Monthly Archives: July 2017

Berkshire Lines Up Support for Oncor Deal

(BRK.A), (BRK.B)

Berkshire Hathaway Energy has announced the support of new Texas stakeholder groups for its proposed acquisition of Oncor Electric Delivery Company.

The announcement adds to an influential list of Texas business, community and consumer groups that have endorsed Berkshire Hathaway Energy’s bid for Oncor.
TXU Energy, NRG Energy, the Texas Energy Association for Marketers (TEAM) and the Alliance for Retail Markets (ARM) have signed a growing list of regulatory commitments proposed by Berkshire Hathaway Energy and agreed to support approval of the transaction as proposed.

“Today’s announcement illustrates the growing support for Berkshire Hathaway Energy’s proposed acquisition of Oncor,” said Greg Abel, Berkshire Hathaway Energy chairman, president and CEO. “Ours is a different kind of proposal. It’s one that hasn’t been seen before, and we want Texans to know that we will be a stable, long-term partner.”

In addition to the 44 regulatory commitments previously proposed by Berkshire Hathaway Energy, the company today also announced the addition of three more commitments that support the successful competitive energy market in Texas.

“Berkshire Hathaway Energy has worked tirelessly to put together a widely supported deal for Oncor customers, one that supports growing the Texas economy,” said Bob Shapard, Oncor CEO.

TXU Energy and NRG Energy represent two of the largest retail electric providers in Texas, with TEAM and ARM representing dozens of Texas electric market participants.

ARM participating members include Champion Energy Services, LLC; Direct Energy, L.P.; NRG Retail Companies; and TXU Energy Retail Company LLC.

Berkshire believes that having the support of these entities further distinguishes this transaction from those that have been previously proposed and demonstrates a growing momentum that provides the largest infrastructure company in Texas with the backing and financial resources of Berkshire Hathaway Inc.

“We will continue working with the state of Texas and other interested parties to provide long-term value for Texans. Once all necessary approvals are received, we look forward to Oncor joining the Berkshire Hathaway Energy family of companies,” said Abel.

Today’s announcement brings the total number of influential Texas stakeholder groups that support Berkshire Hathaway Energy’s proposed acquisition of Oncor to eight, including: Cities Served by Oncor, Texas Industrial Energy Consumers, Office of Public Utility Counsel, and Public Utility Commission Staff.

© 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.

Star Furniture Names New CEO

(BRK.A), (BRK.B)

Houston-based Star Furniture has chosen Bob Price as its new CEO.

Price had been senior vice president of merchandising and inventory management at Art Van Furniture, and has more than four decades of experience in the retail sector, including 30 years at JC Penney.

“Bob is the right person to lead Star into its second century. While we conducted a nationwide search to fill this important position, it became clear that Bob met every criterion for this position,” said Irv Blumkin, Star’s Chairman of the Board. Blumkin is also CEO of Nebraska Furniture Mart.

Founded in the early 1900s by several men that pooled their money to purchase a horse and wagon to deliver furniture, Star Furniture became a retail store in 1912. The company currently has 11 stores, and is currently ranked fourth in the U.S. in furniture sales.

The company was acquired by Berkshire Hathaway in 1997.

© 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.

Fleet of BYD’s Electric Buses Headed to Chile’s Public Transit System

(BRK.A), (BRK.B)

New energy technology company BYD and Enel Chile recently signed a trade agreement in Santiago, focusing on developing a commercial strategy to strengthen electric mobility in Chile from a global perspective.

The agreement will kick off with a fleet of electric buses that are planned for the new tender of the public transportation system.

The Commercial Agreement was signed by Stella Li, BYD’s Senior Vice President and Nicola Cotugno, CEO of Enel Chile.

The agreement seeks to make available at least 90 buses to the current operators. These buses have been required by Chile Ministry of Transport and Telecommunications to be offered within the framework of the next Transantiago’s bidding process, South America’s largest public urban transportation system.

Through this strategic alliance, both companies will seek to lead the implementation of high-standard and 100% electric bus fleets.

“We can easily supply the Chilean market with our ebuses. They have been thoroughly tested in mass international operations, proving that our technology is mature. Moreover, they represent huge reductions in maintenance and energy costs.” said Stella Li.

The purpose of the alliance is not only focused on strengthening the introduction of electric vehicle operations in Transantiago, but also on implementing a model for smaller fleets in the private transport sector, especially focused on municipalities, government institutions or universities.

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.

Intero Real Estate Services Opens in Vietnam

(BRK.A), (BRK.B)

Berkshire Hathaway’s Intero Real Estate Services, a subsidiary of HomeServices of America, Inc., has opened a real estate showroom in Ho Chi Minh City, Vietnam to market their listing and promote US real estate investment to the Southeast Asia luxury market.

Intero also sent a team to the invitation-only luxury property show in China, LPS Beijing, which was held last month, June 16th through the 18th.

With more than 6,000 potential investors over the 3 day conference, having a large presence at LPS strengthens Intero’s commitment to providing global exposure for its luxury property collection.

Representing the Intero brand was Alain Pinel, General Manager of Intero Prestigio International, as well as Yoga Yang, Mitch Wong and Li-Wu Yang, all part of Intero’s International Realtor Team. Alain was also a feature speaker to an audience of highly motivated Chinese buyers interested in Silicon Valley and the greater North America region.

The LPS conference occurs twice a year bringing together a number of real estate professionals exhibiting high-end properties around the world. Intero CEO Tom Tognoli and other representatives from Intero will also be attending the LPS conference to be held in Shanghai in December.

To further its global exposure, Intero has opened a showroom in Ho Chi Minh City, Vietnam. This will serve as a strategic location for Intero to feature its listing inventory, and a touch point in providing a higher level of customer service and a stronger relationship with wealthy investors all throughout Southeast Asia.

“Last year, foreign buyers purchased more than 200,000 homes in the US for a total sales volume in excess of $100 billion. Roughly half of this dollar amount was the fact of Chinese buyers. Their impact on U.S. real estate sales has been and still is significant, to say the least. It is imperative for Intero’s sellers that our properties and brand stay clearly in front of this market now and for years to come,” states Alain Pinel.

© 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.

Sacramento’s Elite Real Estate Joins Berkshire Network, Changes Name

(BRK.A), (BRK.B)

Berkshire Hathaway HomeServices, has announced that independent brokerage Elite Realty Services based in Sacramento, California, will join the network beginning July 25 and change its name to Berkshire Hathaway HomeServices Elite Real Estate.
Robert Do, brokerage president and CEO, announced the transition yesterday to his team of 180 agents and staff at their Sacramento headquarters.

“Our brokerage has grown nicely over the years yet now we step to a whole new level of brand awareness, agent resources and marketing,” Do explained. “Berkshire Hathaway HomeServices gives us everything we need to grow and provide even better service to our clients and agents.”

Berkshire Hathaway HomeServices remains one of America’s fastest-growing brokerage networks with nearly 43,500 agents and 1,313 offices named to the brand since its 2013 launch. The brand’s namesake is Warren Buffett’s Berkshire Hathaway Inc., among the world’s most trusted and respected corporations. “The network is built on Berkshire Hathaway’s value set of trust, integrity, stability and longevity,” Do pointed out. “We strongly identify with these values and are proud to represent Berkshire Hathaway HomeServices in Sacramento County and surrounding areas.”

Do expects to grow his brokerage as a result the transition. The agent-centric CEO, who owns his Sacramento headquarters building at 7412 Elsie Ave., wants to add at least three offices and double his agent count over the next few years. “At Elite Real Estate, everything we do focuses on helping our agents grow their business and prosper,” he said. “We are a great home for agents; the future has never been brighter for our team.”

With their transition, Elite Real Estate agents gain access to Berkshire Hathaway HomeServices’ Global Network Platform, a powerful tool suite focusing on lead generation, marketing support, social media, video production/distribution and more. Beyond technology, the brand provides national and international marketing support, professional education and the exclusive Luxury Collection for high-end listings.

“My team is already tech-savvy so the Global Network Platform will help us supercharge our client service and efficiency,” said Do, who has more than 20 years’ experience in real estate and has trained thousands of agents. “We will be our very best for our home-buyers and sellers.”

Elite Real Estate will commemorate its transition July 25 with a ribbon-cutting ceremony and agent luncheon. Its new Cabernet and White yard signs will appear in the marketplace starting that day.

“We are proud to welcome Robert and his team to Berkshire Hathaway HomeServices,” said Gino Blefari, president and CEO of the network. “Elite Real Estate has earned a strong reputation in the marketplace and is marvelously diverse. It’s well positioned for years of growth in Sacramento.”

© 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.

Dairy Queen Ranked #6 on Entrepreneur Magazine’s Top 500 Franchises

(BRK.A), (BRK.B)

Dairy Queen is ranked #6 on Entrepreneur Magazine’s Top 500 Franchises for 2017.

The list is Entrepreneur’s 38th annual Franchise 500 ranking, and franchisor’s where ranked based on Costs and Fees, Size and Growth, Support, Brand Strength, and Financial Strength and Stability.

Franchisors must have had a minimum of 10 units open and operating as of July 31, 2016, with at least one franchise located in either the U.S. or Canada.

Owned by Berkshire Hathaway, Dairy Queen most certainly has the strongest financial strength of any franchise, and its long history that dates back to 1940 certainly speaks to brand loyalty.

© 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.

Clayton Homes Acquires Fourth Site Builder

(BRK.A), (BRK.B)

Berkshire Hathaway’s Clayton Homes has acquired Oakwood Homes, Colorado’s largest privately held homebuilder and community developer, and the approximately 18,000 lots it owns and controls. The company is the fourth site builder that Clayton has acquired since 2015, and it currently owns homebuilding companies in Missouri, Tennessee and Georgia.

The deal closed on July 3, 2017.

“Oakwood Homes has an impressive history of homebuilding innovation, and practices a relentless commitment to quality and service for its customer base,” said Keith Holdbrooks, president of Clayton home building group. “Oakwood’s self-sustaining operating model, company culture and core values align well with Clayton’s, which is paramount when we acquire a company. We look forward to working together with Oakwood to improve the homebuyer experience while providing greater cost-saving opportunities for homebuyers.”

Founded in 1991 by CEO Pat Hamill, Oakwood Homes builds modern, distinct communities throughout Colorado and Utah that are recognized for their innovative designs, energy efficient homes and highly customizable building processes. The company sold 1,200 homes in 2016 alone, which represents a 20 percent increase from 2015. Oakwood Homes differentiates itself through its commitment to both customer and team-member experiences.

Clayton entered the site-built industry in 2015 through its Clayton Properties division in order to provide industry-leading homebuilding solutions and improve the experience of modern-day homebuyers. Since 2015, Clayton has increased its homebuilder portfolio by acquiring like-minded, innovative companies in strong growth markets, such as Summit Homes in Kansas City, Mo., Goodall Homes in Gallatin, Tenn., and Chafin Communities in Atlanta, Ga.

“After more than two decades of building beautifully functional new homes in Colorado and Utah as a privately held company, we are excited to join forces with Clayton,” said Pat Hamill. “This partnership is part of our strategic vision to continue our steady growth and to provide a very high standard of customer service for our loyal consumers, all while keeping our existing leadership team.”

In 2016, Clayton built more than 42,000 homes. Site built homes are an increasing focus as they have a higher price point than Clayton’s mobile home business.

© 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.

Commentary: Berkshire’s Patience Rewarded in Oncor

(BRK.A), (BRK.B)

With news that Berkshire Hathaway is acquiring Texas utility Oncor, Warren Buffett has once again shown that he is in the market for big acquisitions that produce solid, dependable revenue.

The all-cash consideration for reorganized EFH is $9 billion implying an equity value of approximately $11.25 billion for 100% of Oncor and is subject to closing conditions, including the receipt of required state, federal and bankruptcy court approvals. The transaction is currently expected to be completed in the fourth quarter of 2017.

Buffett has certainly been patient in pursuing this Texas-sized prize, and if successful, would mean he was able to acquire one of the biggest power-transmission companies in the United States.

Back in September 2014, Berkshire Hathaway Energy and several other energy companies, including NextEra Energy and Hunt Consolidated, signed confidentiality agreements for the purpose of exploring the acquisition of Oncor, which was up for auction due to the April 2014 bankruptcy of electric utility Energy Future Holdings.

Energy Future Holdings went under after being burdened with $40 billion in debt from a 2007 leveraged buyout.

Bankruptcy Drama

Over the past two years, while Oncor went through the bankruptcy process, it repeatedly looked like Berkshire was on the losing end in the pursuit of the utility. It was too bad, as it was the perfect fit for Berkshire, as it continues to build it energy company portfolio.

However, the proposed deal comes because the Public Utility Commission of Texas (PUCT) ended up rejecting NextEra Energy’s deal to buy Oncor, opening the door once again for an offer from Berkshire.

A Texas-Sized Energy Asset

Oncor is a quite a prize. The company is a regulated electric transmission and distribution service provider that serves 10 million customers across Texas. The company has the largest distribution and transmission system in Texas; with approximately 122,000 miles of lines and serving approximately 10 million Texans across the state.

Oncor is an excellent fit for Berkshire Hathaway, and we are pleased to make another long-term investment in Texas – when we invest in Texas, we invest big!” said Warren Buffett, chairman of Berkshire Hathaway. “Oncor is a great company with similar values and outstanding assets.”

Greg Abel, Berkshire Hathaway Energy chairman, president and CEO, said, “This partnership combines the strengths of two companies that share a common goal of providing exceptional customer service and a commitment to invest in critical infrastructure that will make the Texas energy grid even stronger and more reliable.”

“By joining forces with Berkshire Hathaway Energy, we will gain access to additional operational and financial resources as we continue to position Oncor to support the evolving energy needs of our state,” said Bob Shapard, CEO of Oncor. “Being part of Berkshire Hathaway Energy is a great outcome for Oncor. Oncor will remain a locally managed Texas company headquartered in Dallas, committed to the communities we serve, and our customers will continue to receive the safe and reliable service they have come to expect from our dedicated team of employees.”

Effective upon closing of the transaction, Bob Shapard will assume the role of executive chairman of the Oncor Board, and Allen Nye will assume the role of CEO of Oncor. “We are excited to begin the regulatory approval process as this transaction has significant support across our key stakeholders,” Nye said. “The stakeholders are eager to obtain a great outcome for Texas.”

“We are pleased to be working with Texas and stakeholders to ensure Oncor continues to be a strong electric transmission and distribution company. Oncor is an exceptional company with great employees and an excellent management team,” said Abel.

Energy Transmission is Great ROE

Transmission lines have been high on Berkshire Hathaway Energy’s wish list of late because they are a great way to put Berkshire’s huge insurance float to work for a high return with very low risk.

The AltaLink Example

In April 2014, BHE made a $2.9 billion purchase of Canadian company AltaLink from SNC-Lavalin Group Inc. The acquisition got the company the transmission lines for Calgary, Alberta, and gives it an 8.75-percent after-tax return on equity, with consumers picking up 100-percent of the tab for any new transmission lines.

Like AltaLink, the acquisition of Oncor will be a perfect fit for Berkshire Hathaway Energy, and with $935 million in operating revenues and $73 million in net income in the quarter ending March 31, Oncor will put a portion of Berkshire’s over $90 billion in cash to good use.

Growing Berkshire’s Energy Business

Berkshire Hathaway Energy currently has over $70 billion in assets, including one of the largest portfolios of renewable energy in the world.

Energy sector businesses made up 9.5 percent of Berkshire Hathaway’s earnings in 2016.

Now, it looks like Buffett’s patience has been rewarded, and Oncor will help Berkshire pass the $100 billion in energy assets mark.

© 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.

Intero Real Estate Services Agents Receive Recognition at NAHREP”s Top Latino Agents Awards

(BRK.A), (BRK.B)

Berkshire Hathaway’s Intero Real Estate Services, a wholly owned subsidiary of HomeServices of America, Inc., has announced the recognition several of their associates received at the 2017 National Association of Hispanic Real Estate Professionals (NAHREP)

Top Latino Agents Awards. NAHREP is a purpose-driven organization that is dedicated to a combination of entrepreneurial spirit, cultural heritage, and the advocacy of its members.

There were over six hundred nominations this year, and we are proud that our agents finished strongly in a number of categories.

Erika Carrasco and Joe Velasco finished in the Top 250 in the units sold category.

Finishing in the Top 100 in sales volume were Erika Carrasco and Carlos Padilla.

The Top 100 California Latino Real Estate Agents list included Erika Carrasco from the Silver Creek office, Joe Velasco from the Saratoga office, Carlos Padilla from the Los Altos office, Juan Barragan from the Livermore office, Juan Jara from the Corona office, and Sirilio Ortiz from the Rancho Cucamonga office.

Tom Tognoli, founder and CEO at Intero said of the award winners, “We are so proud and happy to see our agents recognized for their hard work and dedication to their clients, the industry, and Intero. We could not ask for a better group of people to receive these honors and we thank them tremendously for their commitment to excellence.”

© 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.

Home Furnishings Forecast Means Positive Outlook for Berkshire’s Furniture Retailers

(BRK.A), (BRK.B)

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

Home furniture includes beds and mattresses, tables and table tops, desks, chairs, storage cabinets, sofas, and other furniture that are used to make a house or building a comfortable place to live.

In a new report from Research and Markets, “Home Furniture Market in the US 2017-2021,” the global luxury furniture market is projected to grow at a compound annual growth rate (CAGR) of 6.14% during the period from 2017-2021.

According to the report, one driver in the market is improving residential construction market. The real estate industry in the US is expected to drive the home furniture market in the next few years. This will be due to the increasing number of people engaging in household formation. There has been a significant rise in the number of women joining the workforce and living independently. As a result, there is a rising need for service apartments and single story houses.

© 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.