BRK.B

With M&A Popping, We Think More Deals Lie Ahead

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Monday morning, Barnes and Noble’s (BKS) Chairman Leonard Riggio announced that he will finance a bid to take the company’s retail operations private. This comes after the announcement of several other major deals, including the OfficeMax/Office Depot Merger, Berkshire (BRK.A) and 3G Capital’s acquisition of Heinz (HNZ), and Michael Dell’s bid for Dell (click ticker for report: ). Let’s take a look at some potential targets. Apollo Group Results in the for-profit education space have experienced significant downward pressure during the past few years. Apollo Group (click ticker for report: ), owner of the University of Phoenix, has seen its share price cut by 64% during the past year, after being a cash-generating darling just a few years ago. The … Read more

Buffett Fires the Elephant Gun and Acquires Heinz

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After sitting on cash and not making any major acquisitions since Lubrizol, Warren Buffett’s Berkshire Hathaway (BRK.A) teamed up with 3G Capital (former acquirers of Burger King) to purchase Heinz (HNZ) for a whopping $28 billion, or $72.50 per share—a 20% premium to the previous day’s closing price. The two firms will each own 50% of the venture, meaning Berkshire only invested $14 billion, so there’s plenty of cash left for more acquisitions. According to Buffett, 3G will run Heinz, while Berkshire will be an equal partner and finance part of the deal for 3G. Buffett had a fantastic quote to sum up the deal, saying: “I’ve got one word for you: ketchup.” Although organic attacks have come from every … Read more

Dividends at Financial Services Firms

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After getting slammed by one of the most vicious financial crises in modern history, financial services firms sit on much more solid ground. In fact, several have taken to returning cash to shareholders via dividends. Let’s take a look at a few names in the space that recently made headlines with their dividend policies. T. Rowe Price Money manager T. Rowe Price (TROW) was hit pretty hard by contracting balance sheets and retirement accounts, as it saw revenue fall for two consecutive years. However, as accounts recovered, the company has returned to solid revenue growth, easily eclipsing its 2006-2007 numbers. The firm has raised its dividend 10% this year to $1.36 per share, and it recently announced a special dividend … Read more

Key Takeaways From Berkshire’s 2011 Annual Report

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Warren Buffett’s Berkshire Hathaway (BRK-A, BRK-B) posted its 2011 annual report to shareholders on its website over the weekend. Investors near and far wait all year to read the latest musings of the Oracle of Omaha. This year’s letter to shareholders was filled with Buffett’s candor, as usual, where he outlined much of where he went wrong during the year.   Though the return on Berkshire’s book value still outpaced the return achieved on the S&P 500 in 2011, it advanced less than 5% during the year, a feeble showing given the collection of its businesses. Over the past 47 years, however, book value has grown from $19 to $99,860, a rate of roughly 20% compounded annually – an incredible … Read more

Buffett’s Berkshire Hathaway Weighed Down by Derivative Losses

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Warren Buffett’s Berkshire Hathaway (BRK-B) reported third quarter results Friday that failed to impress. Net earnings attributable to Berkshire shareholders fell almost 24%. Insurance-underwriting and its non-insurance businesses performed well in the period (due primarily to a lower-earnings-quality reserve release, though), and insurance-investment income fell from the same period a year ago. However, a huge spike in derivative losses ($1.53 billion) sent the firm’s net earnings significantly lower. Berkshire suggests that the derivative losses in any given quarter or year are meaningless since they are driven by a long-term bet the firm made to sell put options on a number of global stock indices, which fell during the third-quarter. These European-style options don’t expire until June 2018, so Berkshire has … Read more

Credit Suisse Is a Case Study in Poor Governance and Why ESG Investing Matters

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Image Shown: Shares of Credit Suisse Group AG have performed poorly in recent years as a revolving door of leaders combined with several major scandals have led to billions in losses and prompted Swiss regulators to launch investigations into the bank. The company has a plan in place to turn things around, though it will take years for these efforts to be fully reflected in its financial performance. Credit Suisse recently issued out lackluster guidance for 2022 that weakened investor confidence in its turnaround story. We think Credit Suisse is a good case study in poor corporate governance.   By Callum Turcan   A key part of the investment decision-making process involves evaluating a company’s leadership team, the process of which … Read more