Berkshire Hathaway

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Posted by kaori 04/04/2009 @ 21:11

Tags : berkshire hathaway, insurance, business

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Berkshire Hathaway Stock Holdings and Investment Ideas - Seeking Alpha
Warren Buffett's Berkshire Hathaway (BRK.A) filed its first quarter 13-F with the SEC last week. From the filing, you may find a few investment ideas from where Buffett is putting his money, as noted by Morningstar. At the end of the first quarter,...
Warren Buffett, Pixar Star? - Reuters
Berkshire Hathaway was one of Disney's major investors until 2000, when Buffett sold more than 80 percent of its stake in the company. Disney/Pixar (DIS) has reason to hold a grudge. Or maybe there's some deeper plot-related symbolism going on here....
midamerican Energy and BYD Partner on Battery Storage Initiative - Motley Fool
According to a recent blog post by Marc Gunther, Berkshire Hathaway subsidiary midamerican Energy now plans to utilize the same battery technology to store power generated from renewable resources such as solar and wind power....
Berkshire Hathaway Swings To 1Q Loss On Investment Losses - Wall Street Journal
Berkshire Hathaway Inc. (BRKA, BRKB) swung to a first-quarter loss despite solid growth in operating earnings at its insurance operations, as investment losses continued to mount. Though Chairman and Chief Executive Warren Buffett has recently sounded...
Berkshire Hathaway boosts stake in J&J, Wells Fargo and US Bancorp - RTT News
(RTTNews) - In a filing with the US Securities and Exchange Commission, Berkshire Hathaway Inc. (BRK-A, BRK-B) provided a snapshot of its portfolio of US equities at the end of March 31, 2009. Buffett's US equities portfolio at the end of March quarter...
Berkshire Hathaway Shareholder Meeting Transcript by Philip Durell -
Berkshire is totally conservative and that way we not only avoided the chaos of last fall but we profited from it. Q. (Financial Times) Many have suggested that the next CEO will come from Mr. Jain, Mr. Sokol or Mr. Nicely (all current Berkshire CEO's)...
Berkshire Berkshire Hathaway Shareholder's Weekend: A First-Hand ... - Huffington Post
The hotel signs say "welcome Berkshire shareholders." Next to the college world series, this is the biggest weekend in the year here in Omaha. The annual Berkshire Hathaway conference draws a giant international crowd to the otherwise quiet Midwestern...
Markel's Tom Gayner Holds Berkshire Hathaway, Fairfax Financial ... -
Another Admirer of Warrern Buffett Tom Gayner, Chief Investment Officer of Markel Corp., like Prem Watsa (who we reviewed yesterday), is another Warren Buffett's admirer and attends Berkshire Hathaway annual meeting on regular basis....
AM Best Affirms Ratings of National Indemnity Group and Its Members - WELT ONLINE
A key component of the ratings also takes into account National Indemnity's core importance within the Berkshire Hathaway Inc. (NYSE: BRK.A and BRK.B) organization given the amount of "float” that has been accumulated by National Indemnity and other...
Warren Buffett's Priceless Investment Advice -
From 1980 to 2003, the stock portfolio of Berkshire Hathaway (NYSE: BRK-A) beat the S&P 500 index in 20 out of 24 years. During that same period, Berkshire's average annual return from its stock portfolio outperformed the index by 12 percentage points....

Berkshire Hathaway

Hathaway Mills, New Bedford, Mass.

Berkshire Hathaway (NYSE: BRKA and NYSE: BRKB) is a conglomerate holding company headquartered in Omaha, Nebraska, U.S., that oversees and manages a number of subsidiary companies. Berkshire Hathaway's core business is insurance, including property and casualty insurance, reinsurance and specialty nonstandard insurance. The Company averaged an annual growth in book value of 20.3% to its shareholders for the last 44 years, while employing large amounts of capital, and minimal debt.

Warren Buffett is the company's chairman and CEO. Buffett has used the "float" provided by Berkshire Hathaway's insurance operations (a policyholder's money which it holds temporarily until claims are paid out) to finance his investments. In the early part of his career at Berkshire, he focused on long-term investments in publicly quoted stocks, but more recently he has turned to buying whole companies. Berkshire now owns a diverse range of businesses including candy production, retail, home furnishings, encyclopedias, vacuum cleaners, jewelry sales; newspaper publishing; manufacture and distribution of uniforms; manufacture, import and distribution of footwear; as well as several regional electric and gas utilities.

Berkshire Hathaway traces its roots to a textile manufacturing company established by Oliver Chace in 1839 as the Valley Falls Company in Valley Falls, Rhode Island. Chace had previously worked for Samuel Slater, the founder of the first successful textile mill in America. Chace founded his first textile mill in 1806. In 1929 the Valley Falls Company merged with the Berkshire Cotton Manufacturing Company established in 1889, in Adams, Massachusetts. The combined company was known as Berkshire Fine Spinning Associates.

In 1955 Berkshire Fine Spinning Associates merged with the Hathaway Manufacturing Company which was founded in 1888 in New Bedford, Massachusetts by Horatio Hathaway. Hathaway was successful in its first decades, but it suffered during a general decline in the textile industry after World War I. At this time, Hathaway was run by Seabury Stanton, whose investment efforts were rewarded with renewed profitability after the Depression. After the merger Berkshire Hathaway had 15 plants employing over 12,000 workers with over $120 million in revenue and was headquartered in New Bedford, Massachusetts. However, seven of those locations were closed by the end of the decade, accompanied by large layoffs.

In 1962, Warren Buffett began buying stock in Berkshire Hathaway. After some clashes with the Stanton family, he bought up enough shares to change the management and soon controlled the company.

Buffett initially maintained Berkshire's core business of textiles, but by 1967, he was expanding into the insurance industry and other investments. Berkshire first ventured into the insurance business with the purchase of National Indemnity Company. In the late 1970s, Berkshire acquired an equity stake in the Government Employees Insurance Company (GEICO), which forms the core of its insurance operations today (and is a major source of capital for Berkshire Hathaway's other investments). In 1985, the last textile operations (Hathaway's historic core) were shut down.

Berkshire's class A shares sold for $96,600 as of December 31, 2008 (2008 -12-31), making them the highest-priced shares on the New York Stock Exchange, in part because they have never had a stock split. Shares closed over $100,000 for the first time on October 23, 2006 and closed at an all-time high of $150,000 on December 13, 2007. Despite its size, Berkshire is not included in broad stock market indices such as the S&P 500.

Berkshire's CEO, Warren Buffett, is respected for his investment prowess and his deep understanding of a wide spectrum of businesses. His annual chairman letters are read and quoted widely. Barron's Magazine named Berkshire the most respected company in the world in 2007 based on a survey of American money managers.

As of 2005, Buffett owned 38% of Berkshire Hathaway. Berkshire's vice-chairman, Charlie Munger, also holds a stake big enough to make him a billionaire, and early investments in Berkshire by David Gottesman and Franklin Otis Booth resulted in their becoming billionaires as well. Bill Gates' Cascade Investments LLC is the second largest shareholder of Berkshire and owns more than 5% of class B shares.

Berkshire Hathaway is notable in that it has never split its shares, which not only contributed to their high per-share price but also significantly reduced the liquidity of the stock. This refusal to split the stock reflects the management's desire to attract long-term investors as opposed to short-term speculators. However, Berkshire Hathaway has created a Class B stock, with a per-share value kept (by specific management rules) close to 1⁄30 of that of the original shares (now Class A) and 1⁄200 of the per-share voting rights. Holders of class A stock are allowed to convert their stock to Class B, though not vice versa.

Berkshire's annual shareholders' meetings, taking place in the Qwest Center in Omaha, Nebraska, are routinely visited by 20,000 people. The 2007 meeting had an attendance of approximately 27,000. The meetings, nicknamed "Woodstock for Capitalists", are considered Omaha's largest annual event along with the baseball College World Series. Known for their humor and light-heartedness, the meetings typically start with a movie made for Berkshire shareholders. The 2004 movie featured Arnold Schwarzenegger in the role of "The Warrenator" who travels through time to stop Buffett and Munger's attempt to save the world from a "mega" corporation formed by Microsoft-Starbucks-Wal-Mart. Schwarzenegger is later shown arguing in a gym with Buffett regarding Proposition 13. The 2006 movie depicted actresses Jamie Lee Curtis and Nicollette Sheridan lusting after Munger. The meeting, scheduled to last six hours, is an opportunity for investors to ask Buffett questions.

The salary for the CEO is US$100,000 per year with no stock options, which is among the lowest salaries for CEOs of other large companies in the United States.

The current members of the board of directors of Berkshire Hathaway are: Warren Buffett, Charlie Munger, David Sokol, Walter Scott, Jr., Thomas S. Murphy, Howard Graham Buffett, Ronald Olson, Donald Keough, Charlotte Guyman, David Gottesman, Bill Gates and Susan Decker.

Insurance and reinsurance business activities are conducted through more than 50 domestic and foreign-based insurance companies. Berkshire’s insurance businesses provide insurance and reinsurance of property and casualty risks primarily in the United States. In addition, as a result of the General Re acquisition in December 1998, Berkshire’s insurance businesses also included life, accident and health reinsurers, as well as internationally-based property and casualty reinsurers. Berkshire’s insurance companies maintain capital strength at exceptionally high levels. This strength differentiates Berkshire’s insurance companies from their competitors. Collectively, the aggregate statutory surplus of Berkshire’s U.S. based insurers was approximately $48 billion at December 31, 2004. All of Berkshire’s major insurance subsidiaries are rated AAA by Standard & Poor’s Corporation, the highest Financial Strength Rating assigned by Standard & Poor’s, and are rated A++ (superior) by A. M. Best with respect to their financial condition and operating performance.

GEICO — Berkshire acquired GEICO in January 1996. GEICO is headquartered in Chevy Chase, Maryland and its principal insurance subsidiaries include: Government Employees Insurance Company, GEICO General Insurance Company, GEICO Indemnity Company, and GEICO Casualty Company. Over the past five years, these companies have offered primarily private passenger automobile insurance to individuals in 49 states and the District of Columbia. The subsidiaries market their policies primarily through direct response methods, in which applications for insurance are submitted directly to the companies by telephone, through the mail, or via the Internet. General Re — Berkshire acquired General Re in December 1998. General Re held a 91% ownership interest in Cologne Re as of December 31, 2004. General Re subsidiaries currently conduct global reinsurance business in approximately 72 cities and provide reinsurance coverage worldwide. General Re operates the following reinsurance businesses: North American property/casualty, international property/casualty, which principally consists of Cologne Re and the Faraday operations, and life/health reinsurance. General Re’s reinsurance operations are primarily based in Stamford, Connecticut and Cologne, Germany. General Re is one of the largest reinsurers in the world based on net premiums written and capital. NRG (Nederlandse Reassurantie Groep) — Berkshire acquired NRG, a Dutch life reinsurance company, from ING Group in December 2007. Berkshire Hathaway Assurance — Berkshire created a government bond insurance company to insure municipal and state bonds. These type bonds are issued by local governments to finance public works projects such as schools, hospitals, roads, and sewer systems. Few companies are capable of competing in this area.

Berkshire currently holds 83.7% (80.5% on a fully-diluted basis) of the MidAmerican Energy Holdings Company. At the time of purchase, Berkshire's voting interest was limited to 10% of the company's shares, but this restriction ended when the Public Utility Holding Company Act of 1935 was repealed in 2005. A major subsidiary of MidAmerican is CE Electric UK.

Berkshire’s apparel businesses include manufacturers and distributors of a variety of clothing and footwear. Businesses engaged in the manufacture and distribution of clothing include Fruit of the Loom, Garan, Fechheimer Brothers and Russell Corporation. Berkshire’s footwear businesses include H.H. Brown Shoe Group, Acme Boots and Justin Brands. Berkshire acquired Fruit of the Loom on April 29, 2002 for $835 million in cash. Fruit of the Loom, headquartered in Bowling Green, Kentucky, is a vertically integrated manufacturer of basic apparel. Berkshire acquired Russell Corporation on August 2, 2006 for $600 million or $18.00 per share.

In August 2000, Berkshire entered the building products business with the acquisition of Acme Building Brands. Acme, headquartered in Fort Worth, Texas, manufactures and distributes clay bricks (Acme Brick), concrete block (Featherlite) and cut limestone (Texas Quarries). Berkshire acquired Benjamin Moore & Co. in December 2000. Benjamin Moore, headquartered in Montvale, New Jersey, is a formulator, manufacturer and retailer of primarily architectural coatings, available principally in the United States and Canada. Berkshire acquired Johns Manville in February 2001. JM has been serving the building products industry since 1885 and is a manufacturer of fiber glass wool insulation products for walls, attics and floors in homes and commercial buildings, as well as pipe, duct and equipment insulation products. Berkshire acquired a 90% equity interest in MiTek Inc. in July 2001. MiTek is headquartered in Chesterfield, Missouri and makes engineered connector products, engineering software and services, and manufacturing machinery for the truss fabrication segment of the building components industry. Berkshire acquired Shaw Industries, Inc. in 2001. Shaw, headquartered in Dalton, Georgia, is the world’s largest carpet manufacturer based on both revenue and volume of production. Shaw designs and manufactures over 3,000 styles of tufted and woven carpet and laminate flooring for residential and commercial use under about 30 brand and trade names and under certain private labels. On August 7, 2003, Berkshire acquired Clayton Homes, Inc. Clayton, headquartered near Knoxville, Tennessee, is a vertically integrated manufactured housing company. At year-end 2004, Clayton operated 32 manufacturing plants in 12 states. Clayton’s homes are marketed in 48 states through a network of 1,540 retailers, 391 of which are company-owned sales centers.

In 1996, Berkshire acquired FlightSafety International Inc. FSI’s corporate headquarters is located at LaGuardia Airport in Flushing, New York. FSI engages primarily in the business of providing high technology training to operators of aircraft and ships. FlightSafety is the world's leading provider of professional aviation training services. Berkshire acquired NetJets Inc. in 1998. NJ is the world’s leading provider of fractional ownership programs for general aviation aircraft. In 1986, NJ created the fractional ownership of aircraft concept and introduced its NetJets program in the United States with one aircraft type. In 2004, the NetJets program operated 15 aircraft types. In late 1996, NJ expanded its fractional ownership programs to Europe via a joint venture arrangement which is now 100% owned by NJ. The fractional ownership of aircraft concept permits customers to acquire a specific percentage of a certain aircraft type and allows them to utilize the aircraft for a specified number of flight hours per annum.

The home furnishings businesses are the Nebraska Furniture Mart, R.C. Willey Home Furnishings, Star Furniture Company, and Jordan’s Furniture, Inc. CORT Business Services Corporation was acquired in 2000 by an 80.1% owned subsidiary of Berkshire and is the leading national provider of rental furniture, accessories and related services in the “rent-to-rent” segment of the furniture rental industry.

In 2002 Berkshire acquired The Pampered Chef, LTD, the largest direct seller of kitchen tools in the United States. Products are researched, designed and tested by TPC, and manufactured by third party suppliers. From its Addison, Illinois headquarters, TPC utilizes a network of more than 65,000 independent sales representatives to sell its products through home-based party demonstrations, principally in the United States.

See's Candies produces boxed chocolates and other confectionery products in two large kitchens in California. See’s revenues are highly seasonal with approximately 50% of total annual revenues being earned in the months of November and December. Dairy Queen services a system of approximately 6,000 stores operating under the names Dairy Queen, Orange Julius and Karmelkorn that offer various dairy desserts, beverages, prepared foods, blended fruit drinks, popcorn and other snack foods.

Marmon Holdings Inc on December 25, 2007. Privately held conglomerate owned by the Pritzker family for over fifty years. Owns and operates an assortment of manufacturing companies that produce railroad tank cars, plumbing pipes, metal fasteners, and wiring and water treatment products used in residential construction.

Berkshire acquired McLane Company, Inc. in May 2003 from Wal-Mart Stores, Inc. McLane provides wholesale distribution and logistics services in all 50 states and internationally in Brazil to customers that include discount retailers, convenience stores, quick service restaurants, drug stores and movie theatre complexes. Scott Fetzer Companies — The Scott Fetzer Companies are a diversified group of 21 businesses that manufacture and distribute a wide variety of products for residential, industrial and institutional use. The three most significant of these businesses are Kirby home cleaning systems, Wayne Water Systems and Campbell Hausfeld products. Scott Fetzer also manufactures Ginsu Knives. The Buffalo News publishes one edition daily from its headquarters in Buffalo, New York.

In 2002, Berkshire acquired Albecca Inc. Albecca is headquartered in Norcross, Georgia, and primarily does business under the Larson-Juhl name. Albecca designs, manufactures and distributes custom framing products, including wood and metal molding, matboard, foamboard, glass, equipment and other framing supplies. Berkshire acquired CTB International Corp. in 2002. CTB, headquartered in Milford, Indiana, is a designer, manufacturer and marketer of systems used in the grain industry and in the production of poultry, hogs, and eggs. Products are produced in the United States and Europe and are sold primarily through a global network of independent dealers and distributors, with peak sales occurring in the second and third quarters.

Berkshire acquired XTRA in September 2001. XTRA, headquartered in St. Louis, Missouri, is a leading transportation equipment lessor. XTRA manages a diverse fleet of approximately 105,000 units, constituting a net investment of approximately $1 billion as of December 31, 2004. The fleet includes over-the-road and storage trailers, chassis, intermodal piggyback trailers and domestic containers.

Clayton's finance business, (loans to manufactured home owners), earned $206 million down from $526 million in 2007. Loan losses remain 3.6% up form 2.9%.

Berkshire owns $27 billion in fixed income securities, mainly foreign government bonds and corporate bonds.

Recently, Berkshire has purchased preferred stock in Wrigley, Goldman Sachs, and GE totaling $14.5 billion.

Notwithstanding his previous statements about derivatives as "Weapons of Financial Destruction", he wrote "Equity put" options, and "credit default swaps".

I believe each contract we own was mispriced at inception, sometimes dramatically so.

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Berkshire Hathaway Assurance

Berkshire Hathaway Assurance is an bond insurance company created by Berkshire Hathaway, Inc. in December, 2007.

Berkshire created this government bond insurance company in December, 2007 to insure municipal and state bonds. These type bonds are issued by local governments to finance public works projects such as schools, hospitals, roads, and sewer systems. Berkshire is not guaranteeing BHA, thus opening itself to competition from any number of investors who could easily assemble the $5 billion capital. BHA will begin in New York, then move to California, Puerto Rico, Texas, Illinois, and Florida. On February 12, 2008, Warren Buffett announced a plan to add up to $5 billion in capital to BHA to enable it to provide reinsurance on municipal bonds currently guaranteed by Ambac, MBIA, and FGIC Corp. Buffet also announced BHA had closed its first deal to insure $50 million in debt for a 2% fee.

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List of assets owned by Berkshire Hathaway

This is a list of assets owned by Berkshire Hathaway, Warren Buffett's investment company. This list includes private subsidiaries and large common stock holdings, as well as Berkshire's sizable cash position.

As of December 31, 2006, Berkshire Hathaway owned $43.743 billion dollars in cash and cash equivalents.

This includes outstanding stock as reported in the last SEC EDGAR filing (Form 13F), and the latest annual report.

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General Re

General Re is a reinsurance company. It is a subsidiary of Berkshire Hathaway Corporation.

General Reinsurance Corporation, often called General Re, is one of the world's largest reinsurance corporations. It owns a controlling interest in Kölnische Rückversicherungs-Gesellschaft AG (Cologne Re) and both companies operate together as Gen Re. As a reinsurer, it "insures insurance companies" i.e. it will pay a portion of an insurance company's claims in exchange for a portion of the premium received by the insurance company for policies that cover those claims. "Gen Re" is a wholly owned subsidiary of Berkshire Hathaway, the holding company run by legendary investor Warren Buffett. In good years, General Re is a large source of cash flow to Berkshire Hathaway and has provided much of the cash that is then used by the company to acquire additional subsidiaries. However, since General Re was acquired in December of 1998, it has run into a string of business and profitability issues that may have Buffett questioning the wisdom of the acquisition. Problems have included emergence of losses on unprofitable business written in the 1990s and earlier, concentration of risk (and therefore huge claims) in reinsurance agreements covering 9/11 losses and most recently, questionable accounting practices on "finite risk" reinsurance contracts written with insurance giant American International Group in 2002.

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Source : Wikipedia