Warren Buffett does the unexpected: He sells a business – The Wall Street Journal

EDINBURGH — The world's greatest investor is widely believed to be Warren Buffett, who has outperformed the US stock market year in and year out for decades through his investment company, Berkshire Hathaway. With a track record like that, it's not surprising that Buffett has many followers who lap up his investment advice and follow his lead. Buffett famously said that his favourite holding period is forever, but he changes his investments more frequently than some might expect. The Berkshire Hathaway portfolio has evolved considerably over 25 years. Nevertheless, the principle is a good one: buy businesses you expect to hold for a long period. But don't close your eyes and forget about what you've invested in. Like Buffett, you may occasionally find it prudent to take the unusual step of offloading an asset. – Jackie Cameron___STEADY_PAYWALL___.Warren Buffett Is Doing Something Rare: Selling a Business.By Nicole Friedman(The Wall Street Journal) – Berkshire Hathaway Inc. has agreed to sell one of its workers' compensation insurance companies, a rare move for Warren Buffett.Mr. Buffett, Berkshire's chairman and chief executive officer, has long said that Berkshire buys companies with the intention to hold them forever.The reason Berkshire agreed to sell Omaha, Neb.,-based Applied Underwriters is to avoid conflicts among Berkshire-owned workers' compensation insurers, said Brian Snover, general counsel for Berkshire's reinsurance division. It acquired its majority stake in the company 13 years ago."Berkshire has a number of workers' compensation companies, and there was channel conflict between them," said Jeffrey Silver, Applied Underwriters' general counsel. "This sale will eliminate that inherent competition that occurred between the Berkshire-owned entities."Applied Underwriters ran into state regulatory issues in recent years related to a controversial type of workers' compensation insurance policy and agreed to stop selling that policy in some states without filing for approval. Those issues have been resolved and are unrelated to the sale, Mr. Silver said.Mr. Silver declined to comment on the buyer or the size of the sale. The deal is expected to close in the third quarter, he said.Mr. Buffett has told shareholders he prefers not to part with Berkshire-controlled companies. In an "owners' manual" for Berkshire shareholders posted on the company's website, Mr. Buffett wrote that Berkshire doesn't intend to sell any of its fully owned businesses, even the poorly performing ones, "as long as we expect them to generate at least some cash and as long as we feel good about their managers and labor relations."Berkshire hasn't sold a fully owned subsidiary in recent decades, according to data from Dealogic. Mr. Buffett sold some underperforming businesses in the 1980s, said Lawrence Cunningham, a law professor at George Washington University who has written books about Berkshire.Berkshire subsidiaries do occasionally sell parts of their businesses. Marmon Holdings Inc. sold some assets for $42m last year, and Lubrizol Corp. sold an underperforming unit in 2017, according to Berkshire's 2018 annual report.Berkshire acquired its stake in Applied Underwriters in 2006. Berkshire owns 81%, and Applied Underwriters' founders own the rest of the company, Mr. Silver said.Applied Underwriters had 703 employees at the end of 2018, up from 421 after it was acquired in 2006, according to Berkshire. It wrote about $994 million in gross premiums in 2017, according to ratings firm A.M. Best.State regulatory scrutiny of the company resulted in a 2017 settlement with California insurance regulators. The settlement related to profit-sharing workers' compensation policies, which are designed so that the premiums paid by companies change based on the actual cost of claims incurred.Applied Underwriters agreed to stop selling the policies in the state without filing for approval. Under the terms of the settlement, the Applied Underwriters policies in California were required to include more disclosures and couldn't be sold to small businesses.Write to Nicole Friedman at nicole.friedman@wsj.com

Warren Buffett does the unexpected: He sells a business – The Wall Street Journal

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