Buffett bites back

Buffett has a remarkable record with his chief executives. He has hired good ones, kept them in place, and praised them lavishly even if the company is faltering (in his view good managers in bad businesses are still good managers). Until a few years ago he'd never been rude about them, let alone fired one. An extraordinary record over several decades. And then came NetJets, and the news the chief executive had been let go and a new one installed. In his latest 2011 report Buffett is able, once again, to lavish praise on his NetJets chief executive (now Jordan Hansall).

"A few years ago NetJets was my number one worry: Its costs were far out of line with revenues, and cash was hemorrhaging. Without Berkshire’s support, NetJets would have gone broke. These problems are behind us, and Jordan is now delivering steady profits..."

In Buffett terms this is a rare, and stinging, rebuke to earlier management failures.

Disclosure:blogger owns (a bit of) Berkshire Hathaway

Brits power Buffett profits

Within the Berkshire Hathaway's end of year accounts (out this weekend) there is a breakdown of their regulated utilities businesses (called MidAmerican). Despite the name, it include a large chunk of British assets (Northern Electric and Yorkshire Electricity). Operating earnings (before interest and taxes) for the division are up $120M, but all of that is accounted for by UK utilities earnings (up $136M).

So it seems the regulator is keeping a pretty tight grip on the profitability of these regulated industries, with one exception.

Notes

See: http://www.berkshirehathaway.com/2011ar/2011ar.pdf

(full disclosure: this blogger owns Berkshire Hathaway shares)