Buffett buys into auto retailing à la Lithia Motors

Warren Buffet, through Berkshire Hathaway and its vast holdings, touches just about every life in the country.
If you doubt it, when you’re writing those monthly electric bill checks you’re adding to Buffet’s billions.
Now the Oracle of Omaha is buying into the auto retailing market.
That could make things more interesting for Lithia Motors, which just closed its deal purchase DCH Auto Group Inc. DCH operates 27 dealerships in Southern California, New Jersey and New York. Combined with its exisiting 101 operations Lithia now has a hand in 128 locations nationwide.
Combined with DCH sales, Lithia Motors is now a $5 billion-plus firm and the eighth-largest U.S. retailer with plenty of upside.
Asked about Buffett’s entry into auto retailing, Lithia Chairman Sid DeBoer saw the move as a reassuring pat on the back.
“It confirms what we have known for years,” DeBoer said. “Auto retailing is a great business.”
Berkshire Thursday agreed to buy Van Tuyl Group, the fifth-largest auto dealership firm with 78 dealerships from California to Florida.
As has been the case with the DeBoer family, Buffett said in a CNBC interview he anticipates plenty of family-owned dealerships are ripe for the picking.

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So just what will those investigative law firms find beneath the Harry & David rock pile?

I find it downright hilarious when attorneys start pointing fingers at attorneys.

When you consider who ended up holding shares of the rebirthed Harry & David Holdings three years ago, it is nearly laughable to read the spate of law firm announcements, couched with all-due-indignation, how they are investigating Harry & David’s sale to 1-800-Flowers.com.

As an example:

Levi & Korsinsky is investigating the Board of Directors of Harry & David Holdings Inc. for possible breaches of fiduciary duty and other violations of state law in connection with the sale of the Company to 1-800-FLOWERS.COM, Inc.”

If such law firms are concerned about the (poor) widows and orphans holding shares, they shouldn’t be. The over-the-counter shares were held primarily by former Wasserstein & Co. investors (some of them holding law degrees themselves). Those are the same folks who sunk Harry & David under impossible debt, dumped its pension program and jilted mom and pop vendors here in the Rogue Valley with the blessing of a Delaware Bankruptcy Court judge.

So one can only conclude the financial world equivalent of ambulance-chasing lawyers automatically launch “investigations” every time a Wall Street deal occurs.

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 Every time I attend an Internet security, digital security or scam security conference, I am reminded: There are two types of people, those whose personal/business stuff has been hacked, and those whose personal/business staff will be hacked in the near future.

To wit, here is a New York Times pieces detailing what the Home Depot security breach means to its customers.

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Dust in the wind: Nothing lasts forever…

In this case, the idea that you can flip the switch and lights will come on or microwave reheat the leftovers may soon be passé.

There are plenty of contributing factors, and this Portland Business Journal reports addresses part of the equation.

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Erickson ink 5-year fire supression deal with L.A.

Some good news from Erickson Inc., which builds and maintains heavy-lift helicopters outside Central Point.
Erickson Wednesday announced a five-year contract with the City of Los Angeles to provide aerial firefighting services. Hot dry winds easily fan flames into large wildfires, threatening hundreds of homes almost every year.
The new contract includes five one-year optional extensions, as well as a 150-day per year minimum availability, up from 90 days in 2013.
Erickson has had a presence in Southern California over the past 14 years, providing fire fighting support for Los Angeles County and San Diego Gas and Electric.
Erickson will provide one S-64 helicopter equipped with a 2,650-gallon fire suppression system. The Los Angeles Fire Department Air Operations Center at Van Nuys Airport will serve as the staging area for the helitanker.

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Costco Wholesale Corp.’s fourth-quarter and fiscal 2014 sales both grew substantially.
The Issaquah, Wash.-based warehouse retailer reported a 9 percent gain in its 16-week fourth quarter sales to  $34.8 billion from $31.8 billion from a similar period ending Sept. 1, 2013.
For the 52-week fiscal year ending Aug. 31, 2014, Costco reported net sales of $110.2 billion, a 7 percent advance from the $102.9 billion recorded in fiscal 2013.

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When it comes to matching national demographics, Medford isn’t even close

The folks at WalletHub have taken national data, categorized it into four broad areas: Socio-demographic, housing, economic, and educational rankings.

The consumer and business research firm then ranked Metropolitan Statistical Areas according to how close they matched up against the overall national figures.

Medford isn’t exactly a mirror image of America, ranking 238 out of 366 MSAs. Our socio-economic level is a bit farther off the national mark at No. 253. We’re closest when it comes to housing at No. 84, and nearly in Pluto’s orbit when it comes to economic status at No. 349. Medford is No. 189 when it comes to education.

When it comes to matching up nationally in gender characteristics, Albuquerque, N.M, tops the list, followed by Tucson, Ariz. Eugene is No. 4.

When it comes to tenure in a residence, Las Cruces, N.M., tops the list, followed by  Springfield, Mo., Great Falls. Mont., and Bend.

There are two universities with both land and sea grant status in the country — Texas A&M and Oregon State. Coincidentally, College Station, Texas, and Corvallis are among the five communities farthest from the nation’s wealth gap reference point. Although it’s not exactly clear what that means, it appears to be a good thing.

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A look at the DC-10 air tankers flying out of the Medford airport this summer.

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If you’ve got the time, BLS has a tome for you

Bureau of Labor Statistics reports fall somewhere between less-than-riveting and needing cautionary warnings: “The following may put you to sleep.”

Nonetheless, if you are in business, or want to know where your retail dollars are flowing, a new Prices & Spending report Trends in producer prices between e-commerce and brick-and-mortar retail trade establishments released this month has plenty of interesting tidbits.

It’s here we learn that as recently as 2011, about a third of all retail stores had more than 500 employees, compared with 5 percent of those in the electronic shopping and mail-order houses industry. While 87 percent of online establishments had fewer than 20 employees, that number fell to 56 percent among retailers.

We’re also told well-located brick-and-mortar stores have less need for marketing than those with an electronic storefront. In 2012, for example, electronic and mail-order shopping retailers spent three times, on average, the amount on advertising and promotions per dollar of sales.

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With that other Premier bank no longer on the scene, it makes perfect sense for Columbia Commercial Bancorp  to take on the Premier Commercial Bancorp moniker.

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Satellite and cable carriers never like to reveal how many poker games they’re playing at once; makes it easier to shift cards from hand to hand that way. As well as its relatively small-potatoes clash with KDRV owner Heartland Media, DISH is pushing chips around with FS1 (the Fox Sports channel), a much bigger player.

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Idaho dairy group urges farmers not to give tours to outsiders.

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It’s back, back, back, back to school time

Those trips to Bi-Mart, Target, Freddy’s and Rogue Valley Mall are in the rearview mirror, well mostly.

My daughter begins her final year of college next month, which creates a checklist all of its own.

Back-to-School sales begin within a week of Sirrius XM plays America’s annual anthem “School’s Out” for the thousandth time.

Much of America is back in school, but here in Oregon we generally wait for Labor Day to come in go before shewing the kids back to the classroom.

I’m guessing there are plenty of parents who have procrastinated, putting off the dreaded back-to-school shopping tour.

I’m sure there are plenty of good excuses:

    • “Haven’t put the camping gear away yet.”
    • “The smoke from all those fires is too thick.”
    • “It’s too hot to shop.”
    • “Have you seen my lawn?”
    • “I have to wait for payday.”
    • “My benefits ran out.”
    • “My boyfriend’s car broke down.” 
    • “I can’t find my lottery ticket.”

For those of you who have succumbed to the inevitable and mapped out your clothing and supply journey, I’m curious about your strategies. How much you’re willing to spend vs. how much you end up spending. What you will and won’t do for your kids?

Let me know at Twitter at www.twitter.com/GregMTBusiness, on Facebook at https://www.facebook.com/greg.stiles.31 or emailing me at business@mailtribune.com

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In the end, you pay for those mega endorsements

I’ll be the first to admit it, I don’t get it.

And I will repeatedly say, I don’t get it.

Sports wear maker Under Armour has reportedly offered Kevin Durant $265 million to endorse its brand.

That’s more than Jeff Bezos paid for The Washington Post. That’s almost as much money as the New York Yankees threw away to sign Alex Rodriguez for 10 years of off-the-field distractions in 2007.

Durant is an NBA star, I’ve never seen him play in person and probably haven’t seen more than 15 seconds on television. I still prize my five minute-chat with Elgin Baylor as a kid and have Wilt Chamberlain’s scrawl in my autograph book, but I long ago lost interest in the NBA when the playoffs stretched into the summer because television networks had little else to offer.

What I don’t get is a clothing manufacturer, which sells a very fine product, throwing money at some rich guy thinking that will make me want to pay five or six times the worth of the product.

Full disclosure: I own and love a 10-year-old Under Armour garment that is showing its age. I don’t need such garments to be cool like some over-priced celebrity; the shirt keeps me warm on cold days. I don’t like spending money on clothes to begin with, so assuredly my wife or kids bought it — hopefully from a closeout rack.

But why do Nike, Adidas, Under Armour, et al throw millions of dollars away on marketing? Or better yet, why in a nation where more and more people can’t make ends meet, do consumers reward these companies by spending three or four times the value of the product?

I can already hear the derisive jeers and sneers from the marketing professors and the investors who benefit from the tried and tested endorsement ruses.

But I just don’t understand why so many people mindlessly play the game and pay hundreds of dollars for shoes, shirts and shorts. In the end, it’s not Nike or Under Armour paying for the mega endorsements, it’s you.

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Family Dollar has swatted away Dollar General’s bid, sticking with Dollar Tree deal. Family Dollar didn’t want to mess with possible anti-trust issues.

 

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So how would you define ‘solopreneur’?

If you are an entrepreneur or sole proprietor, this might be for you.
Author Jackie B. Peterson will address the opportunities for what she calls solopreneurs during a Southern Oregon University Small Business Development Center symposium Sept. 30 at the Higher Education Center in downtown Medford.
Peterson defines solopreneur as an individual business owner whose work cannot be replicated, such as an artist, photographer, consultant, web designer, author, healer, or massage therapist.
Peterson suggests solopreneurs need to be the business and do the work they
love, rather than hire others to do it for them. The issue confronting such people, however, is they are generally told to build a staff.
Instead, Peterson argues solopreneurs should focus on a deep and narrow niche, fend off mission creep, develop a business mindset, create cash flow, understand their target buyers and market every day.
The even runs 1-4 p.m., Tuesday, Sept. 30, and the cost is $39.

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Auto safety regulators unveiled a plan for requiring cars to have wireless gear that will enable them to warn drivers of danger on Monday.
The vehicle-to-vehicle transmitters and software will cost an estimated $341 to $350 per vehicle in 2020, the National Highway Traffic Safety Administration said in a report.

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Lithia Nissan is holding a job fair, Thursday, Aug. 21, in anticipation of moving into its new home at the Oregon Auto Mall on Grumman Drive later this year.
The event runs 3-7 p.m. at its present 600 N. Central Ave. dealership.
The company will meet candidates for sales, detail, technicians, and administrative roles. Applicants do not need experience.

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Big boy investors chasing after Grocery Outlet

Back in June, we passed along early rumblings of Grocery Outlet putting itself up for sale.
At the time, it was reported that the company could fetch as much as $1 billion. That figure now appears to be on the conservative as private equity firms with more than $1 trillion at their combined disposal are looking to snap up new opportunities.
According to published reports, it’s just a matter of time before private equity buyers such as Bain Capital, Hellman & Friedman LLC and Roark Capital Group devour the the Berkeley, Calif.-based discount grocer, which has operated here for 30 years.
The Wall Street Journal reports suitors with first-round bids under $1.1 billion weren’t asked back to the second round.

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A majority of Hispanics (55%) surveyed in a nationwide study for Wells Fargo Bank said they agreed that “raising and investing in kids is the best retirement plan.” Nearly one in four said they plan to rely on family members to make ends meet in retirement.
Those sentiments underscore the findings by Versta Research, showing 45% of Hispanic respondents said no one ever taught them about saving and investing (versus 31% of U.S. investors overall), and three out of four (76%) wish they had learned more about managing money when they were growing up (compared to 61% of U.S. investors overall).

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AmericanWest owners seeking ways to cash out

Private equity shows know no passion for products and services, it simply demands a high rate of return with little consideration to anyone or anything else.
Harry & David (Wasserstein & Co.) and Guitar Center (Bain Capital) are local examples of what happens once private equity firms sink their teeth into an otherwise good thing, generally founded by entrepreneurs who had a passion.
Private equity seeped into the banking industry during the throes of the Great Recession. Sterling Financial Corp., Cascade Bancorp, and SKBHC Holdings, among others saw massive infusion from funds looking for big returns.
Private equity likes to acquire, gut, and sell.
When Umpqua Holdings acquired Sterling Financial a pair of private equity investors needed to sell their shares in order to realize their goals. That meant Umpqua had to authorize the sale of 15 million shares worth $243 million.
Those funds, no doubt, will be used to acquire other businesses or assets; jobs will be lost and more profit extracted.
SKBHC Holdings LLC, which operates AmericanWest Bank, which assumed control of PremierWest Bank in April 2013, is now looking for payday of its own.
Financial news service Bloomberg reported last week that SKBHC, which is backed by Goldman Sachs Group Inc. and Oaktree Capital Management LP, is considering a sale or initial public offering after being approached by a potential buyer.
According to Bloomberg, SKBHC received unsolicited interest from Irvine, California-based Opus Bank. Its banking assets could sell for as much as $700 million.
Bloomberg said Private equity-backed banks that raised money during the downturn have been increasingly seeking to sell or go public to return money to investors. CIT Group Inc. agreed to buy OneWest Bank, backed by billionaires John Paulson and George Soros, for $3.4 billion this month.
SKBHC Holdings CEO Scott Kisting, the one-time co-head of global banking for Merrill Lynch & Co., raised $750 million from GS Capital Partners, and other investors including Oaktree in 2010 to buy failed U.S. banks.
SKBHC paid $6.5 million for the assets of bankrupt AmericanWest Bank in 2010. It bought PremierWest for $20 million, plus paying off the defunct institution’s $41.4 million government TARP loan.

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Boeing had a big July with 324 orders, the most ever in a single month.

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