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Berkshire Hathaway Specialty Insurance Opens New Office in Munich, Germany

(BRK.A), (BRK.B)

Berkshire Hathaway Specialty Insurance (BHSI) has opened a new office in Munich, Germany, marking the latest advance in BHSI’s steady, strategic expansion of its global footprint and capabilities for customers and brokers worldwide.

“Our new presence in southeastern Germany enhances our ability to bring our full line of specialty insurance products, our financial strength, and our focus on service excellence to the German and European marketplace,” said Chris Colahan, President, BHSI in Europe and the UK. “We are excited to be in Munich, continuing to build our global team of individuals with stellar capabilities and character.”

The new office in Munich, along with the BHSI office in Dusseldorf, will underwrite property, casualty, medical malpractice, marine and executive & professional lines for a broad range of business segments in Germany.

BHSI also announced that it intends to build substantial local underwriting and claims capabilities in the new office and has filled its first two posts in Munich with Lars Messutat, Senior Underwriter, Property, and Florian Biebrach, Senior Underwriter, Financial Lines, both of whom relocated from BHSI in Dusseldorf.

© 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 Operating Profits Soar 67% in Second Quarter

(BRK.A), (BRK.B)

Berkshire’s operating results for the second quarter and first six months of 2018 and 2017 are summarized in the following paragraphs. However, we urge investors and reporters to read our 10-Q, which has been posted at www.berkshirehathaway.com.The limited information that follows in this press release is not adequate for making an informed investment judgment.

Earnings of Berkshire Hathaway Inc. and its consolidated subsidiaries for the second quarter and first six months of 2018 and 2017 are summarized below. Earnings are stated on an after-tax basis. (Dollar amounts are in millions, except for per share amounts).

Second Quarter

First Six Months

2018

2017

2018

2017

Net earnings attributable to Berkshire shareholders $12,011 $4,262 $10,873 $8,322
Net earnings includes:
Investment and derivative gains/losses –
Investments 4,824 185 (1,439 ) 390
Derivatives 294 (42 ) 131 257
5,118 143 (1,308 ) 647
Operating earnings 6,893 4,119 12,181 7,675
Net earnings attributable to Berkshire shareholders $12,011 $4,262 $10,873 $8,322
Net earnings per Class A equivalent share attributable to Berkshire shareholders

$7,301

$2,592

$6,610

$5,060

Average Class A equivalent shares outstanding 1,645,057 1,644,580 1,645,008 1,644,503

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

In 2018, due to a change in Generally Accepted Accounting Principles (“GAAP”), we are now required to 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 2018 include a gain of approximately $4.5 billion in the second quarter and a loss of approximately $1.7 billion in the first six months of 2018 due to changes during the second quarter of 2018 and changes during the first six months of 2018 in the unrealized gains/losses of equity security investments held at June 30, 2018. In 2017 and in prior years, while changes in unrealized gains/losses were reflected in our shareholders’ equity, they were not included in our earnings statements. Accordingly, the following statement which has been included in each of Berkshire’s earnings releases for many years along with some additional comments (additional comments underlined) is even more important when analyzing Berkshire’s periodic results. The amount of investment gains/losses in any given quarter is usually meaningless and delivers figures for net earnings per share that can be misleading to investors who have little or no knowledge of accounting rules.

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

Second Quarter

First Six Months

2018

2017

2018

2017

Insurance-underwriting $943 $(22 ) $1,350 $(289 )
Insurance-investment income 1,142 965 2,154 1,873
Railroad, utilities and energy 1,890 1,467 3,620 2,785
Other businesses 2,570 1,985 4,766 3,593
Other 348 (276 ) 291 (287 )
Operating earnings $6,893 $4,119 $12,181 $7,675

At June 30, 2018, our book value per Class A equivalent share was $217,677. Insurance float (the net liabilities we assume under insurance contracts) was approximately $116 billion at June 30, 2018, an increase of $2 billion since yearend 2017.

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.

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 now 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.

© 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.

Dairy Queen’s Jurassic Chomp Blizzard Means Another T-Rex-Sized Summer

(BRK.A), (BRK.B)

Dairy Queen is looking for another T-Rex-sized summer tied to the theatrical release of Jurassic World: Fallen Kingdom.

Dairy Queen is featuring the Jurassic Chomp Blizzard — vanilla soft serve blended with chocolate-dipped peanut butter bites and fudge topping—as a tie-in with the blockbuster film.

This is the third go around for Dairy Queen with a major summer movie tie-in. In 2015, DQ had a tie-in with the first Jurassic World, and in 2017 they tied into Guardians of the Galaxy Vol. 2.

At the time, then CEO John Gainor noted the strong boost that sales received just from putting a Blizzard dessert in a movie-themed cup.

Gainor’s successor at CEO, Troy Bader, agrees and says there is a positive change as well.

“These days movie studios aren’t looking for millions in sponsorship fees,” Bader says. “They are looking for the connection to your advertising.”

For Dairy Queen, it’s an opportunity to link to a massive promotional campaign.

The Jurassic World: Fallen Kingdom $185 million media value global campaign is double in size of the campaign that ran for Jurassic World. In addition to Dairy Queen, JEEP, Dr. Pepper, Doritos, Kellogg’s and Mars Candy are just some of the heavyweight players that are tied-in with the film.

Dairy Queen is running Jurassic World: Fallen Kingdom-themed TV ads that began 30 days before the theatrical release date and will continue all summer.

Jurassic World: Fallen Kingdom opens in U.S. theaters on June 22.

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

(BRK.A), (BRK.B)

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.

Teamster Mechanics Ratify Agreement With NetJets

(BRK.A), (BRK.B)

The labor troubles that long plagued NetJets are finally over. NetJets aircraft technicians and related employees have ratified a new six-year collective bargaining agreement with the Columbus, Ohio-based fractional ownership private jet company.

NetJets ongoing labor disputes, which for a number of years saw the pilot’s union stage informational picketing at Berkshire Hathaway’s annual meeting, has made steady progress since the pilot’s won a 30 percent raise at the thend of 2015.

The latest agreement is with The International Brotherhood of Teamsters, the Teamsters Airline Division and the Teamsters Local 284 that represent 212 aircraft mechanics, maintenance controllers, stock clerks, aircraft fuelers and aircraft cleaners at the company.

“After more than six years of negotiations, our members secured a new contract with major improvements, including an immediate 20 percent wage increase, additional pay increases every year of the contract, premium-free health insurance that can’t be cut or reduced, retirement improvements and many other benefits,” said Capt. David Bourne, Teamsters Airline Division Director. “The union and its members stand ready to work with NetJets to help ensure a successful company and the highest standards of air safety now and in the future.”

More than 94 percent of the members voted on the proposed contract which goes into effect tomorrow. NetJets will pay signing bonuses of up to $30,000 by the end of the month. NetJets workers are also eligible for employer matching contributions if they direct some or all of their bonus into their 401(k) accounts.

“The new labor agreement was made possible by membership solidarity and the support of unionized NetJets pilots, flight attendants and dispatchers, as well as the hard work and dedication of a long line of Teamsters representatives at every level of our union who pulled out all the stops for these men and women,” said Local 284 President Mark Vandak. “This contract demonstrates what strong unions can accomplish for working people across the United States.”

The new contract runs through December 2023. NetJets has the right to extend the contract for an additional two years if it provides additional wage increases, hires additional aircraft technicians at its Columbus maintenance facility and satisfies other negotiated requirements.

© 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.

General Star Announces New Primary Casualty Specialist Team

(BRK.A), (BRK.B)

Berkshire Hathaway’s General Star Management Company today announced the creation of the Primary Casualty Specialist Team within the Casualty Brokerage Division.

The new team will consist of Maria Manuli (Primary Practice Leader), Ed Felcyn, Michelle Yoshida and Brianna Gatto.

“We have assembled an experienced and committed team with the knowledge and energy to grow our primary casualty business,” said Cole Palmer, Senior Vice President and Casualty and Professional Brokerage Division Manager for General Star. “We are energized about building primary business with our wholesale brokers.’

“The Primary Casualty Specialist Team will work with all of our casualty brokerage underwriters to deliver innovative solutions.” General Star President and CEO Marty Hacala added, “General Star is continuing to expand its multi-line offerings. The Primary Casualty Specialist Team is another example of our ongoing commitment to being a leader in serving the needs of the E & S marketplace.”

© 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.

Mouser Electronics Wins Top Global High Service Distributor, Again

(BRK.A), (BRK.B)

Berkshire Hathaway’s Mouser Electronics, Inc., has been honored with the prestigious Global High Service Distributor of the Year award for the fourth consecutive year by TE Connectivity (TE), a global leader in connectivity and sensors. Mouser also was recognized by TE as their top customer growth leader and top NPI distributor. The annual Electronic Distributor Awards were presented to Mouser executives at TE’s recent Global Distribution Summit.

The Electronic Distributor Awards recognize TE’s highest-performing distribution partners based on sales growth, market share growth, customer growth and business plan performance. Mouser successfully grew its TE business, outpacing overall company growth rates in key categories, including sales, customer count and pieces per customer, which ultimately increased their TE commercial connector market share. With continued strategic inventory investments and SKU count expansion, Mouser further improves its ability to support engineering needs.

“Mouser’s consistent performance and growth earned them TE’s Global High Service Distributor of the Year award for the fourth consecutive year,” said Joan Wainwright, President, Channel and Customer Experience, TE Connectivity. “Mouser continues to invest in new products, looking for solutions to help their customers grow. I am proud of the partnership TE has with Mouser and look forward to our future success as we bring innovative technology to our customers.”

“Receiving the Global High Service Distributor award is an incredible honor. We’d like to thank TE Connectivity for this important recognition. Our relationship continues to grow, and these awards are a tribute to our teams’ hard work,” said Glenn Smith, Mouser Electronics President and CEO. “TE is an industry leader and a valued business partner, and we look forward to continued success together.”
© 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.

BNSF Announces 6 New Certified, Rail-Served Sites for Development

(BRK.A), (BRK.B)

BNSF Railway has announced six new BNSF Certified Sites that are optimal for customer development along its rail network.

New certified sites include AgriTech Park in Great Falls, Mont.; Ameripointe Logistics Park in Ardmore, Okla.; Central New Mexico Rail Park in Los Lunas, N.M.; Commerce Center of Southeast Iowa in Middletown, Iowa; Gallup Energy Logistics Park in Gallup, N.M. and John W. Kelsey Business and Technology Park in Greenville, Ill.

“One of the ways BNSF works to ensure the right solution is offered to each customer is by scouting potential sites for development in advance of customer inquiries,” said Colby Tanner, assistant vice president, Economic Development. “By doing the upfront leg work to confirm a site is rail-served and shovel-ready, BNSF’s Site Certification Program creates significant value for customers by accelerating the process needed to support customer growth and development.”

The BNSF program allows the certified sites to use the “BNSF Certified Sites” distinction in marketing materials to attract new businesses. BNSF actively markets the sites on its website and promotes the sites to the economic development industry across the country.

A customer who builds a new rail-served facility on a BNSF Certified Site is expected to save between six to nine months of construction time as a result of the site’s advanced level of preparedness for development.

To be considered a certified site, industrial sites agree to submit documentation that allows BNSF to look at tangible evidence of a commitment by the owner and the community to develop a high-quality industrial park or site that is strongly supported by a public-private collaboration and existing investments.

BNSF launched its Site Certification Program in March 2016 by selecting four industrial sites in Shafter, California; Newton, Kansas; Shelby, Montana and Temple, Texas. As a result of these initial site certifications, BNSF has not only received inquiries about these sites from potential customers, but also from other communities that are interested in having an industrial site certified.

Factors known to be critical for a commercial development project include a true picture of property size and boundaries, the confirmed availability of utilities, public services, highway access, proper zoning for industrial usage and transparency of current land ownership. Not only does BNSF complete an analysis of those factors to ensure the sites match the desired economic development readiness level, but BNSF also vets assessments on environmental issues, geotechnical reviews, and endangered species considerations or cultural matters such as land with known archeological value – all to be confident of a good fit with rail expansion.

Additional details on the new group of BNSF Certified Sites are as follows:

• AgriTech Park is planned to eventually contain 1,100 acres. The site being certified at this time is approximately 197 acres and is located in north central Montana about 10 miles off Interstate 15 in Great Falls, Mont. It is about 225 miles north of Billings, Mont. and 110 miles south of the Canadian border.
• Ameripointe Logistics Park has more than 1,200 acres of developable land. The site being certified at this time is specific to 1,026 acres. The hub is located in Ardmore, Okla., which is at the intersection of Interstate Highway 35 and US Highway 70 about 100 miles south of Oklahoma City.
• Central New Mexico Rail Park contains 1,420 acres and is located about six miles west of Interstate Highway 25 in Los Lunas, N.M., approximately 30 miles south of downtown Albuquerque, N.M.
• Commerce Center of Southeast Iowa is an approximately 153 acre site located on the northern edge of the Iowa Army Ammunition Plant in Middletown, Iowa just south of U.S. Highway 34 about 90 miles southwest of the Quad Cities Metropolitan Area.
• Gallup Energy Logistics Park is expected to eventually comprise as much as 2,500 acres. The site being certified at this time is specific to 365 acres and is located a few miles north of Interstate Highway 40 in Gallup, N.M., which is 140 miles west of Albuquerque, N.M. and 190 miles east of Flagstaff, Ariz.
• John W. Kelsey Business and Technology Park is a nearly 440 acre site in Greenville, Ill. and located about 45 miles northeast of St. Louis just north of Interstate 70.

© 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.

Lubrizol Consolidates Skin Care Units Under Lipotec USA Banner

(BRK.A), (BRK.B)

Berkshire Hathaway’s Specialty chemicals company Lubrizol is consolidating its Active Organics and Lipotec skin care units, and giving them a new name, Lipotec USA.

In 2011, Lubrizol acquired Active Organics, a manufacturer and supplier of naturally-derived specialty ingredients including botanical extracts and natural performance ingredients for the personal care industry.

The following year, Lubrizol acquired Lipotec SA, a leader in the development, manufacturing and sale of personal care ingredients based on three core technologies: peptide-based active cosmetic ingredients, delivery systems and biotechnology products.

Lipotec USA, Inc. will be located at the current address of Active Organics, Inc. in Lewisville, Texas.

© 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.

NetJets Brings Michelin-Starred Chef’s Cuisine to Flyers

(BRK.A), (BRK.B)

NetJets owners flying from Washington D.C. will have the opportunity to order from menus specially-curated by Michelin-starred chef José Andrés.

Andrés is chef/owner of ThinkFoodGroup, and with partner Rob Wilder, is the team responsible for popular dining destinations in Washington DC, Los Angeles, Las Vegas and Miami and Puerto Rico. ThinkFoodGroup oversees all of José’s creative endeavors such as cookbooks, television programming, concept consulting and project development.

Andrés was named Outstanding Chef of the Year at the 2011 James Beard Foundation Awards and was named among the 100 most influential people in the world by Time magazine in 2012.

Recently he was named Dean of the Spanish Studies program at the International Culinary Center.

© 2016 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.