YELL - Wall Street Breakfast Podcast: Berkshire Hathaway Earnings

2023-08-07 06:46:52 ET

Summary

• Berkshire Hathaway's Q2 earnings rose 6.6% driven by strong insurance results and stock buybacks.
• Yellow Corp files for bankruptcy after struggling with debt and labor disputes, leading to customer loss and layoffs.
• Authentic Restaurant Brands plans to acquire Fiesta Restaurant Group for $225M, representing an 8% premium to its closing price.

Listen below or on the go on Apple Podcasts and Spotify Berkshire Hathaway ( BRK.A ) Q2 operating earnings drive up on strong insurance results. (00:27) Debt-laden Yellow Corp ( YELL ) files for Debt-laden Yellow Corp files for bankruptcy after prolonged labor row after prolonged labor row. (01:41) Pollo Tropical ( FRGI ) restaurant chain to be sold in $225M deal - WSJ. (02:58)

This is an abridged transcript of the podcast.

Berkshire Hathaway (NYSE: Berkshire Hathaway Inc. (BRK.B) Stock Price Today, Quote & News ) (NYSE: Berkshire Hathaway Inc. (BRK.A) Stock Price Today, Quote & News ) Q2 operating earnings rose 6.6% Y/Y.

This was driven by strong gains in its insurance segment, both in underwriting and investment income.

The company bought back ~$1.4B of its common stock during the quarter, compared with $4.4B in the previous quarter, bringing its purchases in the first half of the year to $5.8B.

The investing giant had cash, cash equivalents and short-term U.S. securities amounting to $147.4B at June 30, 2023, up from $130.6B at March 31.

Q2 operating earnings of $10.0B increased from $8.07B in the previous quarter and $9.42B a year ago.

Insurance float stood at $166B at June 30, 2023, vs. $165B at March 31, 2023.

We have a full breakdown of operating earnings by business segment, investment and derivative gains, and equity holdings in this article on Seeking Alpha along with analysis from Gary Gambino.

I'll leave a link in show notes.

Yellow Corp (NASDAQ: Yellow Corporation (YELL) Stock Price Today, Quote & News ) has filed for Chapter 11 bankruptcy protection .

This is a move that was widely expected as the trucking company struggled to handle its outsized debt load, which forced it to miss union payments. Shares are down more than 24% before the bell today.

The company expects to enter into a debtor-in-possession financing facility, which will be used to support the businesses throughout the sale process, including payment of certain prepetition wages.

Yellow ( Yellow Corporation (YELL) Stock Price Today, Quote & News ) had assets and liabilities of ~$1B-$10B, bankruptcy filing showed. It has more than 100K creditors, the biggest of which include BNSF Railway, Amazon ( Amazon.com, Inc. (AMZN) Stock Price Today, Quote & News ), Home Depot ( The Home Depot, Inc. (HD) Stock Price Today, Quote & News ) and Union Pacific's ( Union Pacific Corporation (UNP) Stock Price Today, Quote & News ) railroad unit.

Yellow ( Yellow Corporation (YELL) Stock Price Today, Quote & News ) had been struggling to stay afloat amid weakening shipping demand despite prior union concessions and a $700M COVID-era government bailout.

The company has been implementing a restructuring plan to modernize operations, which turned out to be the final nail in the coffin amid opposition from Teamsters Union.

The dispute led to customers abandoning Yellow ( Yellow Corporation (YELL) Stock Price Today, Quote & News ) and shifting their cargoes to rivals. This pushed the company to shut down operations last month and lay off 30K workers.

Authentic Restaurant Brands plans to buy Pollo Tropical restaurant parent Fiesta Restaurant Group (NASDAQ: Fiesta Restaurant Group, Inc. (FRGI) Stock Price Today, Quote & News ) for $225M in a deal that could be announced as soon as today, according to the Wall Street Journal.

The deal reportedly is worth $8.50/share, representing an ~8% premium to Fiesta Restaurant's ( Fiesta Restaurant Group, Inc. (FRGI) Stock Price Today, Quote & News ) $7.86 Friday closing price.

Fiesta Restaurant ( Fiesta Restaurant Group, Inc. (FRGI) Stock Price Today, Quote & News ) owns and operates 137 Pollo Tropical restaurants, plus 30 that are franchised.

Other headlines to look out for on Seeking Alpha:

Pfizer alerts hospitals to drug shortages caused by damage to NC plant

Icahn Enterprises drops in after hours amid disclosure of SEC inquiry

Earnings week ahead: Disney, Palantir, Plug Power, Roblox, Rivian and more

Stocks most loved and shunned by hedge funds

On our catalyst watch for the day-The three-day Ai4 artificial intelligence conference in Las Vegas will include speakers from Block ( Block, Inc. (SQ) Stock Price Today, Quote & News ), Walmart ( Walmart Inc. (WMT) Stock Price Today, Quote & News ), Mastercard ( Mastercard Incorporated (MA) Stock Price Today, Quote & News ), Snap ( Snap Inc. (SNAP) Stock Price Today, Quote & News ), General Motors' Cruise ( General Motors Company (GM) Stock Price Today, Quote & News ), and Faraday Future ( Faraday Future Intelligent Electric Inc. (FFIE) Stock Price Today, Quote & News ).

Wall Street's major indices finished the trading week on a negative note.

The Nasdaq ( NASDAQ Composite Index (COMP.IND) Stock Price Today, Quote & News ) finished lower by 0.36%, while the S&P 500 ( S&P 500 Index (SP500) Stock Price Today, Quote & News ) gave back 0.53%, and the Dow ( Dow Jones Industrial Average Index (DJI) Stock Price Today, Quote & News ) fell by 0.43%.

Nine out of the 11 S&P sectors closed in the red, which were led by Tech and Utilities.

Treasury yields also finished lower . The 10-year Treasury yield ( United States 10-Year Bond Yield (US10Y) Stock Price Today, Quote & News ) came down 14 basis points to 4.05% and the 2-year yield ( United States 2-Year Bond Yield (US2Y) Stock Price Today, Quote & News ) fell 11 basis points to 4.78%. Although the 2s10s curve "remains deeply inverted, this is the least inverted since May," said Deutsche Bank's Jim Reid.

Now let’s take a look at the markets as of 6 am. Ahead of the opening bell today, Dow, S&P and Nasdaq futures are in the green. The Dow is up 0.25%, the S&P 500 is up 0.4% and the Nasdaq is up 0.6%. Crude oil is down 1% at $82 a barrel. Bitcoin is up 0.03%.

In the world markets, the FTSE 100 is down 0.5 % and the DAX is down 0.3%.

Our biggest stock movers for the day premarket: First the biggest gainer. Nikola's (NASDAQ: Nikola Corporation (NKLA) Stock Price Today, Quote & News ) stock increased by more than 6% after the company finished Friday with a 26% loss following better-than-expected Q2 results and the Nikola slides after investors digest CEO resignation, earnings release of CEO Michael Lohscheller. And we’ve already talked about the biggest loser, Yellow Corporation (YELL).

On today’s economic calendar, at 3pm consumer credit.

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