Monthly Archives: June 2017

Mouser Electronics Signs Global Agreement with ITT Cannon

(BRK.A), (BRK.B)

Berkshire Hathaway’s Mouser Electronics, and authorized semiconductor and electronic component distributor, has signed a global distribution agreement with ITT Cannon, a world leader in the design and manufacture of highly reliable and innovative connector and interconnect products serving military and commercial customers in the aerospace and defense, medical, energy, transportation, and industrial markets.

Mouser is excited to offer our customers this broad assortment of interconnect solutions from ITT Cannon,” said Krystal Jackson, Vice President, Supplier Management at Mouser. “ITT Cannon has a rich history of designing and manufacturing reliable connectors, earning a reputation for innovation and quality.”

“We are eager to launch our partnership with Mouser,” said Anh Phan, Vice President of Global Sales at ITT Cannon. “Mouser’s attention to detail, cutting-edge products, and responsive customer service makes them a perfect partner for ITT Cannon. This partnership offers another excellent channel for customers to procure our products quickly, anywhere and at any time.”

© 2017 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’s Student Housing Group Closes Over $146 Million in Sales for Two West Coast Student Housing Properties

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Berkadia, Berkshire Hathaway’s joint venture with Leucadia National Corporation, has announced that its Student Housing Group has completed the sale of two properties totaling more than $146 million.

Berkadia’s student housing team, led by Managing Director Kevin Larimer and Director Greg Gonzalez, teamed with Senior Managing Director Kenny Dudunakis, Director David Sorensen and Director Ben Johnson of Berkadia’s Seattle office on the sale of AVA University District at University of Washington – Seattle on behalf of the seller, Arlington, Virginia based Avalon Bay Communities Inc. The student housing team, working with Managing Director Shane Shafer of Berkadia’s Irvine office, also closed Fullerton University Village at California State University in Fullerton, California on behalf of the seller, a local TIC group.

“Student housing seems to be the product type of choice right now for investors,” said Larimer. “Investors have identified the strong fundamentals of student housing with fewer deliveries, average occupancy above 97 percent, annual rent growth more than three percent and a fixed resident base from which to draw. Whether they are looking for yield or a defensive position, investors are finding a comfortable home for their capital in student housing.”

Located at 4535 12th Ave., AVA University District features studio, one- and two-bedroom apartments within walking distance of University of Washington and less than five miles from downtown Seattle. Units feature high-speed internet, a washer/dryer and air conditioning. The property also has a barbeque and picnic area, two rooftops with green spaces and on-site social events.

Fullerton University Village is located at 2000-2030 Oxford Ave., within walking distance of California State University, Fullerton. The property offers studio, two- and three-bedroom fully-furnished apartments with refrigerators, flat screen televisions and all utilities included in the cost of rent. Residents can also enjoy a fitness center, swimming pool, student lounge and monthly organized events.

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.

© 2017 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.

Rocky Mountain Power to Build 140-mile, 500-kV Transmission Line

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Berkshire Hathaway’s Rocky Mountain Power, a unit of PacifiCorp, will build a new 140-mile, 500-kV transmission line running from the new Aeolus substation to the new Anticline substation; a 16-mile, 230-kV transmission line from the company’s existing Shirley Basin substation to the new Aeolus substation; rebuild four miles of 230-kV transmission line between Aeolus and the existing Freezeout substation; to rebuild 14 miles of an existing 230-kV transmission line between the Freezeout substation and the Standpipe substation.

Rocky Mountain Power, which serves nearly 1.1 million customers in Idaho, Utah and Wyoming, will file request for approval of the project on June 30 with the Utah Public Service Commission.

The company’s application will include a request for approval to procure or build new Wyoming wind resources with a total capacity of 860 MW.

© 2017 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.

BNSF Continues To Have Robust Shipping Volumes Compared to 2016

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Higher carload numbers are continuing to bring good news to BNSF Railway when compared to 2016.

Slumping volumes in 2016 saw the total intermodal and carload volumes down 4.94% from 2015 levels, with coal shipments slumping 20.88% from 2015 levels.

This time, coal is leading the way in the recovery, with shipments up a strong 21.72% year-to-date through June18, as compared to the same period in 2016.

Also up a solid 4.9% are intermodal shipments.

While petroleum shipments continue to slide, with year-to-date numbers down 13.22%, the combined intermodal and carloads numbers are up 7.77% in the aggregate.

© 2017 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 Invests $377 Million in STORE Capital

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Berkshire Hathaway has purchased 9.8% of STORE Capital Corporation, an internally managed net-lease real estate investment trust (REIT) that invests in Single Tenant Operational Real Estate.

Berkshire through a subsidiary invested $377 million for 18.6 million shares of company stock in a private placement at a price of $20.25 per share.

“Berkshire Hathaway’s investment solidly positions STORE for continued growth, while adding measurably to our already strong financial position,” said Christopher H. Volk, President and Chief Executive Officer of STORE Capital. “An investment in our company from one of history’s most admired investors represents a vote of confidence in our experienced leadership team and an affirmation of our profit-center real estate investment and management approach.”

In a statement to CNBC, Volk noted that Berkshire had first inquired about the company in 2014 and had been following them closely.

© 2017 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.

GEICO Besting Esurance in Illinois

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GEICO Casualty has been gaining customers in Illinois while its competitor, Allstate’s Esurance, has seen policyholder slippage.

Esurance’s total Illinois policyholders dropped 4% from the prior year to 49,317, according to its June 12 filing with the Illinois Department of Insurance. Nationally, its total policyholders fell 2% to 1.4 million from 1.43 million.

In contrast, GEICO Casualty’s Illinois policyholders grew to 212,029 policyholders as of March 31, which is a strong 15% increase from 183,644 policyholders.

In 2011, Allstate bought Esurance and Answer Financial from White Mountains Insurance Group for roughly $1 billion. Esurance sells auto insurance directly to customers online and through call centers. The unit has never turned a profit, and Allstate has responded by slashing its advertising budget.

© 2017 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 to Invest Millions in Home Capital Group

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Berkshire Hathaway will invest C$153,225,739 in Canadian lender Home Capital Group.

Home Capital Group Inc. is a public company, traded on the Toronto Stock Exchange (HCG), operating through its principal subsidiary, Home Trust Company. Home Trust is a federally regulated trust company offering residential and non-residential mortgage lending.

Berkshire will make the investment through its wholly-owned subsidiary, Columbia Insurance Company, which will make an initial investment of C$153,225,739 to acquire 16,044,580 common shares on a private placement basis, representing an approximate 19.99% equity stake in Home Capital on a post-issuance basis (25% on a pre-issuance basis).

Berkshire will not be granted any rights to nominate directors of Home Capital or any governance rights as an equity holder.

© 2017 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.

BH Media Making $10 Million Investment in North Carolina Plant

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Berkshire Hathaway’s media company, BH Media, is investing $10 million to expand its existing facility in Winston-Salem, North Carolina.

The 12,000-square-foot expansion includes a new building next to its current facility that will house a new press.

When the project is completed, the new press will print papers covering Morganton, Marion, Statesville, Hickory, Mooresville, Concord and Rockingham County.

BH Media publishes 31 daily newspapers and websites, and a number of associated weekly publications.

BH Media also owns operates WPLG, an ABC television affiliate in Miami.

© 2017 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 ADL Partnership to Supply 36 More Electric Busses for London Routes

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The partnership between Chinese battery and vehicle maker BYD and the UK’s leading bus manufacturer Alexander Dennis Limited (ADL) has been selected as preferred bidder by RATP Dev London for the latter’s order of a total of 36 10.8m pure electric buses.

Following a comprehensive technical evaluation of zero emissions buses from a range of electric bus suppliers, RATP Dev London has entered into a letter of intent for the procurement of BYD ADL’s Enviro200 electric vehicle.

The commercial terms for the supply of the vehicles are currently being negotiated for vehicle delivery in spring 2018.

BYD ADL previously supplied The 51 Enviro200EV single-decker buses that were built in Britain and are operated by Go-Ahead London from its Waterloo garage, servicing two Transport for London (TfL) routes – 507 and 521.

The new buses would be based at London United’s Shepherd’s Bush garage and be deployed on two high frequency TfL bus routes: C1 from Victoria to White City and 70 from South Kensington to Chiswick. These two routes, one of which is already operated by RATP Dev London, are being converted by RATP Dev London to full electric operation following the company’s recent success in winning these routes through Transport for London’s tendering process.

The BYD ADL Enviro200 10.8m is a new model designed for more restrictive route conditions than the 51 12m models already in service on the London bus network. Many London streets feature sharp corners and the smaller vehicle – still capable of accommodating 76 passengers – is more appropriate for some routes. Like all ADL BYD models, the new buses will be guaranteed to complete a full day’s duty cycle without the need for recharging.

Once concluded, the new order will bring the number of ADL BYD electric buses in London to over 100, by some way the largest volume of full size electric buses in service in any major European city. The successful and long term BYD ADL partnership agreement has recently been renewed and extended to cover a broader range of exciting products meeting many UK bus model requirements.

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 is now worth roughly $1.8 billion.

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

© 2017 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 Furniture Retailers to Benefit from Growth in Luxury Furniture Market

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Berkshire Hathaway’s furniture retailing companies, which include Nebraska Furniture Mart, Jordan’s, and R.C. Wiley, will benefit from projected growth in the luxury furniture market.

In a new report from Research and Markets, “Global Luxury Furniture Market 2017-2021,” the global luxury furniture market is projected to grow at a compound annual growth rate (CAGR) of 4.92% during the period from 2017-2021.

The report notes that one of the strongest trends demand for eco-friendly and green furnishings.

“Consumers are currently showing more preference toward eco-friendly furniture such as those made from Moso bamboo, which is harder and more durable than oak. These materials also allow designers to obtain an aesthetic look for their products.”

© 2017 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.