Category Archives: Stock Portfolio

Commentary: Buffett Unlikely to Abandon BYD

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With Chinese new energy company BYD seeing a major slump in its share price, its important to remember that Warren Buffett’s belief in the company’s founder and CEO Wang Chuanfu makes it more likely that Buffett will buy more shares, or at least maintain Berkshire’s current position than abandon the investment.

BYD’s share price peaked at 83.70HKD in October 2017 and as of May 2 has slumped to 54.00HKD.

Berkshire’s still way ahead, as its cost basis per share was 8.00 HKD. Berkshire took its position in 2008 when it purchased 225 million shares at roughly 8.00KHD.

Whose idea was it to purchase a stake in the company? It wasn’t Buffett’s, but he has since become a big fan.

“Charlie (Munger) called me one day and says, ‘We’ve got to buy BYD. This guy that runs it is better than Thomas Edison,’ Warren Buffett explained while appearing on CNBC’s Squawk Box on Feb 26, 2018. “And I said, ‘That isn’t good enough.’ And then he called a little later and said, ‘He’s a combination of Edison and Bill Gates.’ And I said, ‘Well, you’re warming up but it still isn’t good enough.’ Anyway, Charlie wanted to do it. Now, it’s worked out so well that I’m actually starting to remember that it was my idea. As it’s coming back to me. I think I persuaded Charlie. But unfortunately I’m on the record that it’s his deal. But BYD, Charlie’s in love with the company, and it’s done very well. And the fellow that runs it, you know who’s autos and batteries, but he’s got big, big ideas and he’s very good at executing. So, but I leave it to Charlie.”

Stock prices go up and down, but Buffett has always been the most patient of investors.

With BYD having sold 13,000 of its plug-in electric cars in March alone, and aiming to sell between 15,000 and 20,000 cars per month when its new model year debuts, it continues to be the leader in EV cars.

The sales marked an increase of 116% year-over-year and were 31% of the total BYD car sales for the month.

BYD was number one worldwide in plug-in electric vehicle sales in 2017, its third consecutive year.

Additionally, its dominance in the Pure electric bus market continues to grow. The company sold over 14,000 pure electric buses globally in 2017.

It’s unlikely that Buffett’s or Munger’s respect for the company will change due to short-term price fluctuations and investors should be reminded that BYD’s stock price had a similar plunge in 2014 that saw no selling by Berkshire.

I’m not calling this one of Buffett’s forever stocks, but it would seem to fit one of his classic buy-and-hold investments, and it is unlikely to leave Berkshire’s portfolio anytime soon.

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

© 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 Partners with the Food Network for Product Line

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Kraft Heinz has launched Food Network Kitchen Inspirations, a new line of globally inspired Salad Dressings, Cooking Sauces and Meal Kits.

Food Network Kitchen Inspirations is billed as the first-ever grocery product line from Food Network that allows fans to bring home the flavors of the Food Network.

Food Network Kitchen Inspirations gives people the tools they need to make dishes they’re proud of. Every product in the new line either inspires people to try global flavors at home with meal kits like Chicken Tikka Masala, or takes classics up a notch with an inspired take on Creamy Parmesan Caesar Dressing. Each category incorporates authentic flavors and is made with high-quality ingredients, free from artificial flavors, colors or dyes.

“At Kraft Heinz, we are known for our iconic brands that have been staples at dinner tables for decades. This opportunity is especially exciting for us because the new Food Network Kitchen Inspirations products make it easy for people to expand beyond their culinary comfort zones and try new flavors,” said Liz Rubin, senior associate brand manager for Meals at Kraft Heinz. “We are thrilled to partner with Food Network to help consumers spice up their meals and inspire them to get creative in their own kitchens.”

“Food Network has always been a source of culinary inspiration and education, but until now has never offered food products people can bring into their homes,” said Ron Feinbaum, senior vice president and general manager of home promotions and consumer products for Discovery, Inc., parent company of Food Network. “With busy schedules, we know that weeknights can be the hardest time to try new recipes, but with Food Network Kitchen Inspirations Salad Dressings, Cooking Sauces and Meal Kits, people can now make convenient meals without sacrificing flavor.”

“The inspiration for this new product line grew out of a successful marketing partnership we’ve had for many years with The Kraft Heinz Company,” added Karen Grinthal, senior vice president of national ad sales for Food Network. “Kraft Heinz is a key partner with Food Network, and we couldn’t be more pleased with this exciting evolution.”

© 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.

BYD’s China Vehicle Sales Top 13,000 in March

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While Tesla struggle to manufacture 2,000 Model 3 cars a month, Chinese new energy company BYD sold 13,000 of its plug-in electric cars in March.

The sales mark an increase of 116% year-over-year, and were 31% of the total BYD car sales for the month.

BYD is aiming to sell between 15,000 and 20,000 cars per month when its new model year debuts. The number is not unexpected, as the company sold 15,873 plug-in electric cars in December 2017.

BYD was number one worldwide in plug-in electric vehicle sales in 2017, its third consecutive 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 has grown in value almost ten-fold, and is now worth roughly $1.96 billion.

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

© 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.

BYD to Separate Vehicle Manufacturing from Battery Biz

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In a move that is directly the opposite of Tesla’s acquisition of Solar City, Chinese new energy company BYD will reportedly spin-off its photovoltaic and rechargeable battery businesses into a separately traded public company.

Nissan made a similar move in the fall of 2017 when it sold its electric battery operations and production facilities to Chinese private investment fund GSR Capital.

BYD is currently one of the world’s top PV manufacturers, and produces from wafer to module with an automatic production line.

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 has grown in value almost ten-fold, and is now worth roughly $1.96 billion.

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

© 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.

BYD’s Electric Buses Launched in South Korea’s Jeju Island

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New energy technology company BYD has debuted a fleet of 20 of its pure electric buses in South Korea’s pristine Jeju Island, the largest project of its kind in Northeast Asia.

The launch represents another milestone for BYD, which has gradually evolved from a rechargeable battery manufacturer to a new energy giant since its establishment in 1995.

BYD’s electric vehicles have a footprint in more than 200 cities worldwide.

The BYD eBus-7, the only pure electric mid-size bus in the South Korean market, will operate in Udo, the largest island of Jeju Island.

The eBus-7 is a compact 15-seater body that enables it to navigate the narrow roads of the small island with ease and without any carbon emissions.

The bus can travel a minimum range of 200 kilometers on a single charge, requiring only two hours to be fully charged.

BYD has rapidly drawn the attention of South Korean officials since its market entry in 2015 with product features such as the plug-and-charge capability of its electric buses.

Last December, the company’s President and founder Wang Chuanfu was among a group of industry delegates invited to attend a discussion with South Korean President Moon Jae-in during his official visit to China.

Earlier BYD also welcomed a group of 60 residents from Udo Island – approximately five percent of the local population – as they personally inspected the eBus-7 at BYD’s Shenzhen headquarters before the order was placed.

“Our track record in renewable energy reflects our mission to do something for the environment with the highest quality,” said Liu Xueliang, General Manager of BYD Asia Pacific Auto Sales Division. “Having passed South Korea’s rigorous vehicle safety standards, the eBus-7 is reflective of the excellent engineering behind our vehicles and suitable for the fragile terrain of Udo Island.”

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 has grown in value almost ten-fold, and is now worth roughly $1.96 billion.

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

© 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.

Thailand Next Country for BYD’s Pure Electric Taxis

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With BYD’s pure electric e6 taxis on the streets in more than 10 countries, the company is looking towards the Southeast Asian motor hub of Thailand for its next major launch.

The environmentally friendly taxis are capable of reaching a maximum distance of 350 kilometers on a single charge, and will operate in Bangkok as a premium taxi service.

BYD aims to introduce 1,000 pure electric taxis in Thailand by 2019, with the first hundred scheduled to hit the streets this month.

Thailand has introduced policies ranging from tariff to corporate income tax cuts to boost the production and use of electric cars in the country.

The official selection of BYD as the provider of the country’s first fleet of pure electric taxis is in line with the country’s ambitions of having 1.2 million green energy vehicles ply its streets.

“We are honoured to have secured the trust of Thailand’s authorities amidst stiff competition,” said Liu Xueliang, General Manager of BYD Asia Pacific Auto Sales Division. “In future everyone will have the added option of experiencing the sights and sounds of Bangkok in comfort, and in a way that’s better for the environment.”

In 2017, BYD sold around 130,000 units of new energy vehicles, ranking number one in global new energy vehicle sales for the third consecutive year. Since its establishment in 1995, the company’s renewable energy products have gained a footprint in more than 200 cities around the world including Okinawa, London and Singapore.

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 has grown in value almost ten-fold, and is now worth roughly $1.96 billion.

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

© 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.

BYD Announces 75MW PV Project in Australia

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New energy company BYD has signed with Biosar for a 75MW PV project in Australia. The project cost is roughly $30 million USD.

The PV project uses BYD’s half-cell solar panel with 18.8% average power, which is 3% higher than the conventional module’s power output.

Biosar, the subsidiary of the largest Engineer, Procure, Construct consultants (EPC) AKTOR in Greece, is mainly responsible for EPC for PV projects all over the world, and it has about 1GW of PV projects in Brazil, Argentina, UK and other countries.

This 75MW PV project is the largest one Biosar has in Australia, and is also the largest project for BYD in Australia.

After the project is finished, it will provide about 13.6 million Kwh per year to Queensland, and provide sustainable green power to 65,000 families per day.

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 has grown in value almost ten-fold, and is now worth roughly $1.96 billion.

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

© 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 Likely Bidder for GlaxoSmithKline’s Horlicks

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GlaxoSmithKline is looking to find a buyer for its malted-milk brand Horlicks, as it raises funds for its $13 billion buyout of its consumer healthcare joint venture with Novartis.

Reportedly in the bidding for Horlicks is Kraft Heinz, as the drink is popular in the United Kingdom, Australia, New Zealand, Hong Kong, Bangladesh, India, and Jamaica.

Made from wheat, malt barley, sugar, milk and vitamins, the beverage dates back to 1873 when Horlicks was invented by two British-born men, William Horlick and his brother James Horlick from Gloucestershire, England. James was a chemist, working for a company that made dried baby food. William, the younger brother, had emigrated to the United States in 1869 and James decided to join him in Chicago in 1873. That same year, they started their own company, J&W Horlicks, to make a malted milk drink. They called their product ‘Diastoid’ and their advertising slogan read: ‘Horlick’s Infant and Invalids Food’.

The company that acquires Horlicks will have to cope with a decline in the popularity of malted-milk sector. In India, negative volume growth in the health food drinks segment was -6.8% in 2016-17, according to India’s The Economic Times.

“Horlicks is a terrific brand with a long history, especially in India,” GSK Chief Executive Officer Emma Walmsley noted at a recent investors’ meeting. “But in the context of funding for this (Novartis) transaction and our desire to increase focus on our over-the-counter and oral health portfolios, as well as other group capital allocation priorities, it makes sense for us to review it.”

© 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.

Portugal Latest Country for BYD’s Pure Electric Ebuses

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New energy company BYD has entered the Portugal market for its pure electric ebuses.

Portugal joins Spain as an operator of the proven BYD ebus.

The Coimbra Municipal Public Transportation Service, SMTUC, has placed an order for eight pure electric 12 metre BYD buses. The contract for this order was signed today by Manuel Augusto Soares Machado, President of the Coimbra Municipality, and Isbrand Ho, Managing Director of BYD Europe, in Coimbra — a city north of the Portuguese capital Lisbon.

It is the first purchase order in Portugal for BYD’s pure electric buses and follows a successful test by SMTUC of a BYD 12 metre ebus last year. With the confirmation of this order for Portugal, BYD is expanding its European presence to 10 countries and now has more than over 400 orders for its electric buses in Europe.

The ebuses will service several routes in the city centre of Coimbra, becoming the city’s first fleet of 12 metre pure electric buses. Delivery of the eight vehicles is planned in the beginning of 2019.

Manuel Augusto Soares Machado, President of the Coimbra Municipality: “I am honoured to announce that these BYD buses are the first full size 12 metre pure electric buses in the one hundred year history of SMTUC. I am also happy to announce that new tenders are being prepared to reinforce electric public transportation in Coimbra.”

Isbrand Ho, Managing Director at BYD Europe: “We are delighted to be able to add this important market, Portugal, to our client portfolio. From north to south Europe, we have become a competitive player across the Continent covering all the climatic conditions from the cold north of Scandinavia to the heat of Italy, Spain and now Portugal, not forgetting the more moderate conditions of Benelux and the UK. The results of the tests with our ebus here were promising and we are confident that our ebuses can deliver reliable and safe services and help to improve air quality – whatever the weather!”

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 has grown in value almost ten-fold, and is now worth roughly $1.96 billion.

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

© 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: Is the Time at Hand for Berkshire to Cash Out of USG?

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Gypsum rock and plaster manufacturer United States Gypsum Company soared today as news that Warren Buffett had offered Berkshire Hathaway’s 30% stake in the company to USG’s other major minority stakeholder, Knauf Entities.

Knauf has long been a potential suitor of USG, and was interested in acquiring the company as far back as 2000, when Berkshire first took a 14% stake.

Berkshire reportedly offered its shares to Knauf at $42 per share, which was roughly 19% above the stock’s closing price on Friday, March 23.

USG’s Board of Directors’ weighed in with their own statement, as they moved to squash the deal.

“The board carefully evaluated it and determined that it substantially undervalues the company and is not in the best interests of all of USG’s shareholders.”

Instead, they suggested that its own plans would be the best way to boost shareholder value.

One thing seems clear, after 17 years riding this stock up and down, Buffett is finally ready to move on.

If it does complete the deal with Knauf, not only would Berkshire make money on its investment, but it’s already made a lot of money even though the stock does not pay a dividend.

The Great Recession, USG and Berkshire

Berkshire played a key role in saving USG during the nadir of the Great Recession.

In 2008, with the housing market imploding and lending all but frozen, Berkshire came to USG’s rescue with $300 million of convertible notes that paid Berkshire 10-percent interest.

At the time, the boost in confidence the company received from Warren Buffett’s financing helped the company avoid another bankruptcy. The day of transaction the stock soared 22% to $6.89 a share.

Today, the stock is hovering around $40 per share.

Berkshire has not only profited from the healthy interest payments, but the stock’s appreciation as well.

In December 2013, Berkshire exchanged $243.8 million of the convertible notes for common stock, and with additional purchases its stake in USG now sits at roughly 30.8%.

Back in 2015 and again in 2016, I wrote that perhaps it was time for Berkshire to buy the rest of USG, as the housing market had revived from its Great Recession doldrums.

However, at Berkshire’s 2017 Annual Shareholders’ Meeting, Buffett was less than enthusiastic about USG.

Buffett commented in answer to a shareholder’s question that buying into USG wasn’t one of his “brilliant ideas,” stating:

“On USG we owned a very significant percentage like 30%. USG overall has been disappointing because the gypsum business has been disappointing. I think they went bankrupt twice because they had too much debt. It has not been a brilliant investment. If gypsum went up to what it was some years on the past, we would have done a lot better. Gypsum has taken a real dive several times and there has been too much gypsum capacity, and when it comes back the management have been not only of use but have gotten more optimistic than they should have. It’s a business where the supply has been significantly greater than the demand in a lot of years. You’ve seen housing starts since 2008-9 not come back anywhere near where people anticipated, so gypsum prices have not moved up dramatically. So just put that one down as not one of our brilliant ideas. Not a disaster.”

Perhaps with USG again in play, it just got brilliant 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.