Heinz deal not signal of binge buying

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Posted: Sunday, April 7, 2013 12:00 am

Berkshire Hathaway's coming purchase of Heinz Co. doesn't necessarily mean a merger-and-acquisition binge is under way, Abram Brown wrote in Forbes magazine.

Thomson Reuters counted a 16 percent decline in the number of announced deals, to 8,100 in the first quarter, the lowest number in nearly a decade. Even so, several big-dollar deals pushed the total value to $540 billion, up from $490 billion a year earlier.

You can't call a trend just from the decision by Berkshire Chairman and CEO Warren Buffett to take part in the $28 billion Heinz purchase, Brown wrote.

“Buffett is quite selective and will wait years to make a large purchase. Buffett is compelled more by specific opportunities than market timing. The man, after all, favors an investing horizon of forever.”

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For future investors

Apparently, it's never too early to educate youngsters about business.

Omahans Nancy Rips and Tom Kerr collaborated on “My First Berkshire ABC” (Donning Co., 32 pages, $16.95) to take young readers, as well as adult fans of the Omaha investment company and its CEO, on a quick tour of the alphabet.

For starters, A is for Acme Brick, B is for Borsheims and C is for Clayton Homes, as you might expect.

Rips' text provides a primer on Berkshire-owned businesses and investment ideas. Kerr's artwork whimsically portrays Buffett and kids in appropriate situations, such as four youngsters holding up a safety net to illustrate an insurance company.

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SEC stance faulted

Warren Buffett's aversion to investing in high-tech businesses isn't at the root of an objection by a Berkshire Hathaway division to using social media to give important information to investors.

Rather, Berkshire's Business Wire said it's concerned that “standalone use of social media platforms” would threaten the “level playing field” for investors who need information to make decisions.

Cathy Baron Tamraz, CEO of Business Wire, said a government report on the matter last week “poses a disservice to the investment community, threatening increased fragmentation of price-sensitive information, privacy concerns as users are required to register to gain access to material news, security risks that may adversely affect market stability, and the loss of simultaneity.”

The Securities and Exchange Commission regulates businesses whose stocks are publicly traded. Business Wire competes with PR Newswire to send out announcements using electronic press releases and other channels that meet SEC rules for broad public disclosure of “material” information.

Tamraz reacted to a report last week by the SEC that said information posted on social media could satisfy SEC rules, as long as investors are told where to find the information.

The issue came up when Netflix CEO Reed Hastings revealed, only on his personal Facebook page, that the company had reached 1 billion movie-viewing hours in a month. Most investors missed the message, which drove up Netflix's stock price.

Tamraz said social media can supplement but not replace “a broadly disseminated news release” that sends out information “simultaneously and in real-time” to the market. “It should not be the core.”

Business Wire has used Twitter and other social media for years as part of a “multi-channel distribution platform,” she said, but relying on social media alone “will likely negatively impact market fairness and investor awareness.”

Spreading sunshine

The FBI came calling on Warren Buffett's sister Doris, but it was good news.

Agency Director Robert Muel-ler honored her for service to the community and contributions to public safety, according to the City of Fredricksburg, Va., where she lives.

Her $1 million challenge grant, along with the Cal Ripken Sr. Foundation, helped raise money for the Sunshine Ballpark, part of a city program to improve the lives of at-risk children.

The name is borrowed from her Sunshine Lady Foundation, which is in the process of giving her wealth to good causes.

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Pipeline spending cut

Berkhsire's MidAmerican Energy Holdings Co. division is cutting its planned capital spending for natural gas pipelines by $2.4 billion, or 13 percent, through 2021, Bloomberg reported, because electricity demand at its PacifiCorp operation is flat or declining.

Energy conservation by homes and businesses has slowed the growth of electricity demand in most areas and even reduced use by 0.6 percent this year in PacifiCorp's Utah, Idaho and Wyoming markets.

The company plans to spend $11.8 billion through 2015 and is reducing spending after that.

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Luck more than skill?

Mutual fund manager Bill Gross wrote in an investment report that the successes of Buffett, money managers Daniel Fuss and George Soros and others may be due to the times as much as to the individuals.

“All of us, even the old guys like Buffett, Soros, Fuss, yeah, me, too, have cut our teeth during perhaps a most advantageous period of time, the most attractive epoch, that an investor could experience,” Gross wrote. “Perhaps it was the epoch that made the man as opposed to the man that made the epoch.”

The report says, according to Bloomberg, that the real test of greatness will be whether the successful investors can adapt to changes over a long period of time.

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The Omaha World-Herald Co. is owned by Berkshire Hathaway Inc.

Contact the writer: 402-444-1080, steve.jordon@owh.com, twitter.com/buffettOWH

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Have a question for Steve Jordon about the Oracle of Omaha? Submit your questions now, then join Steve at 11:30 on Tuesday to discuss the latest news about Warren Buffett.

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