Berkshire Hathaway Specialty Insurance Expands Insurance Offerings in Asia

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Berkshire Hathaway Specialty Insurance Company (BHSI) today introduced Executive First Private Company Portfolio and Executive First Nonprofit Organisation Portfolio policies in Asia.

“Our Private Company and Nonprofit Organisation Portfolio forms provide far-reaching, contemporary coverage backed by BHSI’s financial strength,” said Nero Shiu, Senior Manager, Executive & Professional Lines, BHSI in Hong Kong. “Both policies reflect our commitment to providing the simple, concise solutions customers need for multifaceted management liability risks in today’s world.”

The Private Company Portfolio extends coverage to both individuals and the entity and includes Directors & Officers Liability, Employment Practices Liability, and Employee Dishonesty coverages.

The Nonprofit Organisation Portfolio offers similar coverages, with the addition of Professional Indemnity protection to address the specific needs of a nonprofit organisation. Key features include pre-investigations cost coverage, court attendance coverage, and advancement of defence costs. Professional Indemnity protection includes coverage for corrective actions to help nonprofit organisations mitigate potential losses and avoid claims.

“Our new policies address the full range of claims private companies, nonprofit organisations, and their directors and officers may encounter today — from lawsuits arising from breach of compliance and disclosure requirements, to employee theft, to claims sparked by the acts of employees,” said Edwin Sim, Assistant Vice President, Executive & Professional Lines, BHSI in Singapore.

© 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’s Apparel and Footwear Businesses Have Modest Growth

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Berkshire Hathaway’s revenues generated by its apparel and footwear businesses, including Fruit of the Loom, H.H. Brown Shoe Group, Garan, and Brooks Sports, had modest growth in 2017.

Sales increased 1.2 percent in 2017 compared to 2016, to $4.2 billion.

According to Berkshire Hathaway’s 10K filing, pre-tax earnings from apparel and footwear businesses were up 5 percent in 2017, primarily due to increased earnings from the footwear businesses.

Berkshire Hathaway’s footwear business includes Brooks Sports and H.H. Brown Shoe Group, which includes Justin, Tony Lama, Nocona, Chippewa, BØRN, B•Ø•C, Carolina, Söfft, Double-H Boots, Nursemates and Comfortiva. Apparel businesses largely consists of Fruit of the Loom, which includes Fruit of the Loom, Jerzees, Vanity Fair, Russell Athletic and Spalding. Berkshire Hathaway also owns Garan, the children’s apparel brand.

In 2016, apparel and footwear revenues in 2016 declined $81 million (1.9 percent) compared to 2015, reflecting lower footwear sales and the impact of a divestiture by Fruit of the Loom in 2015. Earnings of its apparel businesses increased 22 percent in 2016, primarily attributable to lower restructuring costs and a loss in 2015 from the disposition of a Fruit of the Loom operation, partly offset by lower earnings from its footwear businesses. In 2015, Fruit of the Loom exited an unprofitable intimate apparel business in Europe.

Overall sales in its Consumer Products segment rose 10.0 percent in 2017 to $12.1 billion. Besides the footwear and apparel business, the Consumer Products segments includes Forest River (leisure vehicles), Duracell (batteries), Larson Juhl (custom framing products) and Richline (jewelry).

While employee levels for most of Berkshire’s brands were relatively stable, Russell Athletics had a major decline of 1,020 employees as compared to 1,551 in 2016.

In 2017, Fruit of the Loom’s Russell Athletic brand ceased making athletic uniforms. The move marked the end of a long history in a product line that in the last decade had seen skyrocketing marketing costs.

© 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.

Berkshire Hathaway Acquires Sonnax Industries

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Berkshire Hathaway has made another “bolt-on” acquisition and taken over Sonnax Industries, Inc., via a sale of the company’s assets, to form a new subsidiary of Berkshire’s Marmon Holdings.

The new company will operate as Sonnax Transmission Company.

Terms of the acquisition were not disclosed.

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.

As an employee-owned company, the sale was overwhelmingly approved by vote of Sonnax employees. Steve Boyer becomes President of Sonnax Transmission, and will work closely with Sonnax Industries CEO Tommy Harmon to ensure a smooth transition into Marmon.

“Joining Marmon affords Sonnax employees the support and stability of a very successful global organization while maintaining its homegrown, entrepreneurial feel,” Harmon said. “Above all, this expands what we can deliver to our customers, so our future is bright.”

Sonnax Transmission joins Marmon’s Automotive Aftermarket group, whose businesses are well known for providing innovative, engineered solutions for aftermarket installers.

Berkshire’s Marmon Holdings comprises about 175 independent manufacturing and service businesses with facilities in 23 countries and total revenues exceeding $7.7 billion in 2017.

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.

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.

Berkshire Hathaway Launches New Business Aimed at Purifying Water for Food Service Industry

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Berkshire Hathaway’s Marmon Water Technologies has announced the creation of Marmon Water Foodservice.

The new business will sell its Finity brand of filtration products to foodservice operators ranging from restaurateurs to hotel chefs, foodservice equipment OEMs, and beverage brand owners.

“Impurities in the water supply can lead not only to health issues, but also adverse effects on the taste of food and beverages and even the life of foodservice equipment,” comments Jeff Holcomb, who is President of Marmon Water Foodservice. “Our Finity products provide an easy and cost-effective way for foodservice operators to make their water as clean and as pure as possible.”

Finity uses proprietary water filtration technology to provide the best possible quality. “Patented FACT media technology allows for top-of-the-line filtration with minimal pressure drop,” explains Ric Knasel, Vice President of Sales and Marketing. “We’re talking 0.2-micron filtration for protection against bacteria and cysts.” In key applications such as post mix dispensing, Finity Advanced Chloramines reduction products are certified to perform at up to three times the capacity of competitor products at comparable flow rate and footprint.

The systems are available with a sensor and Wi-Fi monitor to alert the owner when a new filter should be installed. Maintenance is simple, too. The Finity system comes with an easy-to-access push bar used to release filter cartridges that are color coded by application to ensure proper replacement. The Finity product line has achieved NSF Standards 42 and 53 and is available for purchase through authorized resellers.

© 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 eSupply Builds $45 Million Fullfilment Center

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Berkshire eSupply will build a new $45 million fullfilment center and office facility in Novi, Michigan.

The construction comes at one of Berkshire Hathaway’s newest companies.

In the summer of 2017, Berkshire Hathaway 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.

With more than 1,000 suppliers, the company has more than 1 million industrial/MROP products available online, dispersed from three strategically located distribution centers in Detroit, Los Angeles and Houston.

The 57 acres of currently vacant property will be converted into a 193,230-square-foot warehouse with mezzanines and an 18,380-square-foot office building, along with 359 parking spaces.

The two-level fulfillment center will have 17,000 square feet of office space, 136,000 square feet of warehouse space, 13,650 square feet will be for a distribution center, and shipping/receiving will occupy 21,000 square feet.

The new facility will create as many as 240 new jobs.

© 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.

Special Report: Opportunities Abound for Berkshire in the Growing EV Market

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Everyone can see it coming, petrol, gas, diesel, whatever you want to call it, will play a diminishing role in fueling cars of the future. It’s already playing a diminishing role right now.

Let’s look at a few numbers.

In 2016, 750,000 EV cars were sold worldwide, with Norway the highest in market share at 29%, and China the largest in total units sold. And, 2016 marked the first time that EVs passed more than 2 million vehicles on the road worldwide.

While those numbers are still tiny when compared to the 2 billion vehicles in service around the world, they confirm that the EV is not only here to stay, but will play an ever larger role in personal and commercial transportation.

Credit Tesla with making the EV fashionable in the U.S., and drawing in other car makers that are now debuting their own models. In fact, Tesla has made the EV so fashionable among high-end buyers that in Europe Tesla’s Model S outsold both the traditional petrol-fueled BMW 7 series and Mercedes-Benz S class.

It’s easy to go down the list of carmakers that are showing off their EV vehicles at this year’s auto shows. Volkswagen, which was committed to diesel cars before its huge emissions scandal, is now touting its EV retro-styled concept bus, the I.D. Buzz. And Jaguar’s heading to market in late-2018 with its I-Pace SUV.

BMW, Hyundai, Nissan, Porsche, Toyota, and Volvo, to name a few, are all announcing new EV models or EV versions of existing models. Even Bentley has an all-electric four-door coupe in the works for 2019, and a goal to have an electric version of each of its models by 2025.

For drivers in China that purchased 600,000 EVs in 2017 at the lower-end of the market, it’s China’s BYD that led the way, with Chery, SAIC Wuling, Hawtai, and BAIC all moving more than 3,000 units in December 2017 alone.

The new energy company BYD, which Berkshire Hathaway has a roughly $1.9 billion stake in, sold almost 14,000 ev cars in February 2018, and is the global sales leader despite not being in the U.S. market except for its pure-electric buses.

Back in the U.S., Tesla’s Model 3 is aimed at bringing the company’s cars to a whole new set of consumers, and it’s not the only one making inroads at making an EV with true extended driving range affordable.

GM’s more mainstream price point Chevy Bolt, which boasts a 238-mile range, is now heading towards the company’s goal of moving 30,000 units a year.

All this EV progress bring up the question of what’s Berkshire Hathaway’s role in it?

It’s likely not as a manufacturer.

Berkshire’s roughly 8 percent stake in BYD, and its stake in GM, which was actually down 10 million shares (-16.7%) as of its most recent 13-F filing, doesn’t indicate Warren Buffett wants to be anything but a passive investor in making cars.

Berkshire will certainly play a role in new and used EV sales, as its Berkshire Hathaway Automotive Group of 78 independently operated dealerships with over 100 franchises in 10 states, gives the company a slice of that market.

However, fueling EVs is also right up Berkshire’s alley.

Not the Cars, the Fuel

Berkshire’s in a number of interesting spaces when it comes to fueling EVs. As the EV market-share grows, so do the number of consumers that will be charging their vehicles at home.

When it comes to home charging, its utilities, including PacifiCorp, MidAmerican Energy and NV Energy generate and supply power in twelve states. And overseas, Berkshire’s Northern Powergrid delivers electricity to 3.9 million homes and businesses in England.

Berkshire also is a big player in the electricity transmission business. Its BHE U.S. Transmission owns over a thousand miles of transmission lines in the southern U.S. and California. In Canada, Berkshire’s AltaLink is the largest regulated transmission company in Alberta, supplying electricity to more than 85% of the population.

Taking the EV on the Road

Even though much of the EV market will be charging its cars overnight at home, there is still a big need to be able to quickly charge your vehicle while traveling.

Out of necessity, Tesla has made a substantial investment in this space, to-date building 1,191 Supercharger Stations with 9,184 Superchargers.

These superchargers already benefit Berkshire in areas that get their power from Berkshire-owned utilities.

And a recent Berkshire acquisition has the potential to greatly boost their own capability in this space.

The New King of the Travel Center

In October 2017, Berkshire took a 38.6 percent equity stake in Pilot Flying J, the largest operator of travel centers in North America. That stake will grow in 2023 when Berkshire will become the majority shareholder by acquiring an additional 41.4 percent equity.

With 750 locations across the U.S. and Canada, and more than $20 billion in revenues, Pilot Flying J already plays a substantial role in fueling cars and commercial trucks. It’s also a natural fit for EV charging stations. And while EV ranges continue to grow, the need to charge your vehicle away from home is also growing.

That’s Not All

The charging station space is so new that there are likely to be multiple opportunities for Berkshire, as the lack of a need for storage tanks, which kept traditional petrol fueling stations centralized, means that charging stations can fit into public parking lots, mall and office building parking, and other spaces that were inconceivable for a gas station.

For example, in Oregon, PacifiCorp just received the greenlight to build seven charging stations as part of a $4.64 million transportation electrification plan.

PacifiCorp plans to install seven “pods” that would include multiple dual-standard direct current fast chargers, which can provide up to 80 miles of driving range in 20 minutes of charging, and at least one level 2 port, which offers up to 20 miles of range in an hour of charging.

Whether utilities will ultimately be allowed to own large networks of charging stations remains to be seen, as some environmental groups and potential competitors in the space are already objecting to that concept.

However, the future looks bright for Berkshire. It’s got the electric power, it’s got the transmission, and it’s even got the car dealerships and travel centers that clearly will make it a player in the growing EV market.

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.