Month: November 2021

Categories
Minority Stock Positions Stock Portfolio

BYD Sets 5th Monthly Passenger Vehicle Sales Record

(BRK.A), (BRK.B)

Berkshire Hathaway-backed BYD sold 88,898 passenger vehicles in October, increasing 90.9% year on year (YoY) and 12.5% month on month (MoM), according to the official data.

In particular, the New Energy Vehicle (NEV) sales reached 80,003 units, soaring 262.9% YoY.

By the end of October, the cumulative annual sales of BYD passenger vehicles topped 200,000 units.

The continued contribution of the DM-i technology fueled further success for the DM model, which saw 38,771 units sold in October, up 444.1% YoY，positioning BYD as a dominant player in China’s plug-in hybrid vehicles market.

Globally, the DM-i model also holds an important position. The Qin Plus DM-i and Song Plus DM-i took the 4th and 8th places, among PHEV market worldwide in August with sales of 13,043 and 8,731 units respectively, according to data from EV SALES/EV VOLUME.

BYD battery-electric vehicles (BEV) witnessed steady growth in sales with 41,232 units sold in October, holding its leadership in a fast-growing local BEV market.

BYD Han, the flagship NEV sedan of the Dynasty series, sold 11,087 units in October. According to China Passenger Car Association (CPCA), BYD Han ranked second among the sales rankings of mid-to-large size sedans, with sales of 10,248 units in September. So far, BYD Han’s cumulative sales have exceeded 130,000 units, with increases for seven consecutive months.

BYD e-platform 3.0 solves battery-related safety problems of the NEV and increases its range at low temperatures. It will alter people’s stereotype of BEVs. EA1, the very first model built upon this platform also enjoyed popularity in the market with 6,018 units sold in October, becoming the biggest contributor to the market for NEVs priced at around RMB 100,000.

BYD and Berkshire Hathaway

In 2008, Berkshire Hathaway bet on BYD’s potential, purchasing 225 million shares for $232 million. It’s an investment that has paid off handsomely. Berkshire’s original investment of $232 million had grown in value to $5.897 billion as of December 31, 2020.

© 2021 David Mazor

Disclosure: David Mazor is a freelance writer focusing on Berkshire Hathaway. The author is long in Berkshire Hathaway and BYD, and this article is not a recommendation on whether to buy or sell a 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.

Categories
Brooks

Brooks Year-to-Date Revenue Up 44 Percent

(BRK.A), (BRK.B)

Berkshire Hathaway’s running shoe and fitness apparel company Brooks’ revenue increased for an eighth consecutive quarter in Q3 2021.

From January through September 2021, Brooks grew revenue 43.5 percent globally.

In the U.S. adult performance running footwear category, Brooks captured 19% market share, based on revenues, and gained 2 percentage points, versus last year, according to The NPD Group Retail Tracking data.

Contributing to this result was third quarter revenue growth of 24 percent year over year as the company continued to feed strong consumer demand around the world. Brooks’ leading footwear franchise styles led the gains as revenue from the Adrenaline GTS, Ghost, and Glycerin super franchise are up 50 percent versus 2020.

“More than twenty years ago, we made a big bet that if we put the runner at the center of everything we do—delivering the product they need and then celebrating the many reasons they run and the positive energy they get from it—we could become a leading brand in run,” said Jim Weber, CEO at Brooks. “We look forward to welcoming more people into the running community as we close out 2021 and enter the new year.”

Brooks’ growth is benefitting from distinctive products, a premium brand positioning, strong multi-channel distribution, digital engagement, and a tailwind of increased participation in running and walking around the world.

Brooks entered the third quarter with strong brand demand amid ongoing pandemic-related quarantines and mandated factory shutdowns coupled with widespread supply chain disruptions. These headwinds began to affect Brooks’ ability to meet consumer demand for the quarter, reducing revenue in September. While supply chain challenges are not unique to Brooks, the brand expects impacts to continue through Q2 2022 and is well positioned to manage through the disruption with strong partnerships in its geographically diverse yet categorically focused supply chain ecosystem.

© 2021 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.

Categories
Financial Reports

Berkshire Hathaway Q3 Earnings

Earnings of Berkshire Hathaway Inc. and its consolidated subsidiaries for the third quarter and first nine months of 2021 and 2020 are summarized below. Earnings are stated on an after-tax basis. (Dollar amounts are in millions, except for per share amounts).

Third Quarter

First Nine Months

2021

2020

2021

2020

Net earnings attributable to Berkshire shareholders

$

10,344

$

30,137

$

50,149

$

6,686

Net earnings includes:

Investment and derivative gains/losses –

Investments(1)

3,823

24,771

29,363

1,271

Derivatives

55

(34

)

616

(506

)

3,878

24,737

29,979

765

Impairments of intangible assets(2)

—

(78

)

—

(10,980

)

Operating earnings

6,466

5,478

20,170

16,901

Net earnings attributable to Berkshire shareholders

$

10,344

$

30,137

$

50,149

$

6,686

Net earnings per average equivalent Class A Share

$

6,882

$

18,994

$

33,025

$

4,160

Net earnings per average equivalent Class B Share

$

4.59

$

12.66

$

22.02

$

2.77

Average equivalent Class A shares outstanding

1,503,013

1,586,698

1,518,513

1,607,041

Average equivalent Class B shares outstanding

2,254,518,838

2,380,046,304

2,277,769,582

2,410,561,550

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

(1) Generally Accepted Accounting Principles (“GAAP”) require that we 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 2021 include after-tax gains of $3.1 billion in the third quarter and $26.9 billion in the first nine months and in 2020 include $22.4 billion in the third quarter and $2.3 billion in the first nine months due to changes during the third quarter and the first nine months in the unrealized gains that existed in our equity security investment holdings. Investment gains/losses in 2021 also include after-tax realized gains on sales of investments of $757 million in the third quarter and $2.4 billion in the first nine months and in 2020 include $3.1 billion during the third quarter and $552 million during the first nine months.

The amount of investment gains/losses in any given quarter is usually meaningless and delivers figures for net earnings per share that can be extremely misleading to investors who have little or no knowledge of accounting rules.

(2) Impairments of intangible assets in the first nine months of 2020 include charges of $9.8 billion recorded in the second quarter attributable to impairments of goodwill and certain identifiable intangible assets that were recorded in connection with Berkshire’s acquisition of Precision Castparts Corp. in 2016.

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

Third Quarter

First Nine Months

2021

2020

2021

2020

Insurance-underwriting

$

(784

)

$

(213

)

$

356

$

956

Insurance-investment income

1,161

1,015

3,588

3,769

Railroad, utilities and energy

3,034

2,742

7,244

6,257

Other businesses

2,706

2,346

8,329

5,833

Other

349

(412

)

653

86

Operating earnings

$

6,466

$

5,478

$

20,170

$

16,901

Approximately $7.6 billion was used to repurchase Berkshire shares during the third quarter bringing the nine month total to approximately $20.2 billion. On September 30, 2021 there were 1,493,097 Class A equivalent shares outstanding. At September 30, 2021, insurance float (the net liabilities we assume under insurance contracts) was approximately $145 billion, an increase of $7 billion since yearend 2020.

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 and impairments of goodwill and intangible assets.

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 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.

About Berkshire

Berkshire Hathaway and its subsidiaries engage in diverse business activities including insurance and reinsurance, utilities and energy, freight rail transportation, manufacturing, retailing and services. Common stock of the company is listed on the New York Stock Exchange, trading symbols BRK.A and BRK.B.

Cautionary Statement

Certain statements contained in this press release are “forward looking” statements within the meaning of the Private Securities Litigation Reform Act of 1995. These statements are not guaranties of future performance and actual results may differ materially from those forecasted.

Categories
Financial Reports

Berkshire Hathaway Buys Back $7.6B in Stock in Q3

(BRK.A), (BRK.B)

Warren Buffett continues to see owning more of Berkshire Hathaway as one of the conglomerate’s best investments.

Berkshire Hathaway used approximately $7.6 billion to repurchase Berkshire shares during the third quarter, bringing the nine month total to approximately $20.2 billion.

The $7.6 billion in stock buybacks represents an increase over the first and second quarters. Berkshire repurchased $6.6 billion in stock in the first quarter and $6 billion in the second quarter.

Even with the most recent buyback, Berkshire still finished the third quarter with a record $149 billion in cash.

© 2021 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.

Categories
Berkshire Hathaway Energy

Two Berkshire Hathaway Utilities Saved $58 Million in Q3

(BRK.A), (BRK.B)

Two of Berkshire Hathaway’s utilities, PacifiCorp and NV Energy, saved a combined $58.16 million in the third quarter through the western Energy Imbalance Market (EIM).

The Western EIM achieved $301 million in third-quarter benefits, bringing the cumulative benefits attained in the real-time energy market since its inception in late 2014 to $1.72 billion.

The gross benefits for Berkshire’s NV Energy was $18.04 million and PacifiCorp was $40.12 million.

The western EIM platform automatically finds and delivers low-cost energy to serve consumers in Arizona, California, Idaho, Nevada, Oregon, Utah, Washington and Wyoming. Optimizing diverse resources from a large geographic area enables more effective use of carbon-free generation besides reducing costs.

The record-setting results for the third quarter of 2021 are attributed to above normal temperatures that caused tight energy supplies for much of the West, and the addition of several new entities that joined the Western EIM earlier in the year.

“As we embark on the development of our Enhanced Day-Ahead Market (EDAM), these EIM results are another tangible example of the value of West-wide market coordination,” said California Independent System Operator (ISO) President and CEO Elliot Mainzer. “We look forward to working with our partners across the West to build on this foundation and create even greater economic and environmental value for the people we serve.”

The third-quarter results, which represent gross cost savings calculated from the optimization of market and grid efficiencies, exceeds the $297 million in cumulative benefits for all of 2019, and nearly reaches the $325 million in total benefits attained in 2020.

Since its launch, the Western EIM has deployed sophisticated technology to find and deliver the lowest-cost energy to its members, while enhancing reliability and providing significant environmental benefits through the reduction of renewable energy curtailments during periods of oversupply.

Reducing curtailments leads to lower greenhouse gas emissions because the renewable energy – rather than going unused – can be deployed by other market participants, and may displace power generated using fossil fuels.

The 2021 third-quarter economic benefits for each participant:
(Millions $)

Arizona Public Service $ 24.58
BANC $ 72.52
California ISO $ 54.01
Idaho Power $ 17.76
LADWP $ 23.57
NV Energy $ 18.04
NorthWestern Energy $ 5.16
PacifiCorp $ 40.12
Portland General Electric $ 7.12
Powerex $ 0.92
PNM $ 6.77
Puget Sound Energy $ 6.78
Salt River Project $ 17.78
Seattle City Light $ 3.92
Turlock Irrigation District $ 2.13
Total $ 301.18

© 2021 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.