Dow’s share price being below $53.72? Berkshire comes to mind, since it gets a $255 million annual dividend from Dow for helping finance its 2009 takeover of Rohm & Haas. Kuwait’s sovereign-wealth fund also helped fund the deal and owns $1 billion of Dow preferred securities.

 

When asked, Mr. Buffett declined to comment last week on whether he or his deputies at Berkshire were shorting Dow to exert downward pressure on the stock price. Under the original agreement, Berkshire was forbidden from engaging in short selling or hedging its preferred stake in Dow until April 2014. The clause ensured that Berkshire was locked into its investment in Dow and couldn’t reduce “the economic consequence” of ownership through a hedge.

 

 

 

 

http://www.wsj.com/articles/dow-chemicals-stock-action-works-in-warren-buffetts-favor-1472782317

 

 

I read this too but it says nothing about Kuwait’s investment. I think it's more likely them shorting than Berkshire but that is just my opinion.

 

[John Hjorth]

A bolt-on aquisition for CTB in my back yard .

 

Edit:

 

Article on Yahoo Finance about the aquisition .

[dcollon]

Combs joining JPM's board

 

http://www.bloomberg.com/news/articles/2016-09-20/jpmorgan-chase-names-buffett-deputy-combs-to-board-of-directors

 

[gfp]

Small acquisition at Marmon -

 

http://www.chicagobusiness.com/article/20160920/NEWS07/160929978/buffetts-marmon-buys-italys-dominioni-in-pasta-equipment-wager

[fareastwarriors]

end of Mars pref

https://www.bloomberg.com/gadfly/articles/2016-10-06/berkshire-s-wrigley-windfall-isn-t-even-its-best-bet

[rb]

Cash in now north of $70B. Time to bag another elephant!  :)

[John Hjorth]

Yes, net cash flows from operations is now about USD 2.5 B - per month. BRK could almost take out a CAT now - or easily a DEERE.