Berkshires McLane Unit Buys Spirits Distributor Kahn

Berkshire Hathaway ($BRKB) subsidiary McLane Co. which is a 32 billion supply chain services provider is buying Kahn Ventures LLC which owns Empire Distributors, a wholesale alcoholicbeverage distributor based in Atlanta Georgia with operations in Georgia and North Carolina. Buffett likes buying private family run businesses and this one seems to fit the bill. As of this writing the price of the deal was not disclosed. Here again Buffett buys another simple to understand business, nothing fancy. According to other wire services its noted that Buffett might be using this as a base for further ventures in this field.

• Family run operation lead by Michael and David Kahn

• Empire has been in business since 1940

• According to industry analysts its the nation’s 15th largest beer and wine distributor.

• Over 650 employees

• Revenue of 350 million a year(2006) according to latest figures I can come by

• They have eight facilities totaling over 850,000 square feet of operating space equipped with high-tech equipment, including bottle scanning and GPS routing, to help them operate efficiently.

Author currently long BRKB

Operating like Berkshire Hathaway: Alleghany Corporation

While most eyes have been on Berkshire Hathaway ($BRKA), ($BRKB) lately and rightly so. Their are other companies that operate in a similar fashion to Berkshire one being Alleghany Corp. ($Y) . Alleghany is one of those companies that fly under the radar. Alleghany is an insurance company that takes the "float" (which is money that doesn't belong to the company, but are premiums taken in from policy holders and paid out to policy holders). Alleghany's principal business is insurance, however with the access to this float (or cash) they reinvest the money in other businesses, much like Berkshire does. Alleghany has over 60 publicly traded company's amongst its investment portfolio.

"Alleghany's objective is to create stockholder value through the ownership and management of a small group of operating businesses and investments, anchored by a core position in property and casualty insurance. Alleghany is managed by a select company staff which seeks out attractive investment opportunities, delegates responsibilities to competent and motivated managers, defines risk parameters, sets management goals for its operating businesses, ensures that managers are provided with incentives to meet these goals, and monitors their progress.

The operating businesses function in an entrepreneurial climate as quasi-autonomous enterprises.

Conservatism dominates Alleghany's management philosophy. Alleghany's philosophy shuns investment fads and fashions in favor of acquiring relatively few interests in basic financial and industrial enterprises that offer the potential to deliver long-term value to the investor."

An interesting fact is that these guys at Alleghany were in Burlington Northern Santa Fe long before Buffett & Co. They have since divested their shares in Burlington and now hold over $825 million in cash in which they can use for future investments. Also they have NO debt and have managed to weather the last couple years quite well. They like Buffett use book value as their yard stick and not the actual price of the stock. The stock ($Y) trades at a discount to its current book value of $306.71.

We shun investment fads and fashions in favor of acquiring relatively few interests in basic financial and industrial enterprises that offer the potential to deliver long—term value to the investor... Alleghany Corporation

Author currently long $Y

Buffetts Latest Move!

Warren Buffett's Berkshire Hathaway Inc subsidiary International Dairy Queen, the ice cream retailer is planning in 2010 to open its first stores in Egypt and Macau. Berkshire bought Dairy Queen in 1998. Buffett frequently snacks on DQ desserts followed by an ice cold Cherry Coke. Coca Cola (KO) is Buffetts largest publicly traded equity posistion.

Markel Corps Private Acquisitions

Markel Corp. (MKL) which is a property and casualty insurance company that specializes in specialty insurance products such as wind and earthquake exposed commercial properties, high valued motorcycles, personal, watercrafts, even horse related risks is becoming more and more like Berkshire Hathaway(BRKA, BRKB) as time passes on. Yesterday Markel announced that it acquired Baltimore-based Ellicott Dredge Enterprises LLC which is a 124-year old maker of Dredges. Markel first stepped into the private equity arena almost 5 years ago buying a major stake in a bakery manufacturer. This is a practice that Warrren Buffett has been doing for over 40 years and is quite successful at it. By buying into private concerns Markel is able to get 80-100% of these smaller companies unlike their passive investments in larger holdings such as General Elecrtic(GE), Wal-Mart (WMT), and Carmax (KMX) . By buying majority stakes of these smaller companies Gayner is counting on double digit returns. As you see by the list below these are simple businesses to understand. It seems Tom Gayner who runs the investment arm of Markel adheres to the same practices as Buffett, which is buying businesses that are simple and that have good management already intact. You will notice that their are no high-tech, fashionable companies in this group.

Private acquisitions since 2005

• Acquires majority stake in AMF Bakery Systems- Located in Richmond Virginia is the world's leading manufacturer of quality bakery equipment for high volume bakeries since 1915.

• Acquires Parkland Ventures- which owns and operates mobile home parks around the country.

• Acquires 40 percent stake in First Market Bank- First Market Bank was founded and is headquartered in Richmond and mostly owned by the Ukrop family who own a chain of super markets in central Virginia. Now celebrating its twelfth anniversary, the bank has grown to more than 300 employees and has a network of 39 full-service locations (including 25 in Ukrop's stores and 14 freestanding branches). It has more than $1 billion in deposits and offers a full range of retail and commercial products including mortgage, trust and investment services. Earlier in the year First Market announced a merger with Union Bankshares Corporation. When the merger is complete the combined organization will have 97 branch locations throughout Virginia with more than $4.0 billion in assets.

• Acquires Panel Specialist- is a leading manufacturer of panels, partitions, wall systems, casework, furniture, and countertops. Their customers include project managers, architects, and builders within five specialized divisions with annual revenues are over 30 million dollars.

• Acquires an unspecified majority interest in Baltimore- based Ellicott Dredge Enterprises LLC- located in Baltimore Maryland has designed and manufactured over 1500 dredges, more than any other manufacturer, and has served customers in over 8- countries. They market their products through two divisions. The Ellicott Division sells pre-engineered standard dredges primarily to the marine contracting and sand and gravel markets. Ellicott Dredge is the only dredge builder which designs and builds all key components of the dredging system- from winches to pumps, from excavators to spud carriages. This concept of single responsibility lies behind Ellicott's reputation for reliable and durable dredges. Because of this approach, many Ellicott dredges are still going strong after 50 years of steady service. Ellicott also built all of the dredges used in the original construction of the Panama Canal.

Markel has over a one hundred and ten publicly traded companies totaling 1.3 billion dollars in its investment portfolio.

A Smaller Version of Berkshire Hathaway: Markel Corporation

3 Mini Berkshire Hathaways???

*Author currently long BRKB, MKL

4 Of Warren Buffett's Smaller Holdings

Four of Warren Buffett's smaller holdings have made some big gains off the bottom, along with the overall market. What's interesting is that most focus on his largest holdings which are Coca Cola $KO, Wells Fargo $WFC, American Express $AXP, Burlington Northern $BNI, Johnson & Johnson $JNJ, Procter & Gamble $PG, and Kraft Foods $KFT. Below in the graph's you see 4 smaller positions that Berkshire Hathaway owns. Three of these companies IR, NRG & KMX have gained 100% or better off their lows, while ETN has gained 76%, all four far out pacing the market averages, with the Dow Jones Industrial returning 44% and the S&P returning 50%.

Looking at some of his smaller holdings might give us a glimpse at what he is buying in his personal account which is not published anywhere. All-in-all Buffett owns over 90 different companies in which over half of these are wholly owned by Berkshire Hathaway $BRKA, $BRKB.

Can Kraft Feed Buffett's Appetite?

One of Warren Buffett's stocks takes it on the chin this morning by posting a 72% decline in profits and trimming forecast for 2009. Kraft Foods(KFT) is trading down -$2.49 to $26.25 in pre-market this morning 2/4/2009. Kraft is the #2 food maker in the WORLD! Buffett usually makes Few but BIG bets and says his holding time frame is forever. I guess when you get to be the size of Berkshire Hathaway(BRKA,BRKB) you do have to hold a long time. Buffet likes companies with good steady cash flows which Kraft has and seems to be passing this on to shareholders in dividends which have been growing steadily. The current dividend is yielding over 4%. Keep in mind WALL STREET likes to focus on earnings, however the Intelligent Investor should focus on the the underlying business and its cash flows. Organic revenue for the 4 quarter and the year 2008 just ended grew 4.4% and 6.6% respectively. Here's a look at Kraft's(KFT) RECENT REPORT dated February 4th 2009.

Author long KFT

Billionaires Buffett & Gates Up Stakes In RailRoad & Waste

Again the Oracle of Omaha, Warren Buffet bought Burlington Northern Santa Fe Corp. (BNI) bringing his total share count to over 74 million and giving him the largest stake with 22% of company . Prices ranged between $61.65-$$63.43.While fellow billionaire buddy Bill Gate's Cascade Investments ups its stake in Republic Services (RSG) bringing the total to over 39 million shares and 10 1/2% ownership. Prices ranged between $22.97-$25.43. Cascade Investments which is gate's Investment arm also has large stake in Canadian National Railway Company (CNI).

Author is currently long BNI

Update! Buffett Again AddsTo Burlington Northern Santa Fe Railway

Once again Buffett is adding to his position in Burlington Northern Santa Fe (BNI), bringing his total stake in the company to nearly 20%. Buffett first announce this position back in the spring of 2007, if you remember he was saying he wanted to do a huge deal, could this be it? Since the market has taken a dive this year he has been on somewhat of a buying binge, with other purchases of Goldman Sachs(GS), General Electric(GE) in which he got preferred shares in both these companies. He has also announce plans to buy all of Constellation Energy(CEG) for $26.50 a share. Below is a direct link to Berkshire Hathaway's most recent buys of Burlington which were on 12/8 & 12/9.

http://www.sec.gov/Archives/edgar/data/109694/000118143108066742/xslF345X03/rrd226027.xml

Warren Buffett Is Adding to His Train Set

At 78 years old Warren Buffet is still playing with CHOO CHOO TRAINS, but their no longer the Lionel Trains from childhood day's. Looks like the Oracle of Omaha is amassing a large position in his favorite railroad company Burlington Northern Santa Fe(BNI). Buffett has been acquiring a position in this company since early 2007 and buying it on dips in the $70-80 range. He has also used the tactic of selling puts on the stock which pays him  similar to getting a dividend. If the stock hits his strike price the stock is put to him . If the stock never hits his strike price he pockets the option premium. Earlier in the year the stock almost hit $115 per share but has fallen back with the over all market. Here is a link to Berkshire Hathaway's(BRKA,BRKB) current filing.

http://www.sec.gov/Archives/edgar/data/109694/000118143108065808/xslF345X03/rrd225536.xml

also be sure and check the link to Gurufocus:

http://www.gurufocus.com/news.php?id=39652

Omaha Oracle Taps a Medium on Wall Street(circa1999)

Omaha Oracle Taps a Medium on Wall Street

Thought this was an interesting article taken from the NY TIMES January 31st 1999, almost 10 years ago . Look at where Berkshire was trading at then, $65,000 a share, 2 months later it was trading at $73,000 a share. Whats really interesting is that its book value back then was $37,000 a share, which was close to 2x book value. Today it trades at book value which is $77,500 a share. 

anyones thoughts?

Buffett Likes Those Quarterly Cash Payments

The Oracle of Omaha Warren Buffet has probably been in the news more in the last couple years than his first 50 years of his business career. One reason is that he is one of the richest people in the world second he has made his fortune strictly off of investing and third he is at the twilight of his career. But the reason for this article was to touch upon his investing style, and what he looks for in order for him to invest or buy the complete company. I will not get into the details with this post, but I do want to bring up a point, which is Warren Buffett- The Ultimate Dividend Investor(see dividendgrowthinvestor.com, a good article) has transformed as an investor over his long career. Yes Warren Buffett still very much adheres to the rules that Ben Graham wrote nearly 75 years ago which were Margin of Safety and Mr. Market. I do believe he is the ultimate dividend investor. Many of his public companies are dividend paying ones, plus the companies that are wholly owned subsidiaries send profits back Berkshire Hathaways(BRKA, BRKB) bottom line, much like the float of his insurance companies do. Buffets Berkshire(BRKA, BRKB) has been forced to change just out of its shear size. However I do believe in his personnel portfolio he still looks for 50 cent $1 bills. This is just my personnel observance while reading many books and articles that have been written on him.





This article intends to point out that he has gravitated to investing in large, cash paying companies rather than his early years which were Ben Grahams, cigar butt style of investing.

9 Ways to Make Money - Kiplinger.com

9 Ways to Make Money - Kiplinger.com

Thought this was an interesting article!

3 Mini Berkshire Hathaways???

For those of you interested in purchasing Berkshire Hathaway stock (BRKA) A shares and (BRKB) B shares which trade at $111500 and $3710 respectively, but do not want to pay the price, here are 3 companies that operate in the same fashion as Berkshire Hathaway hence the title. Markel (MKL), Fairfax (FFH), and Alleghany Corp. (Y) all 3 are insurance companies just like Berkshire. They take the insurance float and invest it in common stock or buy the whole company. All 3 have a portfolio of businesses ranging from railroads to pharmaceuticals with Markel having the most diversified portfolio. All have very competent management in place. All take a value approach to investing. These companies are not in the limelight like Apple(AAPL), Google(GOOG) or Research in Motion(RIMM), so you are probably not familiar but all 3 have prodded along allocating capital (insurance float) into new businesses. It has even been rumored in certain circles that Tom Gayner the Chief Investment Officer of Markel could be in line to run Berkshire. All 3 trade in the triple digits MKL $315, FFH $285, Y $275, but keep in mind folks the price does not have anything to do with the valuation of the underlying business.

I hope this article was some what informative.

STOCKMANMARC

a conversation with warren buffet

STOCKMANMARC: a conversation with warren buffet