Montana Business Park Receives BNSF Certification

(BRK.A), (BRK.B)

The Kootenai Business Park in Libby, Montana, is now officially one of roughly 20 industrial sites nationwide to be certified by BNSF Railway’s certification program.

In 2016, the Kootenai Business Park received a $750,000 grant from the U.S. Economic Development Administration to restore rail service into the business park.

The total cost of the rail project was $1.6 million to rebuild the 14,000-foot rail spur that originally connected the former Stimson Lumber Co. mill site to BNSF Railway’s main line between Chicago and Seattle.

The Lincoln County Port Authority (LCPA) owns and operates 400 acres of commercial/industrial property acquired after Stimson Lumber Company ceased activity on the property in 2002.

The property, referred to as the Kootenai Business Park (KBP), is suitable for commercial and industrial redevelopment, and a major strategy of the KBP has been the continued investment in infrastructure on the site to attract and support business development.

© 2018 David Mazor

Disclosure: David Mazor is a freelance writer focusing on Berkshire Hathaway. The author is long in Berkshire Hathaway, and this article is not a recommendation on whether to buy or sell the stock. The information contained in this article should not be construed as personalized or individualized investment advice. Past performance is no guarantee of future results.

BYD to Bring its Double-Decker Electric Buses to the US

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Move over London, America’s commuters will soon be riding high.

China’s new energy company BYD will be bringing its double-decker electric buses to the United States.

The company has yet to reveal the city that the buses where the buses will be going into service, but its most likely in California, as BYD notes that its 45’ Electric Double-Decker Coach is eligible for California’s California Air Resources Board Hybrid and Zero-Emission Truck and Bus Voucher Incentive Project (HVIP).

Under HVIP, eligible purchasers will receive a $175,000 voucher, and first-time purchasers through the HVIP program will receive an additional $10,000 off.

The official announcement of the location will be made in Q3, according to the company.

BYD and Berkshire Hathaway

In 2008, Berkshire Hathaway bet on BYD’s potential, purchasing 225 million shares. It’s an investment that has paid off handsomely. Berkshire’s original investment of $230 million has grown in value almost ten-fold, and is now worth roughly $1.96 billion.

For More on BYD, read the Special Report: BYD, Berkshire’s Tesla.

© 2018 David Mazor

Disclosure: David Mazor is a freelance writer focusing on Berkshire Hathaway. The author is long in Berkshire Hathaway, and this article is not a recommendation on whether to buy or sell the stock. The information contained in this article should not be construed as personalized or individualized investment advice. Past performance is no guarantee of future results.

Central Nebraska’s Sales-Leading Realtor Joins Berkshire Hathaway HomeServices

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Berkshire Hathaway HomeServices has announced that Century 21 Da-Ly Realty has joined its network operating as Berkshire Hathaway HomeServices Da-Ly Realty.

The full-service brokerage, led by local real estate veteran Jeffrey Reed, is Central Nebraska’s perennial leader for units sold and sales volume. It holds a 54% share of the Grand Island real estate market where its three offices operate.

Berkshire Hathaway HomeServices remains one of the nation’s fastest-growing real estate brokerage networks with 46,000+ agents and nearly 1,400 offices named to the brand since it was launched in September 2013. The network was recently named “Real Estate Agency Brand of Year” and “Most Trusted Real Estate Brand” in the 2018 Harris Poll EquiTrend Study.

Gino Blefari, president and CEO of Berkshire Hathaway HomeServices, welcomed Reed and his team. “Da-Ly Realty is an institution in Central Nebraska that has earned the respect and repeat business of its clients,” Blefari said. “The team’s strong work ethic, professionalism and expertise set it apart in the marketplace. I know that our entire network is very proud that its newest member to the brand is as accomplished and widely respected as Jeffrey and his agents.”

“My vision is to expand my brokerage and I felt like the Berkshire Hathaway HomeServices support team, with all its brokerage-management experience, understood my goals and would best help me achieve them,” said Reed. “The Berkshire Hathaway HomeServices brand couldn’t be a better choice for us, operating in such proximity to Warren Buffett and Berkshire Hathaway Inc. We think consumers in our markets will appreciate the combination of Berkshire Hathaway HomeServices and Da-Ly Realty.”

Reed’s organic growth plans include all of Central Nebraska and he said he’s considering brokerage acquisitions in the region. The brand will give Da-Ly Realty an advantage in agent recruiting, he added. “I think nearly every real estate professional in Nebraska understands the unique advantage of the Berkshire Hathaway HomeServices brand in our state. We’re confident top local agents will want to represent the brand,” he said.

With their network membership, Da-Ly Realty agents gain access to the brand’s Global Network Platform, a powerful tool suite driving lead generation, marketing support, social media, video production/distribution and more. The brand also provides international listing syndication, relocation referrals, professional education and the exclusive Luxury Collection marketing program for high-end listings.

“Berkshire Hathaway HomeServices’ tool suite is second to none in real estate,” said Reed. “Our agents will be even more efficient and effective for their clients. They’ll have more advantages to grow their businesses.”

Da-Ly Realty will commemorated its brand transition with an event at its Grand Island headquarters. It will hold an open house celebration Sept. 6 in conjunction with the Grand Island Chamber of Commerce.

The brokerage’s Cabernet and White yard signs today will begin appearing in the marketplace.

2018 David Mazor

Disclosure: David Mazor is a freelance writer focusing on Berkshire Hathaway. The author is long in Berkshire Hathaway, and this article is not a recommendation on whether to buy or sell the stock. The information contained in this article should not be construed as personalized or individualized investment advice. Past performance is no guarantee of future results.

U.S. Rail Infrastructure Market to Reach $5.93 billion by 2025

(BRK.A), (BRK.B)

According to analysts at ResearchAndMarkets.com, the U.S. rail infrastructure market is projected to reach $5.93 billion by 2025.

“We will not hesitate to bring on additional resources — including infrastructure, equipment, and people — to handle the growth our customers bring us,” BNSF Railway CEO Carl Ice stated in a recent letter to federal regulators at the Surface Transportation Board.

Traffic volume at BNSF Railways is currently at historically high levels for this time of year, Ice also noted.

The U.S. rail infrastructure market is expected to witness a lucrative growth on account of increasing population and demographics in this country. United States is becoming an urbanized country and it is anticipated that it will cover larger network of metropolitan areas.

The report notes that the industry also provides 221,000 jobs across United States and also offers various public benefits such as reducing highway fatalities, logistics cost, greenhouse gases and fuel consumption, reduction in road congestion, and public infrastructure maintenance cost. Rising passenger volume, increasing number of rail routes and network, rolling infrastructure and stock, growing awareness regarding passenger rail is anticipated to boost the U.S. rail infrastructure market over the forecast period.

Railroads are continuously developing and researching high tech innovations to enhance rail operations which in turn is expected to add market growth. Growing investment in locomotives, freight cars, computer equipment, highway equipment, and other equipment is anticipated to add U.S. rail infrastructure market growth over the forecast period.

© 2018 David Mazor

Disclosure: David Mazor is a freelance writer focusing on Berkshire Hathaway. The author is long in Berkshire Hathaway, and this article is not a recommendation on whether to buy or sell the stock. The information contained in this article should not be construed as personalized or individualized investment advice. Past performance is no guarantee of future results.

Berkshire’s Symmetry Electronics & TDK’s InvenSense Extend Distribution Agreement

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TDK Corporation has announced that InvenSense Inc., a TDK Group Company, and leading provider of MEMS sensor platform solutions, has extended its strategic distribution agreement with Berkshire Hathaway’s Symmetry Electronics, a leading global distributor of wireless, IoT and video technologies, increasing the footprint and expanding the InvenSense “Sensing Everything” platform globally.

With the extended agreement, Berkshire’s Symmetry Electronics is now chartered with sales and value-added support for InvenSense’s MEMS sensor platform solutions worldwide.

InvenSense provides industry leading sensor technologies in motion tracking, optical image stabilization, location tracking and audio microphones; solutions can be found in the consumer, industrial, automotive and IoT market sectors.

As a member of the TTI Semiconductor Group, Symmetry Electronics specializes in wireless, IoT and video solutions, providing OEMs with a focused and curated line card. TDK, having a long-standing relationship with the TTI family of companies, now enables Symmetry Electronics to support and distribute the full product portfolio of InvenSense; the latest of acquisitions made by TDK.

“The growing market of IoT is increasing the need for high-quality, low-powered MEMS sensors,” said Mark Zack, Vice President and General Manager at Symmetry Electronics. “We are extremely excited to offer InvenSense products to our customers. The innovative technology InvenSense provides will enable our customers to utilize cutting-edge MEMS sensors in their IoT applications.”

“Demand Creation through Distribution is vital to the success of the IoT marketplace,” said Dan Goehl, VP of Worldwide Sales at InvenSense. “We are very excited to have Symmetry as a partner to help maximize our success and provide our customers with such support, extending beyond traditional distributor offerings.”

Symmetry Electronics was acquired by Berkshire’s TTI, Inc. in July 2017.

© 2018 David Mazor

Disclosure: David Mazor is a freelance writer focusing on Berkshire Hathaway. The author is long in Berkshire Hathaway, and this article is not a recommendation on whether to buy or sell the stock. The information contained in this article should not be construed as personalized or individualized investment advice. Past performance is no guarantee of future results.

Berkadia Arranges Financing for 3 Multifamily Properties in Dallas-Fort Worth Area

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Berkadia, Berkshire Hathaway’s joint venture with Leucadia National Corporation, has announced the $94.2 million in combined financing for Avana Stonebriar, Avana McKinney Ranch and Avana Point, three multifamily garden-style properties located in the Dallas-Fort Worth, Texas area.

Managing Director Andy Hill and Associate Director Tyler Nowlin of Berkadia’s Austin, Texas office secured the financings through Freddie Mac for the acquisition of the properties.

For Avana McKinney Ranch, the team secured $35.19 million in financing for Blue Atlantic McKinney Ranch, LP.

Berkadia secured a seven-year $30.01 million loan for Avana Point on behalf of Blue Atlantic Point, LP.

Avana Stonebriar received $29 million in financing for the borrower, Blue Atlantic Stonebriar, LP.

“We were pleased to work with Atlantic Pacific Companies and Freddie Mac to structure acquisition financings for these three assets under Freddie’s Green Up Program and close within 32 days of signing the loan applications,” said Hill. “In addition to investing in energy conservation improvements, the borrower plans to complete significant capital improvements at all of the properties to elevate their positions within their respective markets.”

Avana McKinney Ranch is located in McKinney, Texas and features 343 units of one, two- and three-bedroom floor plans, as well as attached and detached garages or carports. Residents also have access to a clubhouse, a business center, a pool and spa, a cyber café and an outdoor cabana with a grill. Within 30 days of closing, the property will be renamed The Atlantic McKinney Ranch.

Avana Point is located in Fort Worth, Texas, and the property features 324 units of one-, two- and three-bedroom floor plans. Residents can also enjoy a clubhouse, a fitness facility, a pool and spa, a sand volleyball court and covered parking. The owner plans to rename the property.

Located in The Colony, Texas, Avana Stonebriar features 294 units of one-, two- and three-bedroom floor plans. The property features a clubhouse, a pool, a fitness room and a playground. Within 30 days of closing, the property will be renamed The Atlantic Stonebriar.

About Berkadia

Founded in 2009 as a 50/50 joint venture between Berkshire Hathaway and Leucadia National Corporation, Berkadia is a third-party commercial mortgage servicer, as well as an approved lender for Fannie Mae, Freddie Mac, and HUD/FHA.

The company is among the top Freddie Mac and Fannie Mae multifamily lenders.

Berkadia owes its origins to GMAC Commercial Mortgage Corporation, which was acquired in 2009 by Kohlberg Kravis Roberts & Co., Five Mile Capital Partners LLC, and Goldman Sachs Capital Partners. Christened Capmark Financial, the company had $10 billion of originations in 2008 and a servicing portfolio of more than $360 billion before running into bankruptcy in October 2009.

In a deal approved by the bankruptcy court, Capmark sold its mortgage loan and servicing to the newly formed Berkadia in a deal worth $515 million.

The deal brought Berkshire into the heart of the commercial loan serving business, and the company has one of the largest commercial real estate servicing portfolios.

© 2018 David Mazor

Disclosure: David Mazor is a freelance writer focusing on Berkshire Hathaway. The author is long in Berkshire Hathaway, and this article is not a recommendation on whether to buy or sell the stock. The information contained in this article should not be construed as personalized or individualized investment advice. Past performance is no guarantee of future results.

BYD Sets Up US Leasing Program for Electric Buses

(BRK.A), (BRK.B)

With Chinese new energy company BYD leading the charge on pure electric buses, it’s fitting that it would also make headway on making the vehicles affordable for regional transportation systems.

BYD has created a joint venture with San Francisco-based energy and resource infrastructure financing firm Generate Capital to provide an electric bus leasing program in the United States.

Generate Capital will allocate $200 million to the lease program.

Regional transportation systems, which often struggle with affording capital expenditures, will now have greatly reduced upfront costs.

While electric buses are cheaper to run over the long term, they do have higher upfront investment than conventional diesel-powered buses.

The market for electric buses is expanding rapidly, as regional transportation systems replace diesel buses. Many hybrid buses have also been on the road for over a decade, and are heading towards the end of their service life.

According to Bloomberg New Energy Finance, the U.S. energy efficient transportation market is projected to increase 500% over the next eight years.

“BYD’s mission is to fundamentally change the world by reducing our dependency on carbon-based fuels through the development and advancement of battery and electric vehicle technology,” said BYD president Stella Li. “This partnership will be critical in that effort by creating new financing alternatives to a broader range of clients.”

BYD and Berkshire Hathaway

In 2008, Berkshire Hathaway bet on BYD’s potential, purchasing 225 million shares. It’s an investment that has paid off handsomely. Berkshire’s original investment of $230 million has grown in value almost ten-fold, and is now worth roughly $1.96 billion.

For More on BYD, read the Special Report: BYD, Berkshire’s Tesla.

© 2018 David Mazor

Disclosure: David Mazor is a freelance writer focusing on Berkshire Hathaway. The author is long in Berkshire Hathaway, and this article is not a recommendation on whether to buy or sell the stock. The information contained in this article should not be construed as personalized or individualized investment advice. Past performance is no guarantee of future results.

Berkshire Operating Profits Soar 67% in Second Quarter

(BRK.A), (BRK.B)

Berkshire’s operating results for the second quarter and first six months of 2018 and 2017 are summarized in the following paragraphs. However, we urge investors and reporters to read our 10-Q, which has been posted at www.berkshirehathaway.com.The limited information that follows in this press release is not adequate for making an informed investment judgment.

Earnings of Berkshire Hathaway Inc. and its consolidated subsidiaries for the second quarter and first six months of 2018 and 2017 are summarized below. Earnings are stated on an after-tax basis. (Dollar amounts are in millions, except for per share amounts).

Second Quarter

First Six Months

2018

2017

2018

2017

Net earnings attributable to Berkshire shareholders $12,011 $4,262 $10,873 $8,322
Net earnings includes:
Investment and derivative gains/losses –
Investments 4,824 185 (1,439 ) 390
Derivatives 294 (42 ) 131 257
5,118 143 (1,308 ) 647
Operating earnings 6,893 4,119 12,181 7,675
Net earnings attributable to Berkshire shareholders $12,011 $4,262 $10,873 $8,322
Net earnings per Class A equivalent share attributable to Berkshire shareholders

$7,301

$2,592

$6,610

$5,060

Average Class A equivalent shares outstanding 1,645,057 1,644,580 1,645,008 1,644,503

Note: Per share amounts for the Class B shares are 1/1,500th of those shown for the Class A.

In 2018, due to a change in Generally Accepted Accounting Principles (“GAAP”), we are now required to include the changes in unrealized gains/losses of our equity security investments as a component of investment gains/losses in our earnings statements. In the table above, investment gains/losses in 2018 include a gain of approximately $4.5 billion in the second quarter and a loss of approximately $1.7 billion in the first six months of 2018 due to changes during the second quarter of 2018 and changes during the first six months of 2018 in the unrealized gains/losses of equity security investments held at June 30, 2018. In 2017 and in prior years, while changes in unrealized gains/losses were reflected in our shareholders’ equity, they were not included in our earnings statements. Accordingly, the following statement which has been included in each of Berkshire’s earnings releases for many years along with some additional comments (additional comments underlined) is even more important when analyzing Berkshire’s periodic results. The amount of investment gains/losses in any given quarter is usually meaningless and delivers figures for net earnings per share that can be misleading to investors who have little or no knowledge of accounting rules.

An analysis of Berkshire’s operating earnings follows (dollar amounts are in millions).

Second Quarter

First Six Months

2018

2017

2018

2017

Insurance-underwriting $943 $(22 ) $1,350 $(289 )
Insurance-investment income 1,142 965 2,154 1,873
Railroad, utilities and energy 1,890 1,467 3,620 2,785
Other businesses 2,570 1,985 4,766 3,593
Other 348 (276 ) 291 (287 )
Operating earnings $6,893 $4,119 $12,181 $7,675

At June 30, 2018, our book value per Class A equivalent share was $217,677. Insurance float (the net liabilities we assume under insurance contracts) was approximately $116 billion at June 30, 2018, an increase of $2 billion since yearend 2017.

Use of Non-GAAP Financial Measures

This press release includes certain non-GAAP financial measures. The reconciliations of such measures to the most comparable GAAP figures in accordance with Regulation G are included herein.

Berkshire presents its results in the way it believes will be most meaningful and useful, as well as most transparent, to the investing public and others who use Berkshire’s financial information. That presentation includes the use of certain non-GAAP financial measures. In addition to the GAAP presentations of net earnings, Berkshire shows operating earnings defined as net earnings exclusive of investment and derivative gains/losses.

Although the investment of insurance and reinsurance premiums to generate investment income and investment gains or losses is an integral part of Berkshire’s operations, the generation of investment gains or losses is independent of the insurance underwriting process. Moreover, as previously described, under applicable GAAP accounting requirements, we are now required to include the changes in unrealized gains/losses of our equity security investments as a component of investment gains/losses in our periodic earnings statements. In sum, investment gains/losses for any particular period are not indicative of quarterly business performance.

© 2018 David Mazor

Disclosure: David Mazor is a freelance writer focusing on Berkshire Hathaway. The author is long in Berkshire Hathaway, and this article is not a recommendation on whether to buy or sell the stock. The information contained in this article should not be construed as personalized or individualized investment advice. Past performance is no guarantee of future results.

Berkshire Hathaway HomeServices Enters Metairie, Louisiana Market

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Berkshire Hathaway HomeServices United Properties has entered the percolating Metairie, Louisiana market and added one of the region’s most productive agents and teams, Shaun McCarthy and his McCarthy Group, REALTORS.

The agreement gives United Properties a third office beyond its Baton Rouge headquarters and Central city location. McCarthy and the McCarthy Group, REALTORS team will continue operating from their existing Metairie office at 530 Metairie Road as Berkshire Hathaway HomeServices United Properties.

Combined, the company has 86 agents.

“We’ve had our eye on the Metairie market for a long time,” said Jonathan Starns, brokerage founder and co-owner. “Yet to do so and add the most productive and respected office in the region, we feel we’ve hit a grand-slam home run.”

“We are proud and excited to join forces with Shaun and his team,” added Chase Muller, brokerage founder and co-owner. “The group is skilled, experienced and the best for its clients. They have a terrific service ethic and will represent our brokerage and our brand well.”

McCarthy, a native of the region, brings to the brand more than 25 years of local real estate experience. He said the United Properties alliance, combined with the Berkshire Hathaway HomeServices brand and its marketing and technology might, will help his team grow business to new heights.

“Jonathan Starns and Chase Muller are strong and respected operators; we’re happy to be part of their team,” McCarthy said. “In addition, our new brand carries the name of Warren Buffett’s Berkshire Hathaway Inc., one of the world’s most respected corporations. The network’s digital-advertising platform, created in conjunction with VaynerMedia, generates huge attention; and its real estate technology is top of class with exciting innovations on the drawing board. With all these resources at our fingertips, it’s up to us to do what we do best – sell real estate and make our Metairie-area clients happy.”

As part of Berkshire Hathaway HomeServices, McCarthy and his team gain access to the brand’s Global Network Platform, a powerful tool suite driving lead generation, marketing support, social media, video production/distribution and more. The brand also provides international listing syndication, relocation referrals, professional education and the exclusive Luxury Collection marketing program for high-end, resort-style listings.

Muller sees continued growth across the United Properties enterprise. “Our company thrives on attracting the finest and most experienced professionals in the marketplace, and then standing on our heads to ensure our clients achieve their real estate goals and aspirations,” he said. “We believe United Properties and the Berkshire Hathaway HomeServices brand present a compelling option for local real estate consumers and professionals alike.”

Gino Blefari, president and CEO of Berkshire Hathaway HomeServices, applauded United Properties’ union with McCarthy and his team, and its entrance to the Metairie market. “Jonathan Starns and Chase Muller reinforced the significance of their company name by uniting one of the most successful teams in the state of Louisiana,” Blefari said. “I commend Shaun McCarthy for making this commitment to the future growth of his skilled and successful team.”

© 2018 David Mazor

Disclosure: David Mazor is a freelance writer focusing on Berkshire Hathaway. The author is long in Berkshire Hathaway, and this article is not a recommendation on whether to buy or sell the stock. The information contained in this article should not be construed as personalized or individualized investment advice. Past performance is no guarantee of future results.

Berkshire Utilities Rack Up Millions in Benefits as Western Energy Imbalance Market Surpasses $400 million

(BRK.A), (BRK.B)

Berkshire Hathaway’s utilities NV Energy and PacifiCorp racked up over $16 million in benefits in the 2nd quarter through their participation in the Western Energy Imbalance Market.

In 2014, Berkshire Hathaway Energy’s PacifiCorp agreed to become the first participant in a new Energy Imbalance Market (EIM) as a way to balance electricity in-flows and out-flows on a regional basis and bring millions of dollars in benefits to participating utilities.

The Western Energy Imbalance Market total benefits have now surpassed $400 million.

For the 2nd quarter, Berkshire Hathaway’s NV Energy showed benefits of $5.34 million and Berkshire’s PacifiCorp achieved benefits of $11.67 million.

The Western EIM’s state-of-art technology automatically finds and delivers the lowest cost energy to serve more than 42 million consumers in eight western states, and extending to the border with Canada. In addition to optimizing diverse resources from a larger pool for lower costs, the EIM favors carbon-free generation, an added environmental benefit.

The market is poised to grow, with the Balancing Authority of Northern California/Sacramento Municipal Utility District (BANC/SMUD) set to begin participating in April 2019. The Los Angeles Department of Water and Power, Salt River Project of Phoenix, and Seattle City Light will follow in April 2020.

© 2018 David Mazor

Disclosure: David Mazor is a freelance writer focusing on Berkshire Hathaway. The author is long in Berkshire Hathaway, and this article is not a recommendation on whether to buy or sell the stock. The information contained in this article should not be construed as personalized or individualized investment advice. Past performance is no guarantee of future results.