Buffett/Berkshire - general news

[gfp]

It does make you wonder if merger approvals will be a lot more difficult for BRK Energy going forward.

[bennycx]

Timing seems to coincide with Biden’s new Exec Order

[gfp]

FTC statement on the pipeline deal termination:

https://www.ftc.gov/news-events/press-releases/2021/07/statement-regarding-berkshire-hathaway-energys-termination

[woodstove]

Very interesting statement.  Blocked in 1995 a similar transaction, they say, so this is 26 years later. 

[ValueMaven]

For what its worth Kern River has turned into a MASSIVE homerun for BHE.  Whatever the case might be, still 80% of the deal got done.  It is what it is. 

[ValueMaven]

With all due respect - this statement is a bunch of FTC BS.  How pompous.. 

.  

“Although this outcome preserves competition, it is disappointing that the FTC had to expend significant resources to review this transaction when we previously filed suit in 1995 to block the same combination. Questar Pipeline attempted to purchase a 50% share in the Kern River Pipeline but the parties abandoned those plans shortly after the Commission’s suit. Given our prior action, and the even closer competition that developed between the pipelines since then, this is representative of the type of transaction that should not make it out of the boardroom. The Bureau of Competition will be actively exploring its options on how to curtail this type of re-review to better deploy the Commission’s scarce resources.”

[Xerxes]

On 11/29/2020 at 6:54 PM, Xerxes said:

https://asia.nikkei.com/Business/Business-Spotlight/Warren-Buffett-s-Japan-trade-The-changing-world-of-sogo-shosha

 

 

 

aug3020.pdf (berkshirehathaway.com)

 

About a year out, so how did they do .. even though we don't really know the initial purchase date, but we can assume perhaps the heavy buying would have been post March-2020.

 

"The companies, listed alphabetically, are Itochu, Marubeni, Mitsubishi, Mitsui and Sumitomo. These holdings were acquired over a period of approximately twelve months through regular purchases on the Tokyo Stock Exchange"

 

 Mitsubishi (8058), Mitsui (8031), Itochu (8001), Marubeni (8002) and Sumitomo (8053)

38%, 62%, 39%, 29% and finally 20%, respectively, as one year return.

 

Interestingly, looking at these I realized that some of that of them (Ex: Mitsubishi) have a NYSE listing. Not for the whole conglomerate, Mitsubishi Group, which is fact private, but different tentacles (i.e. Mitsubishi UFJ Financial Group), which by itself is worth $70 billion, has a NYSE listing.

 

My guess would be that Buffett bought Mitsubishi Corporation (8058) and not MUFG (8306/MUFG) nor Mitsubishi Heavy Industries (7011).

 

Mitsubishi UFJ Financial Group - Wikipedia

 

"MUFG holds assets of around US$2,459 billion as of 2016 and is one of the "Three Great Houses" of the Mitsubishi Group[6] alongside Mitsubishi Corporation and Mitsubishi Heavy Industries. It is Japan's largest financial group and the world's second largest bank holding company holding around US$1.8 trillion (JPY 148 trillion) in deposits as of March 2011.[1] The letters MUFG come from Mitsubishi and United Financial of Japan." 

Edited July 14, 2021 by Xerxes

[Dynamic]

I would agree that it appears to be Mitsubishi Corp. (8058) which seems to match OTCMKTS:MSBHF and to be the general trading company, while the other parts of the Mitsubishi Keiretsu seem to be more specialist.

 

I found some OTC Markets listings for all 5, which, while not as good as tracking via the Tokyo tickers, is at least something I can track on Google Sheets using GoogleFinance.
 

OTCMKTS    ITOCF    Itochu Corp
OTCMKTS    MARUF    Marubeni Corp
OTCMKTS    MSBHF    Mitsubishi Corp
OTCMKTS    MITSF    Mitsui & Co Ltd
OTCMKTS    SSUMF    Sumitomo Corp

My guess it that the holdings were worth about $8.3 billion at end of Q2 and about $8.1 billion today, but it's certainly imprecise.

Edited July 14, 2021 by Dynamic

[valueinvesting101]

Warren Buffett's Berkshire Hathaway could bag a 60% profit when Paytm goes public
 

https://markets.businessinsider.com/news/stocks/warren-buffett-berkshire-hathaway-paytm-ipo-profit-digital-payments-india-2021-7

[Munger_Disciple]

Pilot Flying J levering up to buyout the Haslam and Call families.  Looks like a mini levered buyout inside Berkshire: https://www.yahoo.com/finance/news/berkshire-backed-pilot-seeks-3-164604204.html. Haslams will continue to own 20% of the business after 2023. 

[gfp]

Thanks for posting.  This was always the plan but it looks like they moved up the date by a couple years to take advantage of the current cost of money for corporate borrowers.  The Haslams will definitely benefit from the Berkshire Halo on the cost of this debt.

[gfp]

30 minutes ago, Munger_Disciple said:

Pilot Flying J levering up to buyout the Haslam and Call families.  Looks like a mini levered buyout inside Berkshire: https://www.yahoo.com/finance/news/berkshire-backed-pilot-seeks-3-164604204.html. Haslams will continue to own 20% of the business after 2023. 

Also, as a reminder, Pilot Flying J paid out a non-recurring $849 million distribution to Berkshire in Q1, with Berkshire owning 38.6% at that time.  That indicates a $2.2 Billion total special dividend out of Pilot Flying J in Q1 of this year.  Now they are refinancing some of that and accelerating the timetable of Berkshire going to 80%.

 

The Haslams are going to be flush, having already received $1.1 Billion in the Q1 distribution.  Sounds like the Call family will be selling out completely with this deal.

[Munger_Disciple]

1 hour ago, gfp said:

Also, as a reminder, Pilot Flying J paid out a non-recurring $849 million distribution to Berkshire in Q1, with Berkshire owning 38.6% at that time.  That indicates a $2.2 Billion total special dividend out of Pilot Flying J in Q1 of this year.  Now they are refinancing some of that and accelerating the timetable of Berkshire going to 80%.

 

The Haslams are going to be flush, having already received $1.1 Billion in the Q1 distribution.  Sounds like the Call family will be selling out completely with this deal.

 

 I think the families are cashing out sooner to take advantage of current lower rates on capital gains taxes which will almost certainly go up next year if Biden's proposal is enacted by the Congress. 

[Gamecock-YT]

Haslams have to get some money to pay off some more failed university of tennessee coaches. 

[Munger_Disciple]

2 hours ago, gfp said:

Thanks for posting.  This was always the plan but it looks like they moved up the date by a couple years to take advantage of the current cost of money for corporate borrowers.  The Haslams will definitely benefit from the Berkshire Halo on the cost of this debt.

 

You are most welcome gfp!

[boilermaker75]

On 7/16/2021 at 5:31 PM, Gamecock-YT said:

Haslams have to get some money to pay off some more failed university of tennessee coaches. 

 

University of Tennessee has become a graveyard for coaches. That fan base would scare me away.

Edited July 17, 2021 by boilermaker75

[DooDiligence]

Interesting story about a recent BRK business sale.

 

https://markets.businessinsider.com/news/stocks/warren-buffett-kirby-vacuum-cleaner-brand-berkshire-hathaway-scott-fetzer-2021-7

[mjm]

if my memory serves me correct, this company also included world book encyclopedia as a division. not sure of the margin on kirby, but I remember World Book's margin as being very high and lucrative-- that is until the cdrom came along.

[gfp]

1 hour ago, mjm said:

if my memory serves me correct, this company also included world book encyclopedia as a division. not sure of the margin on kirby, but I remember World Book's margin as being very high and lucrative-- that is until the cdrom came along.

 

Yes, Scott Fetzer owns a bunch of small to medium sized companies.  Utility bodies for trucks, pumps, Ginsu, electric motors - it's interesting to peruse the current mini-conglomerate's holdings -

https://scottfetzer.com/brand-portfolio/

 

Seems like most of those businesses would fit fine inside Marmon, but maybe you don't take a CEO's kingdom away from him until he retires on his own.

Edited July 23, 2021 by gfp

[gfp]

I saw this Moody's report on Pilot Flying J's current planned $3.5 Billion bond offering and thought some here might find it interesting.  Following this deal, Berkshire will own 80% of Pilot Flying J.  Certainly, Berkshire will show a lot more revenue once it consolidates Pilot Flying J, since revenues were $27 Billion last year.  The report also mentions that Pilot Flying J will spend around half a billion dollars this year on expansion and acquisitions.

 

Report attached as a PDF

Rating Action - Moodys-assigns-a-Ba1-to-Pilot-Travel-Centers-planned-term-loan-B-Ba1-CFR-uncha... - 19Jul21.pdf

[ValueMaven]

Thank you for posting.  This was a great acquisition by Berkshire.  Hopefully more to come.

[Munger_Disciple]

Thanks gfp!

[VersaillesinNY]

Enjoy! 

 

https://www.youtube.com/channel/UCvvR2wp795uqsmh6F-Rq6TA/videos 

 

 

Edited July 29, 2021 by VersaillesinNY

[ValueMaven]

This is pure gold.  Thank you!!

[gfp]

Greg Abel making a change - Lubrizol CEO out and the new CEO comes from BHE Infrastructure Group.  Will add a link once I find one without a paywall.

 

"Brown joins Lubrizol from BHE Infrastructure Group, which, like Lubrizol, is a company in Berkshire Hathaway's portfolio. Brown served as president and CEO at BHE Infrastructure. Prior to that, he was president for North American sales and service operations for wind turbine supplier Vestas and chief operating officer for the city of Detroit."

 

In case anyone is curious what BHE Infrastructure actually is, there is a description on this website.  They were also the division of BHE that was responsible for proposing the emergency power plan to the state of Texas following the winter storm.  Of course that plan has not been adopted by Texas.

 

https://www.brkenergy.com/about-us/leadership/chris-brown.aspx

 

Quote

a commercial initiative with a broad mandate to invest in diverse infrastructure projects, from energy to transport to data, while remaining nimble and responsive to market needs

 

Edited August 23, 2021 by gfp