What I learned from the Berkshire Hathaway 2015 Annual Report
- Tenor of American politics diminishes great advances in the U.S.
- Investment strategies of adding to existing business lines and underwriting risk based on actual default risk as opposed to competition still work and should be encouraged.
- Accurate accounting shouldn’t disregard relevant charges in favor or EBITDA valuations.
- Success comes from staying in your lane. For Berkshire, this means friendly acquisitions, large purchases and partnership with like-minded long term holders of companies.
- Burlington Northern Santa Fe, Insurance and Clayton Homes business all improved in a diminishing market, but conditions for the insurance market look difficult in the next ten years.
- The shareholder meeting will be simulcast for the first time this year. Details are below.
Warren Buffett, inarguably one of the most successful investors in history, released his annual letter to the shareholders of Berkshire Hathaway in late February 2016. The annual report he publishes through his conglomerate, Berkshire Hathaway, is one of the most highly anticipated and widely read in the financial world.
On March 18, 2016, the Georgia Association of Healthcare Executives sponsored a closed door session for C-Level Executives throughout the state to hear perspectives from two insiders: Harold Kirtz, Senior Litigator for the Federal Trade Commission, and Mr. Will Melson, President of the Broadwell Group. The discussion went long, but here’s half of what was shared from a regulator’s perspective. Please note that any comments by Harold Kirtz are not necessarily the views of any individual Commissioner or of the Commission as a whole.
Q: What things does the FTC look for in its jurisdiction over mergers and acquisitions?
A: We look for whether the merger or acquisition will substantially lessen competition in a particular market. We have to determine what the product or service market is, what the geographic market is, what concentration is there among the current players in the market, and whether there is the likelihood of substantial entry by new or expanding players in the market.
On March 18, 2016, the Georgia Association of Healthcare Executives sponsored a closed-door session for C-Level Executives throughout the state to hear perspectives from two insiders: Harold Kirtz, Senior Litigator for the Federal Trade Commission, and Mr. Will Melson, President of the Broadwell Group. The discussion went long, but here’s one half of the story from a dealmaker’s perspective.
Q: What is the actual “state” of Mergers & Acquisitions?
A: While none of us have unlimited funds, healthcare professionals struggle with the idea there’s a lot of things I “could” do, but what “should” I do? When it comes to mergers & acquisitions, you’re probably presented with a lot of opportunities to consider – should we join? Should we buy? Should we merge? Should we integrate?
I think we’re in the middle of it. And when you’re in the middle of all this change, it’s sometimes a little hard to figure out. Should we go with a population health management? Should we do something with a payer plan? We see a lot of health systems that will dabble in something that looks like a plan.
You would have thought that in 2010, M&A was on a huge tear. And even up to 2014, you’re thinking there’s no way it can be any bigger. Last year was a 66% increase of M&A activity in Healthcare. Even nationwide – Wall Street Journal reported there were over $2 Trillion of mergers.
Global volatility and its effect on accessibility of capital in Georgia
- Global economic indicators do not universally support a national contraction.
- As emerging markets decline in a strong U.S. dollar environment, U.S. exports are under pressure.
- However, most profit losses are disproportionately borne by energy and heavy industrials like Exxon. Minus those sectors, U.S. profits remained unchanged in 2015.
- Changes in capital flow, as China became a net seller of treasuries and invests more domestically, should have improved yield, but other players stepped in as buyers seek safety.
- In addition, Georgia’s economy is outpacing the U.S. in population and employment growth, banks gotta bank and many factors are pushing institutional equity sources into the market over going back to sitting the bench.