EU concerns push the euro to close to a two-year low. (Reuters)

Goldman Sachs (NYSE: GS) will invest $40 billion into alternative energy in the next decade. (Reuters)

TV networks battle with Dish Network (NASDAQ: DISH) over a DVR that can skip ads. (Reuters)

Apple (NASDAQ: AAPL) CEO Tim Cook gives up $75 million in dividends on his stock holdings. (Reuters)

Warren Buffett’s Berkshire Hathaway (NYSE: BRK-B) may buy more newspapers. (Reuters)

Goldman Sachs and Morgan Stanley (NYSE: MS) loan shares to short sellers who want to hedge Facebook’s stock. (WSJ)

U.S. bank lending falls in the first quarter, a possible sign of economic slowing. (WSJ)

Toyota (NYSE: TM) will push further into emerging markets. (WSJ)

Comcast’s (NASDAQ: CMCSA) NBCUniversal division may buyout Microsoft’s (NASDAQ: MSFT) part ownership in MSNBC.com. (WSJ)

Japanese power companies invest in U.S. shale gas to help replace nuclear power. (WSJ)

Yahoo! (NASDAQ: YHOO) releases an Internet browser call Axis, which will compete with Google’s (NASDAQ: GOOG) product. (WSJ)

Spain is concerned about a run on its banks. (NYT)

Large European institutional funds begin to sell euro assets. (FT)

Italian Prime Minister Mario Monti says most leaders in the region back regionwide bonds. (Bloomberg)

Douglas A. McIntyre

RailAmerica, Inc. (NYSE: RA) recently announced the redemption of $74 million in its remaining 9.25% notes due in 2017.  That is not enough to move the needle on a stock by much that is worth over $1 billion in market value.  What can move a stock this much is takeover chatter.  The Jacksonville Business Journal is quoting Trains Magazine noting that Fortress Investment Group LLC is looking to sell its majority stake in RailAmerica.

Warren Buffett was listed as on potential acquirer and RailAmerica has 45 individual railroad lines with approximately 7,500 miles of track throughout 28 states in America and another three Canadian provinces.

RailAmerica shares are up almost 6% at $22.81 against a 52-week trading range of $11.06 to $23.90.  Its market value is listed as $1.15 billion according to Yahoo! Finance.

Until news gets more concrete, we would only treat reports of this sort as a market rumor.

JON C. OGG

What is interesting here is that this suddenly makes the new portfolio management team at Berkshire Hathaway Inc. (NYSE: BRK-A)(NYSE: BRK-B) have to consider whether or not the “forever” time period applies to its relatively new investment here.

HealthCare Partners operates centers in Central Florida, Southern Nevada and also in Southern California. The outfit has just over 150 clinics, about 700 staff physicians, and it has a network comprised of over 8,300 doctors who operate independently. It provides and coordinates these services to over 667,000 managed care patients on a comprehensive capitated basis.

The terms of the deal call for DaVita to pay $3.66 billion in cash from its cash on hand and to borrow under its credit facility and to take on new debt.  The company also plans to issue almost 9.4 million shares valued at another $758 million or so before the dilution and there may be another $250 million or so in cash payments to partners if certain milestones are reached.

HealthCare Partners generated about $2.4 billion in sales and operating income was roughly $488 million in 2011.  DaVita generated $6.98 billion in sales with $1.13 billion in operating income in 2011.

Our question is whether or not this implies that DaVita is wanting to diversify further and further away from kidney care.  HealthCare Partners is called “a leader in multispecialty integrated and coordinated care delivery” and its website shows a much more general angle of care compared to DaVita.

Buffett’s most recent Berkshire Hathaway holdings shows in the filing that his 6 million shares were worth $90.17 at the March 31 cut-off date. DaVita shares are now down 1.8% at $79.35.

JON C. OGG

The announcement is a coup for Yahoo!’s interim CEO Ross Levinsohn, although the buyout must have been in the works long before he began his job earlier this month. What Yahoo! did not say as its reported on the agreement is what it will do with the money. That will be as crucial to Yahoo!’s share price, and perhaps its future, as anything the company has done in the past year — with the possible exception of changing CEOs twice.

Yahoo!’s market cap is just short of $19 billion, so the firm certainly could offer a dividend. That will not satisfy shareholders who have concerns about the viability of the portal company over the longer term. Yahoo! could buy back close to 20% of its shares and automatically raise its earnings per share. Shareholders may not be impressed with that move. Share buybacks rarely have been a way for shareholders to gain long-term value in troubled companies.

Beyond a these traditional uses of capital to enhance shareholder value are others that are more radical. One is a special dividend. Microsoft (NASDAQ: MSFT) did this in 2004. AOL (NYSE: AOL) plans to make a similar move with the just over $1 billion it got from the license and sales of some of its patents to Microsoft. Each was part of a plan to get cash on its balance sheet to shareholders immediately. The sum per share, however, in Yahoo!’s case would be relatively modest. Yahoo! has more than 1.2 billion shares outstanding.

If none of these is the route Yahoo! takes, the board and management are left with the option of making a quick M&A deal to enhance the company’s position as a content company. Yahoo!’s weakness in social media is obvious. But the $4 billion it has left after taxes may not be enough to buy a social media firm. Twitter, for example, has a valuation of at least $8 billion, based on the last time it raised money. If Yahoo! could raise additional cash to make an offer, a bidding war would ensue. Yahoo! does not have access to the capital necessary to win an auction. There are plenty of smaller social media companies, but not many that would make Yahoo! a force in the sector.

Yahoo! could also buy a large traditional media company and try to strengthen that company’s online presence. Yahoo! has the traffic to make such a plan work. Among the corporations it could afford is Gannett (NYSE: GCI), the largest newspaper company in the United States. It has a market cap of $3 billion. But, aside from Warren Buffett of Berkshire Hathaway (NYSE: BRK-B), who can afford to own newspapers as a hobby? Not a single analyst on Wall St. believes that papers have much of a long-term future.

Yahoo! is about to have a lot of money. Along with that will be a several options for what to do with it, none of which is terribly attractive.

Douglas A. McIntyre

Ackman had pushed for replacing Green with Hunter Harrison, former CEO of Canadian National Railway Co. (NYSE: CNI), but following the coup Ackman now said not to expect a coronation, “We’re going to do a proper job, we’re going to meet all the candidates and do it the right way.”

Canadian Pacific’s problems, at least according to Ackman, are due to high operating costs and he wants to reduce those costs. Ackman’s stated goal is to lower CP’s operating ratio — that is cost as a percentage of revenue — from around 80% to 66%. That would match the operating ratio at Canadian National, Harrison’s former company. Most of the credit for CN’s success, however, is attributed to Harrison’s predecessor.

CP’s main problem is that it operates mainly in western Canada in a nasty climate with difficult topography. The company hauls mainly commodity minerals and is captive to swings in the market for those minerals. Lowering costs won’t be easy once the workforce is trimmed.

CP’s ability to compete with the likes of Union Pacific Corp. (NYSE: UNP), CSX Corp. (NYSE: CSX), Burlington Northern Santa Fe (BNSF), owned by Warren Buffett’s Berkshire Hathaway Inc. (NYSE: BRK-A), and Norfolk Southern Corp. (NYSE: NSC) is dubious, given that CP is much smaller than any of these and that the only likely merger possibility is Kansas City Southern (NYSE: KSU). A potential merger between Canadian National and BNSF was squashed by regulators in 1999, so a tie-up with one of the larger railroads is unlikely.

What is likely is that Ackman has shaken up sleepy Canadian companies and shareholders. This was Canada’s first big, public battle over corporate direction and many observers believe that it’s just the beginning.

Who could be next? A good bet might by phone maker Research in Motion Ltd. (NASDAQ: RIMM) whose recent struggles are well documented.

CP did not get much of a share price boost yesterday, closing at $75.07 in a 52-week range of $44.74-$79.91. The stock is inactive in pre-market trading this morning.

Paul Ausick

News came on Thursday morning that Berkshire Hathaway Inc. (NYSE: BRK-B) (NYSE: BRK-A) has reached a deal with Media General, Inc. (NYSE: MEG) to buy all of Media General’s newspapers outside of the Tampa paper.  Buffett is joining a sector that has wrecked many private equity firms looking for deals over the last decade in printed news.  The price tag is listed as $142 million in cash, but Berkshire Hathaway will simultaneously issue a $400 million term loan and a $45 million revolving credit line.

Today’s news is likely to bring a focus on other newspaper outfits around the nation.  Some companies with high concentrations in newspapers are Gannett Co., Inc. (NYSE: GCI), The McClatchy Company (NYSE: MNI), Daily Journal Corp. (NASDAQ: DJCO), A. H. Belo Corporation (NYSE: BLC), Lee Enterprises Inc. (NYSE: LEE).

Berkshire Hathaway also owns 1.7 million shares of The Washington Post Company (NYSE: WPO), although Warren Buffett does not hold a board seat any longer.  Does it beg the question, “Does this increase or decrease the value of The New York Times Company (NYSE: NYT)?”…

Media General will also issue Berkshire Hathaway ‘penny warrants’ for approximately 4.6 million Class A shares and that will give Buffett the right to buy 19.9% of Media General’s existing shares outstanding. Berkshire Hathaway also has the option to nominate a director to Media General’s board of directors.

The newspaper sale includes websites and mobile applications and these outfits have commercial printing businesses as well.  These include 63 daily and weekly titles in Virginia, North Carolina, South Carolina and Alabama.

Dare we say Buffett is back to his paper route he had as a teenager?  Mr. Buffett said, “In towns and cities where there is a strong sense of community, there is no more important institution than the local paper.  The many locales served by the newspapers we are acquiring fall firmly in this mold and we are delighted they have found a permanent home with Berkshire Hathaway.”

The move will allow Media General to focus on the broadcast television business, which accounted for some 77% of its 2011 platform cash flow in 2011.

Media General closed at $3.14 on Wednesday and its 52-week range is $1.14 to $6.84.  Its shares are indicated up about 40% around $4.75 in early indications.  With this newspaper and media outfit up so much, it may be safe to expect that other newspaper outfits could be worth more money than their battered shares indicate.

JON C. OGG

Also, keep in mind that portfolio managers Todd Combs and Ted Weschler are still new and those new positions of under $200 million $300 million are likely tied to them.

24/7 Wall St. has gone through line by line of each position to see which stocks have been bought and sold as new positions, as well as having added in whether or not the number of shares grew or shrank on each since the prior quarter. We had added some color in on some of the positions if applicable.

Be advised that the number of subsidiaries that this filing covers is 14 entities rather than 18 entities in the prior quarter. There is also a note in the 13F filing showing that the SEC has granted “Confidential Treatment” on some Berkshire stock holdings and that likely suggests that Buffett is still acquiring a position he does not want the public to know about yet. This filing does not signal the half-dozen or more European shares that Buffett said he bought so that remains an outstanding issue as well.

The value of the stock portfolio was $66,151,587,000 at the end of 2011 and this was listed as $75,300,250,000 at the end of March 2012.

American Express Co. (NYSE: AXP) was over 151.6 million shares, SAME AS last quarter.

Bank of New York Mellon Corp. (NYSE: BK) is now 5.6 million shares, HIGHER THAN the 1,793,915 shares last quarter.

CVS Caremark Corporation (NYSE: CVS) is the SAME SIZE at 7.106 million shares after having been a new holding in a recent quarter and having been raised one quarter ago.

Coca Cola Co. (NYSE: KO) was right at 200 million shares, SAME AS BEFORE.

ConocoPhillips (NYSE: COP) is roughly 29.1 million shares, roughly the SAME AS BEFORE but it is still lower than previous quarters in past reports.

Costco Wholesale (NASDAQ: COST) 4,333,363 Shares, SAME AS last quarter after having lowered it before.

Da Vita Inc. (NYSE: DVA) is now 6 million shares worth $541 million and that LARGER THAN BEFORE after having been a new position of 2.684 million shares.

DirecTV (NASDAQ: DTV) is a LARGER POSITION listed at 22.999 million worth over $1.13 billion. This one had been 20.348 million shares worth $870 million one quarter earlier and it had been a new position just two quarters ago at 4.249 million shares.

Coty wrote to Avon’s board yesterday and said:

We received encouragement from many of your shareholders, research analysts and others in the financial community. Despite this support, your total lack of engagement with us leads us to believe that you remain reluctant to explore a friendly, negotiated combination on a reasonable timetable. Two months is enough. Consequently, as our deadline to begin discussions expired today, our proposal is withdrawn. It is time for Coty Inc. to move on and pursue other opportunities.

Coty went to a great deal of trouble to make the bid. It lined up partners, including Warren Buffett’s Berkshire Hathaway (NYSE: BRK-B), and debt from JP Morgan Securities. Its efforts involved large amounts of management time and Coty’s reputation with the financial world. All the work to reach a deal will not end yet. Avon is too compelling a target, and Coty has too much invested in a successful buyout.

Coty’s best leverage is that, though Avon’s shares raced from $18 to $24 immediately after its bid, those shares certainly will sell back to $18, and perhaps less, as investors despair about Avon’s troubles. These include SEC investigations, slowing sales and several failed restructurings.

Avon might make a case for a quick turn, buts its CEO, Sherilyn S. (Sheri) McCoy, formerly of Johnson & Johnson (NYSE: JNJ), has only just begun her job. The challenges she faces are so complex and the company’s culture so entrenched that bettering Avon’s prospects could take a number of quarters — if they can be bettered at all.

Avon’s board faces a shareholder revolt because of the Coty decision. The board will have to contend with institutional investors who wanted the Coty bid to improve their fortunes. Avon also may have to wrestle with more downgrades of its debt. Each day that passes, it is more a victim of its own long-term failure to find a formula similar to the one that made it a premier retailer for years.

Coty has the Avon board painted into a corner. Coty can afford to wait, but it will not have to wait for long. Avon’s shareholders will quietly beg it to come back. And that will be enough to prompt it to make another offer. Avon should hope the offer is as high as the last one.

Douglas A. McIntyre

Falling Oil Prices

Futures for Brent crude continue to sink closer to $100. Saudi Arabia’s oil minister said that the $100 level would be ideal for his nation’s finances and, he believes, those of the portion of the world that imports oil. Also weighing on futures is the financial fate of the EU and the growing recession there. For the time being, the beneficiaries of the drop in prices are large oil-consuming nations like the United States, China and India. The crippled economy in Europe has more than offset concerns about supply due to tensions over Iran and lower output from refineries. But the apparent advantage for the U.S. cuts another way. The slowdown in Europe that has pushed oil prices down means that U.S. exports to the same regions will begin to fall. Corporate earnings for the first quarter from a number of multinationals show the process already has begun.

Avon Mulls Options

Avon Products (NYSE: AVP) said it will take a week to decide whether it will negotiate a new, sweetened deal from Coty. Coty has just gotten financial support from Warren Buffett’s Berkshire Hathaway (NYSE: BRK-B). Coty raised its offer to $24.75 a share from $23.25. Avon’s board has a number of compelling reasons to take the offer. The first is the legacy of former CEO Andrea Jung, who ran the company into the ground, mostly by mismanaging its overseas operations. It also has been alleged that on her watch there may have been bribery problems overseas. The SEC has begun to investigate Avon. A new CEO, Sherilyn McCoy, formerly of Johnson & Johnson (NYSE: JNJ), has been appointed by the Avon board. That should not stop the board from saving the company and preventing a sharp drop in its stock if Coty is rejected. Avon has no viable turnaround plan, and, in the best case, it will take quarters for McCoy to implement one, if she can at all.

Big Box Office

The Walt Disney (NYSE: DIS) super-hero movie “The Avengers” was the top grossing movie at the U.S. box office this weekend. The same was true in many other countries. Estimates are that the film has taken in $373 million in North America since it opened. Added to overseas ticket sales, the number is closer to $600 million. Only a few films in history have taken in $1 billion — a number “The Avengers” almost certainly will pass. Among films that have approached the figure or exceeded it are those in the Transformers, Batman, Star Wars, Harry Potter and Lord of the Rings franchises, and the two most successful movies of all time — James Cameron’s “Titanic” and “Avatar.” “The Avengers” probably will not make it past these Cameron movies, But it will become a franchise with more releases, which will line the pockets of the Disney film studio operations.

Douglas A. McIntyre

A new CEO, Sherilyn McCoy, formerly of Johnson & Johnson (NYSE: JNJ), has been appointed by the Avon board. That should not stop the board from saving the company and preventing a sharp drop in its stock if Coty is rejected. Avon has no viable turnaround plan, and, in the best case, it will take quarters for McCoy to implement one if she can at all.

Douglas A. McIntyre