Category Archives: Minority Stock Positions

Commentary: What Does Sale of DaVita Medical Group Mean for Berkshire Hathaway?

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The news that health services company Optum is purchasing DaVita Medical Group, a subsidiary of DaVita Inc., for $4.9 billion may bring a windfall for Berkshire Hathaway.

Berkshire has a $2.27 billion stake in DaVita Inc., which works out to roughly 22.03% of the company’s market cap and approximately 23.57% of the institutional ownership, and news of the sale gave Berkshire an immediate paper profit boost of $230 million.

The longer term prospect is good for Berkshire, as well.

According to DaVita, the company plans to use the proceeds from the transaction for significant stock repurchases over the one to two years following the closing of the transaction, as well as to repay debt and for general corporate purposes.

“Following this transaction, DaVita will continue to be a leader in population health management, with a focus on our U.S. and international kidney care businesses,” DaVita CEO Kent Thiry said. “We also expect to pursue other investments in health care services outside of kidney care.

Berkshire has long been rumored to be interested in acquiring DaVita, and entered into a standstill agreement with Davita in May 2014, pledging not purchase more than 25% of the company.

And while Berkshire doesn’t reveal whether Warren Buffett, or his portfolio managers Ted Weschler and Todd Combs, purchased or sold a particular security, the push to acquire shares in DaVita is generally credited to Ted Weschler.

It looks like he was right on this one.

© 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 Pure Electric Buses Now in Okinawa

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A fleet of 10 pure electric buses manufactured by Chinese new energy technology company BYD is now in service on the Japanese island of Okinawa, marking the beginning of the island’s electrified public transportation initiative.

A total of 10 BYD K9 buses now run a shuttle service to and from the Okinawa Naha Port. BYD is the only Chinese automaker to enter the Japanese market, and only with pure electric vehicles.

This is not the first time BYD has delivered its e-buses to Japan. In 2015, five BYD K9 buses started running in the city of Kyoto. This time, Japan placed the additional order to operate the K9 fleet in the historic city of Okinawa, which hosts millions of visitors each year.

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.

BYD Wins Innovation Award

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China’s BYD Co. Ltd., the world’s leading supplier of rechargeable lithium batteries, has received an industry award for its high voltage lithium storage system B-Box HV. The versatile concept and its features for high efficiency have been recognized by the industry experts on a jury panel from pv magazine award 2017 for top innovation.

BYD’s B-Box HV drives progress in three categories: with the modularity, the charging and discharging performance and the efficiency. The efficiency had also been tested in a recent storage system performance test and could show impressive results, surpassing the competition.

The B-Box HV lithium storage system was launched in spring 2017 and employs the successful modular design of the B-Box series with battery capacities ranging from 6.4 to 11.5 kWh, providing more than enough energy for the average household and can be scaled up to 57.5kWh for light commercial. The B-Box features excellent efficiency, delivering higher capacity for the best return on investment. The system supports constant 1C and 2C peak charge and discharge rates, and provides best in class useable capacity ratios. As a result it can support household electric devices longer with more power. An innovative connection system allows for an extremely easy plug-and-play installation without the need to connect cables.

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.

BYD Electric Buses Rolling in Santiago, Chile

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The first two BYD 100% electric buses are operating in Santiago, Chile. With the debut of the buses, Santiago moves forward as one of the pioneers in the field of electromobility in Latin America, consolidating the new requirements included in Transantiago’s bidding basis.

The electric buses will be operated permanently by Metbus on route 516 and their routes will include the most important arteries of 8 districts of the city. According to the information available, the operational costs will be reduced by 70% compared to conventional diesel buses, reaching a value of 70 Chilean pesos per kilometer, against 300 Chilean pesos for diesel. The full charge of the vehicle has a cost of 19,500 Chilean pesos. BYD’s new energy vehicle footprint currently covers over 200 cities in 50 countries and regions.

Secretary of State, Paola Tapia, stated that “Electromobility is not the future; it is the present we are living today in the capital’s transportation system. We are moving forward in providing quality for users by incorporating the electric buses today, fulfilling the commitment to offer more comfort, greater service efficiency and care for the environment. In 2018 we will have another 90 of these buses circulating; making us electrified public transportation pioneers in Latin America. Our embrace of this technology prioritizes passengers, which forms the basis of the bidding process.” Additionally, Paola said that this strategy highlights the importance of electric vehicles, for their significant contribution to the reduction of pollutants and noise levels in areas of high exposure.”

The Minister of Environment, Jorge Canals, said that “the metropolitan region suffers increased pollution problems during winter, largely by emissions from mobile sources. Therefore, the incorporation of these electric buses comes as a cleaner alternative in urban transport. It is important to emphasize that a vehicle during traffic congestion contaminates 4 times more than one circulating normally.”

The Minister of Energy, Andrés Rebolledo, explained that “the entry of these first two electric buses are great news for a country like Chile, since the transport sector represents one third of the energy consumption, and it imports practically all the fuel used for transportation.”

The General Manager of E-Solutions of Enel Chile, Simone Tripepi, commented that “at Enel we want to be part of the solution of important issues such as the decontamination of cities. Therefore, we have strongly promoted electric mobility in Chile, based on clean energy and lower prices as compared to other fuels. We have the capacity to provide the necessary electrical infrastructure to facilitate the dissemination of electrified public transportation in Santiago and regions.”

Tamara Berríos, BYD’s Country Manager in Chile explained that “One single electric bus prevents the equivalent to the emissions and pollution from 33 gasoline vehicles. So far, BYD has supplied 27 thousand pure electric buses to over 200 cities worldwide, so we are confident that our experience and maturity in this sector will ensure we can successfully deliver a high quality service that will set a new standard of comfort for users and city dwellers in Chile.”

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.

BYD Negotiating to Build Monorail in the Philippines

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Just weeks after new energy company BYD announced it is in talks to build one of its monrails in Egypt, the company is looking to do the same in the Philippines.

BYD and the city of Iloilo are currently exploring the possibility of constructing a 20-kilometre SkyRail monorail by 2019.

“Air pollution and traffic congestion are twin problems many cities around the world are faced with,” said Liu Xueliang, General Manager for BYD Asia Pacific Auto Sales Division. “We are very excited to bring more of our solutions to the Philippines to create a cleaner living environment for everyone.”

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.

Commentary: Akzo Nobel and Axalta Coatings Merger Would Benefit Berkshire Hathaway

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A possible merger between Akzo Nobel NV and Axalta Coating Systems would give Berkshire Hathaway a major stake in a world-leader in the coatings market.

The Dutch coatings company Akzo Nobel is reportedly in the discussion stage with Philadelphia-based Axalta on a deal that could create a $30 billion coatings behemoth. The discussions have been described as a “merger of equals’ even though Axalta is the smaller of the two companies.

One of the benefits for Akzo Nobel would be to make it too large for takeover by other coasting companies, including PPG Industries.

The potential merger has already benefited Berkshire, as shares in Axalta soared 17% to Friday’s closing price of $33.15 on news of the discussions.

Berkshire currently owns 23,324,000 shares of Axalta, which is approximately 9.59% of the company, and has a value of roughly $745,668,263. 20 million of its stake was purchased in April of 2015 from The Carlyle Group for an aggregate purchase price of $560 million, or $28.00 per share.

Axalta was founded in 1866 as Herberts, the original producer of Standox paint products. Spun off of DuPont Performance Coatings in 2013, it was sold to The Carlyle Group and renamed Axalta Coating Systems. Today the company is a leader in coatings for commercial vehicles.

When Berkshire took its stake in Axalta back in 2015, the company looked like a possible merger candidate with Berkshire’s Lubrizol. However, Berkshire’s never been shy about owning significant minority stakes in companies if they are purchased at favorable prices.

Such is the case with Axalta.

© 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 in Talks to Bring SkyRail Monorail to Egypt

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New energy technology company BYD is negotiating to bring its SkyRail monorail to the ancient Egyptian port city of Alexandria, the country’s second largest.

The proposed project will be planned for the construction of a 128 kilometer track. The potential collaboration comes four years after Alexandria local authorities began exploring options to relieve their city of chronic traffic jams.

“Strategic Partnership,” Said General Engineer / Khaled Eleiwa, “BYD has a very strong reputation and reliable image especially in Egypt, we are so glad to have such kind of cooperation step with BYD, and we hope to see the SkyRail operates in Alexandria as soon as possible”.

“BYD’s SkyRail is a clean, affordable and safe way for people to commute. It also utilizes limited road space in towns and cities while minimizing disruption to local communities,” said AD Huang. “Today’s cooperation is a step towards developing wider partnership that we have maintained with Egypt over the past 13 years”.

BYD’s SkyRail is substantially cost saving and quicker to construct compared to a subway, requiring only a fifth of the cost and one third of the construction time. BYD has conducted feasibility studies in more than 100 cities worldwide including the city of Iloilo in the Philippines, and has entered into strategic partnerships with over 10 cities in China. SkyRail is currently operating in Yinchuan, an industrial city in China’s northwest. Construction of BYD SkyRail lines are also expected to begin in 20 cities in 2018.

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.

BYD Gets Big Order for its New Midibus from Holland’s Connexxion

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Chinese battery and vehicle manufacturer BYD reports that Connexxion has ordered 21 units of its new Midibuses for use in the north part of North Holland. The new fleet will deliver a service in largely rural areas during the daytime.

Delivery of the Midibuses and the start of operation is scheduled in the summer of 2018. The new BYD model takes BYD Europe into a new market sector and augments the BYD ebus range which includes single deckers up to 18m longer, double deckers and an electric coach.

The Midibuses ordered by Connexxion have an overall length of 8.75m, two doors and have seats for 26 passengers (with a total capacity of about 50).

According to BYD, this is believed to be one of the largest orders for heavy duty pure electric midibuses in Europe and is certainly the first significant one to be placed by a Dutch operator.

Eric van Eijndhoven, Managing Director of Public Transport for Connexxion, said: “We chose BYD due to its proven and leading electric bus and battery technology. We are delighted to be the first user of this important new model and know our passengers will enjoy the new levels of green performance the buses will deliver.“

Isbrand Ho, BYD Europe’s Managing Director, said: “This is great news which confirms the attractiveness of our new model which brings big bus features to the midibus sector. This is a real bus with all the reliable, heavy duty features operators expect but smaller than our other ebuses and of course totally emissions free.”

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.

Kraft Heinz Buys Cerebos Brands from Suntory

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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 purchase price will be A$290 million and includes popular brands such as the Gravox gravies, which is one of the all-time great Australian brands, and traces its roots back to 1917.

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.

Cerebos Australia and New Zealand is a trans-Tasman integration of two companies, Cerebos (Australia) Limited and Cerebos Gregg’s Limited in New Zealand. Our parent company, Cerebos Pacific Limited, is based in Singapore and has been wholly owned by Suntory Limited, a Japanese global food and beverage group. Within this structure, the companies have operated with a great deal of autonomy.

Kraft Heinz is the fifth-largest food and beverage company in the world and has a strong platform in Australia and New Zealand, with a staple of well-known brands such as Heinz, Kraft, Wattie’s, Eta and Golden Circle in categories including beans & spaghetti, sauces, soups, sauces & dressings and many others.

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.”

“In addition to the iconic local brands, Cerebos has a strong team that will play an important role in our future growth. This transaction reinforces our commitment and long-term plan to the Australia and New Zealand markets in addition to our significant investment in the Kraft brand for 2018. We will continue investing in our brands, factories and our employees to meet consumer needs and expectations,” he said.

Terry Svenson, CEO of Cerebos Australia/New Zealand, said the company was pleased with the outcome of the transaction.

“As we announced in April 2017, the Food & Instant Coffee business has a number of market-leading brands across Australia and New Zealand and has made significant progress in recent years, particularly in relation to improvements in manufacturing efficiency. However, Food & Instant Coffee is not a core focus category for SBF and we believe this business can be maximised under different ownership. The Food & Instant Coffee business will now have opportunities to leverage Kraft Heinz’s operations to grow the business further.”

The transaction is scheduled to close in the first quarter of 2018, subject to regulatory approvals.

© 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 Powers Up in Australia Market

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BYD Company Ltd., the world’s leading manufacturer of rechargeable batteries, is focusing on the Australian renewable energy market with its proprietary Lithium-Iron Phosphate battery.

At All-Energy Australia 2017 – the country’s largest renewable energy exhibition, BYD exhibited its MINI-ES, B-Box – in high-voltage and low-voltage versions – and Containerized Energy Storage solutions to provide the market with increased efficiency, economy and flexibility.

The BYD B-Box Storage System comes in two versions: low-voltage B-Box LV and high-voltage B-Box HV. The B-Box LV system operates with a Goodwe S-BP inverter, making it the cost effective; and the B-Box HV system operates with an SMA Sunny Boy Storage inverter, which raises the system’s level of efficiency. Both are aimed at the retrofit market that is booming in Australia, that is, a market in which people already have solar panels installed and want to install an energy storage system.

Another advantage of the BYD B-Box systems is that they are modular and scalable from 2.5kWh to 442kWh – users can increase the capacity of parallel battery rack to meet different requirements of energy storage – whereas major competitors only reach 13.5kWh with a large-sized system.

A variety of configurations of the two versions of the BYD B-Box can also be used for commercial purposes.

The MINI-ES is a small-sized, all-in-one residential energy storage system that is easy to install and maintain, with an original capacity of 3kW / 3kWh that can be expanded to 6kWh. This system is fully certified by Australia’s SAA, in line with the latest Australian AS / NZS 4777.2: 2015 standard, and has become very popular with a number of Australian local power grid companies and electricity retailers.

Over 500 Australian households have already installed the BYD MINI-ES.

The BYD Containerized Energy Storage has a modular design to meet different large-scale energy storage projects demands, and features extreme safety, reliability and efficiency. It can be used for peak load and frequency regulation to stabilize renewable energy or as a back-up system to prevent outages.

Current installed capacity of BYD ESS exceeds 400MWh globally.

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.