Job Cuts Outstrip Berkshire Hathaway Shares (BRK-A, BNI)

December 28, 2009 by Douglas A. McIntyre

There was an interesting filing out during the Christmas holiday showing that Warren Buffett and Berkshire Hathaway Inc. (NYSE: BRK-A) weren’t in the holiday spirit for much of 2008.  There were  21,000 fewer employees at Berkshire Hathaway entities in 2009 compared to 2008’s 246,000 employees.

Bloomberg called this “a slump at its manufacturing and retail units.”  The new tally of about 225,000 workers according to documents pertaining to the planned acquisition of Burlington Northern Santa Fe (NYSE: NBI).

This also followed a Barron’s feature article calling Burlington Northern’s tepid outlook a warning.  In fact, Barron’s leaves the base case scenario as one with no real recovery in 2010 not just at Burlington Northern but in general.  At the same time it poses an inexpensive Berkshire Hathaway stock.

When you consider how many units are at Berkshire Hathaway, more than 70 in all, there are many obvious spots where employees may have been trimmed.  Some of Berkshire’s retail and construction-related units are Acme Brick, Ben Bridge Jeweler, Benjamin Moore, Borsheims Fine Jewelry, Clayton Homes, Helzberg Diamonds, John’s Manville, Jordan’s Furniture, Nebraska Furniture Mart, RC Willey Home Furnishings, See’s Candies, and Star Furniture.  There is also the Buffalo News.

Berkshire Hathaway’s stock has not exactly been a huge harbinger that Buffett and friends will turn the hiring machine back on.  At $98,895.00,  it is down one-third from all-time highs.  The stock is barely up 2% from the $96,600.00 price at the end of 2008.  Shares are up 35% from the March 9 closing that investors use as the official end of the bear market, but this compares to a gain in the S&P 500 Index of roughly 27% in 2009 and  69% since the March 9 closing bell.

It is probably not fair to only look at Berkshire Hathaway’s share price when considering jobs.  Mr. Buffett tends to look at his whole operations rather than his share price, but that won’t necessarily be the same for the Berkshire Hathaway shareholders.  It also took Buffett far longer to turn optimistic than the overall markets indicated throughout the entire 2009 stock market recovery.

Buffett might be more optimistic now, but it doesn’t seem likely the HR departments are yelling “All Aboard!” throughout the subsidiaries.

JON C. OGG