Monthly Archives: March 2018

Dairy Queen & W.B. Mason Square-Off Over “Blizzard” Trademark

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Berkshire Hathaway’s Dairy Queen has sued office products dealer W.B. Mason over its use of the word “Blizzard.”

Dairy Queen’s Blizzard is a popular frozen confection that the quick service restaurant chain has been selling since 1985.

“W.B. Mason’s actions constitute unfair competition and false designation of origin under the common law of Minnesota and all states, and have caused and are likely to cause injury to the public, and have caused and are likely to cause Dairy Queen to suffer irreparable injury,” Dairy Queen alleged in a lawsuit filed Monday in its home state of Minnesota.

In response, W.B. Mason went to court to file a lawsuit in its home state of Massachusetts.

“Indeed, no reasonable person would ever mistakenly believe that copy paper or spring water sold by W.B. Mason and emblazoned with the W.B. MASON mark and logo emanates from, or is associated with (Dairy Queen),” attorneys for W.B. Mason maintained in their filing.

While winter may be officially over on March 21, there is no telling how long this storm will go on.

However, the two companies were reportedly in negotiation on a settlement before the lawsuits, so a spring thaw may be close at hand.

© 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.

Bay Street Realty Group Joins Berkshire Hathaway HomeServices

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Berkshire Hathaway HomeServices has announced that independent brokerage Bay Street Realty Group has joined the network operating as Berkshire Hathaway HomeServices Bay Street Realty Group.

The full-service brokerage, serving greater Beaufort and the Sea Islands, remains independently owned and operated. It is a market leader in South Carolina’s Lowcountry.

“We are thrilled to bring the Berkshire Hathaway HomeServices brand to Beaufort and the Sea Islands,” said Brokerage Owner Ken Willis. “The brand is fresh, progressive and ideally suited for our coastal communities. Its namesake is Warren Buffett’s Berkshire Hathaway Inc., and it’s built on Berkshire Hathaway’s core values of trust, integrity, stability and longevity. We believe consumers throughout the Lowcountry will appreciate these virtues and embrace the Berkshire Hathaway HomeServices brand.”

Willis plans to double his agent count over the next two years and extend the brokerage’s reach to neighboring markets. He said the Berkshire Hathaway HomeServices brand will help his team recruit. “We think seasoned agents in the area will want to take their businesses to new heights representing Berkshire Hathaway HomeServices Bay Street Realty Group. As important, the brand, which builds its strategies and programs with input from its leading millennial agents, will appeal to sharp, younger professionals.”

With their affiliation, Bay Street Realty Group agents gain access to the network’s Global Network Platform, a powerful real estate tool suite that supercharges lead generation, marketing support, social media, video production/distribution and more. The brand also provides international listing syndication, professional education and the exclusive Luxury Collection marketing program for high-end listings.

“The brand’s real estate tools and resources are second to none and will help our agents be their very best for clients,” said Brokerage Owner Will Thurman. “Since Beaufort and the Sea Islands are becoming popular destinations for foreign travelers and investors, we’re particularly excited about Berkshire Hathaway HomeServices’ global listing syndication program. Our listings will appear monthly before more than 12 million additional consumers abroad.”

Both Willis and Thurman are eager to begin a new era with Berkshire Hathaway HomeServices. “Our agents are pumped up, the market is percolating — buoyed by our strong, local economy — and Bay Street Realty Group is positioned to grow for years to come.”

Gino Blefari, president and CEO of Berkshire Hathaway HomeServices, applauded the brokerage’s transition. “Bay Street Realty Group is highly respected in the marketplace and led by skilled operators. We’re proud to welcome this group to our network family.”

© 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.

BNSF to Benefit from Amtrak Track Improvements in Southwest US

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BNSF Railways will benefit from track improvements aimed at speeding up Amtrak’s Southwest Chief service that runs daily from Chicago to Los Angeles.

A $16 million grant for track upgrades in Colfax County in northeastern New Mexico has been awarded by the U.S. Department of Transportation.

The funding is part of nearly $500 million in discretionary grant funding for road, transit, maritime and rail projects through the Transportation Investment Generating Economic Recovery (TIGER) program.

The Southwest Chief Route Stabilization Project will replace 60-year-old bolted rail, associated turnouts and crossings for a net gain of 42 miles of Class 4 rail in the La Junta subdivision between Hutchinson, Kansas, and Las Animas, Colorado.

© 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.

Lubrizol Makes $80 Million Expansion in TPU Capacity

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The Lubrizol Corporation has announced an update to its ambitious global expansion program supporting the company’s Engineered Polymers thermoplastics polyurethane (TPU) business and growing global demand for its Estane TPU, Pearlthane TPU, Pearlbond TPU and other product lines.

Lubrizol’s combined investment of nearly $80 million will add capacity in key plants in North America, Europe and Asia.

“Ongoing investments in Engineered Polymers are an integral part of Lubrizol’s global growth strategy and strengthen our position in every region of the world. We see a robust market poised for growth with a rebounding global economy, infrastructure and technology investments, and increasing demand for higher performing, more sustainable materials. We are well prepared to meet the needs of this dynamic market,” states Arnau Pano, Vice President and General Manager, Lubrizol Engineered Materials.

In North America, the company is adding new state-of-the-art production capabilities, expanded raw material storage, warehouse space and improved site logistics. With the latest investment, new capacity is expected to come onstream later this year.

In Songjiang, China, the company held a ribbon cutting ceremony earlier this month to inaugurate a new compounding line and new extrusion lines. 2018 marks the fourth major expansion in Songjiang since the plant first produced TPU in the early 2000s.

Recognizing the vast potential of the Chinese market, Lubrizol was the first foreign company to invest in local TPU production. Further investment is planned in Asia in 2019.

In Europe, the company is extending production capabilities for elastomers, aliphatics and adhesives. These expansions build on the acquisition of Merquinsa in 2011, and improvements to R&D laboratories in 2016. A next major European expansion is planned for 2019.

Jian-Wei Dong, General Manager, Lubrizol Engineered Polymers, adds, “Lubrizol has been recognized as a market leader since its invention of TPU for commercial use. These staged investments demonstrate our long-term commitment to innovation and growth and strengthen our ability to serve customers worldwide. The added capabilities ensure that we deliver world class quality and more sustainable manufacturing practices. Our resources are aligned to quickly identify and respond to market trends, fast-track innovation and applications development, and help our customers be more successful in the markets they serve.”

© 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.

Kraft Heinz’s Acquisition of Cerebos Gregg’s Brands Approved

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New Zealand’s competition authority has approved Kraft Heinz’s acquisition of the food and instant coffee business of Cerebos Gregg’s.

The approval requires Kraft Heinz to divest some of Cerebos Gregg’s sauce brands.

Kraft Heinz is expanding its brands marketed in Australia and New Zealand with its purchase of the Cerebos food and instant coffee business from Japan’s Suntory Group.

The announced purchase price is A$290 million.

Kraft Heinz gains popular brands such as the Gravox gravies, which is one of the all-time great Australian brands and traces its roots back to 1917.

Bruno Lino, CEO of Kraft Heinz Australia and New Zealand, who will lead the combined business, said: “The transaction provides an exciting opportunity for Kraft Heinz to expand its portfolio into complementary categories, stretching the footprint of Cerebos’ brands into new categories and markets.”

Cerebos’ Food & Instant Coffee business includes iconic food brands in Australia and New Zealand such as Fountain, Gravox, Saxa, Foster Clark’s, Gregg’s, Bisto, Raro and Asian Home Gourmet. The business has market-leading brands across a number of categories including sauces, gravies, herbs & spices, salt, condiments, Asian sauces, desserts and cooking ingredients.

The sale agreement does not include the Cerebos Fresh Coffee business in Australia/New Zealand, which SBF will retain.

© 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.

Commentary: Beware the “Baby Berkshire” Scam

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Berkshire Hathaway’s unprecedented growth in share value, which has seen its stock skyrocket 1,088,029% from 1964-2017, always has investors hoping to catch the “next Berkshire Hathaway” in its infancy. Thus, being proclaimed (or proclaiming yourself) the next Berkshire Hathaway in the making, can be an irresistible lure for some investors.

Well, there’s good cause to resist the siren song of the Baby Berkshire moniker.

The S.E.C. has put a halt to the trading in the securities of Manzo Pharmaceuticals, Inc. (“MNZO”), of Spring Hill, Tennessee.

Manzo Pharmaceuticals, a penny stock which billed itself as a “mini-Berkshire Hathaway,” is in the eyes of the S.E.C., “a classic pump-and-dump scheme.”

According to the S.E.C, company president, J. Ritch, 51, of Spring Hill, Tennessee, used his Website to make a host of misrepresentations.

On the Website, Ritch touted his investment background, his role at MNZO and the prospects of MNZO, which he claimed would “operate as a mini-Berkshire Hathaway” and “acquire in whole or in part operating companies” in the “energy, technology, real estate and financial services” sectors. In fact, since his acquisition of over one million MNZO shares in or around January 2017, Ritch has authored numerous blog posts on his Website falsely claiming that he built and exited several multimillion dollar businesses, had been involved in over $1 billion in investment deals, and had degrees from college and/or graduate school.

The S.E.C. has fined Ritch $50,000 plus interest and prohibited him from acting as an officer or director of any issuer that has a class of securities, and barred him from participating in any offering of a penny stock, including: acting as a promoter, finder, consultant, agent or other person who engages in activities with a broker, dealer or issuer for purposes of the issuance or trading in any penny stock, or inducing or attempting to induce the purchase or sale of any penny stock.

Unfortunately for investors, the only one who ever had a shot at getting rich was Ritch. His “mini-Berkshire Hathaway” is gone with the wind, and investors are left with nothing.

It’s a painful reminder that calling yourself the next Berkshire Hathaway is a far cry from being the next Berkshire Hathaway.

© 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.

Commentary: Bolt-On Acquisitions Continue to Power Berkshire’s Growth

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With the price of acquiring large businesses high, Berkshire Hathaway has been hard-pressed to spend down its $116 billion cash hoard on a major acquisition or two. Its proposed $143 billion Unilever bid, made in conjunction with 3G Capital Partners, fell on deaf ears, and other than an agreement to acquire Pilot and Flying J travel centers, the big fish have remained elusive.

However, Berkshire’s bolt-on acquisitions, which add capability and value to its existing businesses, have continued unabated, and were highlighted by Warren Buffett in his annual letter to shareholders.

In the letter, Buffett noted some of the larger acquisitions.

“Clayton Homes acquired two builders of conventional homes during 2017, a move that more than doubled our presence in a field we entered only three years ago. With these additions – Oakwood Homes in Colorado and Harris Doyle in Birmingham – I expect our 2018 site built volume will exceed $1 billion.

Clayton’s emphasis, nonetheless, remains manufactured homes, both their construction and their financing. In 2017 Clayton sold 19,168 units through its own retail operation and wholesaled another 26,706 units to independent retailers.

All told, Clayton accounted for 49% of the manufactured-home market last year. That industry-leading share – about three times what our nearest competitor did – is a far cry from the 13% Clayton achieved in 2003, the year it joined Berkshire.

Both Clayton Homes and PFJ are based in Knoxville, where the Clayton and Haslam families have long been friends. Kevin Clayton’s comments to the Haslams about the advantages of a Berkshire affiliation, and his admiring comments about the Haslam family to me, helped cement the PFJ deal.

Near the end of 2016, Shaw Industries, our floor coverings business, acquired U.S. Floors (“USF”), a rapidly growing distributor of luxury vinyl tile. USF’s managers, Piet Dossche and Philippe Erramuzpe, came out of the gate fast, delivering a 40% increase in sales in 2017, during which their operation was integrated with Shaw’s. It’s clear that we acquired both great human assets and business assets in making the USF purchase.

Vance Bell, Shaw’s CEO, originated, negotiated and completed this acquisition, which increased Shaw’s sales to $5.7 billion in 2017 and its employment to 22,000. With the purchase of USF, Shaw has substantially strengthened its position as an important and durable source of earnings for Berkshire.

I have told you several times about HomeServices, our growing real estate brokerage operation. Berkshire backed into this business in 2000 when we acquired a majority interest in MidAmerican Energy (now named Berkshire Hathaway Energy). MidAmerican’s activities were then largely in the electric utility field, and I originally paid little attention to HomeServices.

But, year-by-year, the company added brokers and, by the end of 2016, HomeServices was the second-largest brokerage operation in the country – still ranking, though, far behind the leader, Realogy. In 2017, however, HomeServices’ growth exploded. We acquired the industry’s third-largest operator, Long and Foster; number 12, Houlihan Lawrence; and Gloria Nilson.

With those purchases we added 12,300 agents, raising our total to 40,950. HomeServices is now close to leading the country in home sales, having participated (including our three acquisitions pro-forma) in $127 billion of “sides” during 2017. To explain that term, there are two “sides” to every transaction; if we represent both buyer and seller, the dollar value of the transaction is counted twice.

Despite its recent acquisitions, HomeServices is on track to do only about 3% of the country’s home-brokerage business in 2018. That leaves 97% to go. Given sensible prices, we will keep adding brokers in this most fundamental of businesses.

Finally, Precision Castparts, a company built through acquisitions, bought Wilhelm Schulz GmbH, a German maker of corrosion resistant fittings, piping systems and components.”

But Wait, There’s More!

Sometimes Berkshire’s bolt-on acquisitions get little attention. Such was the case in the summer of 2017, when Berkshire acquired Warren, Michigan-based MRO distributor Production Tool Supply, and created a new wholesale division, Berkshire eSupply.

At the time, the company was ranked 34th on Industrial Distribution’s 2017 Big 50 List.

And the Bolt-On Acquisitions Continue in 2018

QS Partners, the aircraft brokerage subsidiary of Berkshire Hathaway’s NetJets, acquired aircraft brokers Cerretani Aviation Group of Boulder, Colorado.

Berkshire’s Vanderbilt Mortgage and Finance, a financier of manufactured and modular homes, acquired Silverton Mortgage. Silverton Mortgage has 22 locations and is licensed in Alabama, Colorado, District of Columbia, Florida, Georgia, Louisiana, Maryland, North Carolina, Pennsylvania, South Carolina, Tennessee and Virginia.

And, Berkshire’s Marmon Holdings acquired Sonnax Industries, Inc. and formed a newly-created subsidiary called Sonnax Transmission Company. Sonnax is an industry leader in the cutting edge design, manufacture and distribution of the highest quality products to the automotive aftermarket, commercial vehicle industries, and industrial sectors utilizing drivetrain technology.

So, if you think that Berkshire Hathaway is sitting still, think again.

© 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.

General Star Launches Allied Health and Churches & Schools Programs

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General Star Management Company has announced the debut of the Allied Health and Churches & Schools Programs. The programs will be offered through Promont Insurance Advisors, the program administrator. Together, they will provide eligible risks with customized insurance solutions. The programs will be written on a non-admitted basis.

Promont Insurance Advisors is a Chicago-based, industry-leading, specialized underwriting organization with a focus on Home Healthcare providers and Churches.

Coverage will be written by General Star Indemnity Company, rated A++ (Superior) by A.M. Best Company, and carries an AA+ Insurance Financial Strength Rating from Standard & Poor’s Corporation. General Star is a wholly-owned subsidiary of General Reinsurance Corporation, a member of the Berkshire Hathaway family of companies.

“This partnership is another exciting piece of our strategic commitment to providing insureds with the best possible coverage and care,” stated Jeff Longbons, President of Promont Insurance Advisors. “A critical element to the partnership is our ability to expand the product offerings of two very important pieces of Promont’s portfolio: Allied Health and Churches & Schools Programs. In addition to possessing financial stability, General Star is a stalwart player in the Managing General Agency and Program Administration space. They understand how to help Promont continue to improve our industry-leading response time and service levels.”

“We are excited to partner with Promont to provide coverage on a customized basis for allied health risks as well as insureds in the churches and schools marketplace,” said Scott Ginsberg, VP and Program Underwriting Executive for General Star. “Promont has a nationwide reputation as a professional program administrator, with in-depth industry expertise. We are delighted to add that skill to the equation.”

General Star President and CEO Martin Hacala said he is eager to expand General Star’s program offerings via this recent collaboration with Promont. “Their specialized knowledge of the business is a terrific advantage. I have great confidence in the ability of the program to rapidly achieve its potential. Allied Health and Churches & Schools will have the comfort of a very secure insurer ready to deliver the protection they need.”

© 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.

Vanderbilt Mortgage Acquires Silverton Mortgage

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While Warren Buffett may be unable to find a reasonably priced, multi-billion-dollar acquisition. Berkshire’s subsidiaries continue to make what Buffett refers to as “bolt-on” acquisitions.

These acquisitions add on to Berkshire’s existing businesses, expanding their reach and scope of operations.

The latest acquisition came recently when Berkshire’s Vanderbilt Mortgage and Finance, a financier of manufactured and modular homes, acquired Silverton Mortgage.

Silverton Mortgage has 22 locations and is licensed in Alabama, Colorado, District of Columbia, Florida, Georgia, Louisiana, Maryland, North Carolina, Pennsylvania, South Carolina, Tennessee and Virginia.

Founded in 1998, Silverton Mortgage grew from a one-person shop to a top residential mortgage lender with 170 employees, and is one of the nation’s fastest growing financial companies.

Despite the acquisition by Vanderbilt, Silverton Mortgage will be retaining its name, leadership, employees and corporate identity following the transaction.

Expansion is also in the works. It is also anticipated that, because of this transaction, Silverton Mortgage will expand its footprint and increase its access to capital to develop an expanded line of products and services for its clients. There will be no lapses in service for borrowers currently working with the company.

“While we were not actively looking to be acquired, we are grateful for this opportunity to expand our services, both in terms of geographic footprint and loan product offerings, while keeping our identity and the great people that have built our culture of unparalleled service to our customers and communities,” said Josh Moffitt, who will stay on as the president and CEO of Silverton Mortgage. “This is a unique opportunity to keep what makes Silverton special, while also improving the service and lives of our customers and employees.”

Vanderbilt Mortgage services over 200,000 loans and also offers financing for eScore energy efficient home improvements.

Bolt-On Acquisitions Continue to Power Berkshire’s Growth

© 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 Signs its First Global Franchisee

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Berkshire Hathaway HomeServices has signed its first global franchisee, Rubina Real Estate GmbH, an award-winning real estate brokerage serving central Berlin and neighboring regions. The brokerage will operate as Berkshire Hathaway HomeServices Rubina Real Estate starting in April.

“Rubina Real Estate is an ideal fit for our network and we’re excited that it will carry the distinction of Berkshire Hathaway HomeServices’ first franchisee abroad,” said Gino Blefari, president and CEO of the network. “The brokerage’s business acumen and dedication to service and growth mirror our own values and aspirations. As important, Rubina Real Estate is a market leader and is wonderfully positioned in Berlin’s vibrant real estate market.”

Along with serving the German capital region, Rubina Real Estate attracts buyers and investors to Berlin from China, India and the Middle East. The firm is an industry authority on the residential sector and is often used as a source of real estate insight among banks, lenders and real estate developers.

Rubina is a perennial honoree for Germany in the prestigious International Property Awards held each fall in London. In 2017, the brokerage was named Best Real Estate Agency and Best Property Consultant (Marketing) for all of Europe.

“We are proud to bring the Berkshire Hathaway HomeServices brand to Berlin, Germany and other key markets in which we serve clients,” said Carsten Heinrich, co-founder and managing director of Rubina Real Estate. “The brand carries the name of Warren Buffett’s Berkshire Hathaway Inc., one of the world’s most respected and trusted corporations. We believe the brand will be warmly embraced in our markets and will help us build our global brand bridging Europe, Asia and America. We look forward to a new era of growth as Berkshire Hathaway HomeServices Rubina Real Estate.”

Berkshire Hathaway HomeServices continues as America’s fastest-growing real estate brokerage network, with more than 45,000 agents and 1,400 offices named to the brand since its launch in September 2013. The network will provide Rubina Real Estate with a powerful tool suite focusing on lead generation and network referrals, marketing and social media support, international listing syndication, professional education, business consultation and more.

Heinrich, who with his leadership team will be formally introduced to the network March 5 during Berkshire Hathaway HomeServices’ annual Sales Convention in San Antonio, Texas, said he and his team look forward to exchanging client referrals with network brokerages and engaging with the U.S. real estate market. “Our alliance will be mutually beneficial,” he said. “The brand is poised for great success globally; our company is ready and eager to grow, as well.”

Blefari said Rubina Real Estate opens the door to additional global franchisees. “We’ve approached global network expansion very carefully and methodically,” he explained. “We will continue to name high-quality franchisees in the months ahead in Europe, Asia, North America and beyond.”

Berkshire Hathaway HomeServices began global expansion in 2016.

© 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.