Lessons From Warren Buffett: You Don’t Have to Make It Back the Way You Lost It

Pouring more money into a money losing stock in the hope of making back your losses is not only dangerous, it is unnecessary Warren Buffett says. There are lots of ways to make money and there is no advantage to making your money back on the same stock that you have previously lost money, rather than buying something else.

“It is true that a very important principle in investing is you don’t have to make it back the way you lost it,” Warren Buffett said at the 1995 Berkshire Hathaway Annual Meeting. “And in fact, it’s usually a mistake to make, try and make it back the way that you lost it.”

Hear Buffett’s full explanation

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© 2022 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.

As Shares Soar, BYD Raises Stock Repurchase Ceiling 33 Percent

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The board of Berkshire Hathaway-backed BYD has approved a 33 percent rise in the share price the new energy company can pay to buy back its shares. The company can now pay up to 400 yuan each for shares repurchased from the open market.

At last month’s shareholder meeting, BYD had stated its repurchase ceiling was 300 yuan each as part of the company’s 1.85 billion yuan (US$277 million) stock repurchase plan.

The increase in repurchase price was disclosed in an exchange filing this past Thursday, and comes as BYD’s share price is flirting with a new all-time high that has seen its market value move the company into third place among global automakers ahead of Volkswagen.

BYD and Berkshire Hathaway

In 2008, Berkshire Hathaway bet on BYD’s potential, purchasing 225 million shares for $232 million. It’s an investment that has paid off handsomely. Berkshire’s original investment of $232 million had grown in value to $7.69 billion as of December 31, 2021.

© 2022 David Mazor

Disclosure: David Mazor is a freelance writer focusing on Berkshire Hathaway. The author is long in Berkshire Hathaway and BYD, and this article is not a recommendation on whether to buy or sell a stock. The information contained in this article should not be construed as personalized or individualized investment advice. Past performance is no guarantee of future results.

Dairy Queen Loses Trademark Dispute Over “Blizzard”

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Berkshire Hathaway’s Dairy Queen has lost its lawsuit against office products dealer W.B. Mason over its use of the word “Blizzard.”

Dairy Queen’s Blizzard is a popular frozen confection that the quick service restaurant chain has been selling since 1985, and the company alleged that its trademark was infringed W.B. Mason’s use of the word as names for its copier paper and bottle spring water.

U.S. District Judge Susan Richard Nelson sided with W.B. Mason in a 217-page decision released on June 10, 2022, and released on Friday. She wrote that “Dairy Queen introduced no evidence of an actual association between the two products.”

In Dairy Queen’s 2018 lawsuit that it originally filed its home state of Minnesota, the company asserted that “W.B. Mason’s actions constitute unfair competition and false designation of origin under the common law of Minnesota and all states, and have caused and are likely to cause injury to the public, and have caused and are likely to cause Dairy Queen to suffer irreparable injury.”

In response, W.B. Mason filed a lawsuit in its home state of Massachusetts.

“Indeed, no reasonable person would ever mistakenly believe that copy paper or spring water sold by W.B. Mason and emblazoned with the W.B. MASON mark and logo emanates from, or is associated with (Dairy Queen),” attorneys for W.B. Mason maintained in their filing.

Berkshire Hathaway, which acquired Dairy Queen in 1998, has not decided whether to appeal the decision.

© 2022 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 a stock. The information contained in this article should not be construed as personalized or individualized investment advice. Past performance is no guarantee of future results.

Lessons From Warren Buffett: How to Evaluate a Company’s Management

A critical component to any successful company, especially over the long term, is the quality of its management. As an investor, Warren Buffett thinks there are two key aspects of relevance to shareholders that they should consider.

“I think you judge management by two yardsticks,” Warren Buffett said at the 1994 Berkshire Hathaway Annual Meeting. “One is how well they run the business and I think you can learn a lot about that by reading about both what they’ve accomplished and what their competitors have accomplished, and seeing how they have allocated capital over time. You have to have some understanding of the hand they were dealt when they themselves got a chance to play the hand. But, if you understand something about the business they’re in, and you can’t understand it in every business, but you can find industries or companies where you can understand it, then you simply want to look at how well they have been doing in playing the hand, essentially, that’s been dealt with them. And then the second thing you want to figure out is how well that they treat their owners. And I think you can get a handle on that, oftentimes.”

Buffett added: “It’s interesting how often the ones that, in my view, are the poor managers also turn out to be the ones that really don’t think that much about the shareholders, too. The two often go hand in hand.”

Hear Buffett’s full explanation

See the complete Lessons From Warren Buffett series

© 2022 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.

Helzberg Diamonds’ Chairman and CEO Beryl Raff Retiring

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Berkshire Hathaway’s Helzberg Diamonds has announced the retirement of Beryl Raff, the company’s chairman and CEO. Raff will continue to advise and consult the Helzberg Diamonds’ executive team as non-executive chairman of the board.

With a remarkable retail career spanning 50 years, Raff has led Helzberg Diamonds with 13 years of dedicated service and unrelenting commitment. Since 2009, she has reshaped and helped the company navigate through the most tumultuous retail economic times with calm, decisive, and strategic leadership and, most importantly, a great heart.

“I’ll never forget the day I was asked to lead Helzberg Diamonds – I couldn’t wait to get started! Fast forward 13 years, it’s been an honor to be on this incredible journey with the talented people at Helzberg, and to serve among the exceptional leaders of Berkshire Hathaway,” said Beryl Raff, chairman and CEO of Helzberg Diamonds. “Together we’ve created a business that is agile and responsive to the ever-changing retail environment. Most importantly, Helzberg Diamonds is my family. The relationships I’ve built with my teams, sales associates, and customers have enhanced my life beyond measure. I’ll miss everything about leading this amazing brand, but I’m ready to start a new chapter.”

Raff guided Helzberg Diamonds to exceed a multitude of significant performance goals. As the longest serving non-family CEO at Helzberg, she made the company relevant again in the retail landscape. A constant learner and never satisfied with the status quo, she challenged herself and every area of the business to view each day as an opportunity to do something new and different to propel the company’s success.

“I want to personally thank Beryl for her industry-leading vision and one-of-a-kind contributions to Helzberg Diamonds. She will be missed,” said Warren Buffett, chairman and CEO of Berkshire Hathaway.

“When Beryl arrived in Kansas City, it wasn’t long before she called Shirley and me and asked us to re-engage with the company’s culture,” said Barnett Helzberg Jr., former chairman, CEO, and founding family member of Helzberg Diamonds. “She valued the people and brought back the heart and family-feeling culture to the company. Shirley and I are proud not only of what she has achieved but also to call her a treasured friend.”

Raff will conclude her tenure as chief executive officer on July 1, 2022. Brad Hampton, who has served as Helzberg Diamonds’ chief financial officer and executive board member for the past five years, will then take over the role of chief executive officer. Julie Yoakum will assume the role of president – chief merchandising officer, and Bruce Pryor, senior vice president – e-commerce, who has elevated Helzberg’s digital capabilities, will report to Yoakum. Mitch Maggart will assume the role of executive vice president – chief operations & real estate officer. Ellen Junger, senior vice-president – chief marketing officer, who has driven Helzberg’s customer-first marketing approach, will report to Hampton. Brad Hampton also will continue serving as CFO in the interim until a successor is selected.

“Beryl’s steadfast leadership helped position Helzberg Diamonds as an efficient and effective organization that is dedicated to meeting its customers’ needs,” said Greg Abel, vice-chairman of non-insurance operations of Berkshire Hathaway. “Helzberg’s newly formed executive leadership team has remarkable business acumen that will ensure the company continues to see success well into the future.”

In addition to serving as non-executive chair at Helzberg Diamonds, Raff will continue her service on the corporate boards of Academy Sports and Outdoors, Inc., Helen of Troy Limited and the Larry H. Miller Group of Companies.

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 a stock. The information contained in this article should not be construed as personalized or individualized investment advice. Past performance is no guarantee of future results.

Buffett Donates Shares to Three Foundations

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Today, Warren E. Buffett has converted 9,608 A shares into 14,412,000 B shares in order to donate 14,414,136 shares of Berkshire Hathaway “B” stock to five foundations: 11,003,166 to the Bill & Melinda Gates Foundation Trust, 1,100,316 shares to the Susan Thompson Buffett Foundation and 770,218 shares to each of the Sherwood Foundation, Howard G. Buffett Foundation and NoVo Foundation. The donations have been delivered today.

Mr. Buffett’s ownership of Berkshire now consists of 229,016 A shares and 276 B shares.

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 a stock. The information contained in this article should not be construed as personalized or individualized investment advice. Past performance is no guarantee of future results.

Commentary: Government Needs to Intervene as Pilot Flying J’s CEO Warns Union Pacific Embargo Would Have “Disastrous” Consequences

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With all the supply chain issues in the news this past year, one that has flown largely under the radar are mandatory Union Pacific railcar reductions (and a threatened embargo) of Pilot Flying J tank cars carrying urea for Diesel Emissions Fluid (DEF) and ethanol for automobiles.

The Class 1 freight railroad is trying to reduce the number of cars in its system by 2-3% due to congestion that has caused service problems, and Pilot Flying J is warning that an embargo of its tank cars could be “disastrous” for the long-haul trucking industry.

Union Pacific offers the sole service to a number of urea manufacturers that make the key ingredient in DEF, and DEF is required in all diesel trucks manufactured after 2010.

“A single railcar carries 21,500 gallons of DEF on average,” noted Pilot Flying J CEO Shameek Konar in his testimony before the Surface transportation Board in late April. “A single truck takes in 7 gallons of DEF every time they fill. . . .That implies a single railcar is providing 7,000 trucks of DEF fill.” He went on to note every missed railcar “reduces trucking potential mileage by 5 million miles.”

While Union Pacific maintains that it is trying to reduce the number of railcars in its system to reduce congestion, Konar feels that Pilot is being incorrectly penalized based on data that looked at increases in shipments between January 2022 and March 2022 that inaccurately reflect an increase in Pilot shipments, noting that it has not increased the number of railcars it is adding to UP’s system. Instead it has just become the shipper of record for a number of companies that previously shipped the railcars in their own names.

“The total number of cars has stayed the same,” Konar testified.

Konar noted that unless Pilot agreed to UP’s 26% to 50% mandated reduction in shipments, they have been threatened with shipping embargos. He added that he was unaware of any other company being asked to reduce their shipping that dramatically.

Pilot Flying J operates one the largest DEF supply networks in the country, and accounts for approximately 20 percent of the US’s over the road diesel supply and 30 percent of the DEF supply. It supplies 300 million gallons of DEF to truckers on an annual basis.

Konar said that UP’s actions come during a time when diesel inventories are already running 10-15% below the historic lows over the past five years, and that the railcar reductions “will likely sideline trucks and reduce trucking capacity.”

He also added that a 50 percent reduction would also raise fuel prices and cause DEF to run out at some locations.

As for the cuts’ impact on automobiles, Konar also warned that UP’s cutting ethanol railcar shipments by 50 percent for the ethanol needed to blend with gasoline to raise octane that originates at its plant in Nebraska and is shipped by UP to markets in Arizona and Nevada will “substantially reduce the amount of gasoline available in these markets.”

Konar believes that the railroad’s actions are “flawed, disproportionate and unprecedented.” He added that “the current situation is untenable for us.”

With record CPI inflation numbers reported just this past week, if there is any area that calls for the direct intervention of the heads of the Department of Transportation and the Department of Commerce this would be it.

Both the Commerce secretary Gina Raimondo and the Transportation secretary Pete Buttigieg need to directly focus on this issue before a trucking bottleneck sends inflation far higher.

Berkshire Hathaway and Pilot

In 2017, Berkshire Hathaway made a $2.76 billion investment in Pilot, obtaining an initial 38.6 percent stake in the company, and Berkshire will become the majority owner in 2023.

© 2022 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 a stock. The information contained in this article should not be construed as personalized or individualized investment advice. Past performance is no guarantee of future results.

Lessons From Warren Buffett: Having Opinions on the Wrong Things Can Harm Your Investing

Will the stock market go up? Will it go down? There are so many different forecasts on what markets will do that it is tempting to try and form your own opinion in order to bolster your investing strategy. Warren Buffett says don’t do it. Having bullish or bearish opinions about things that are ultimately unknowable is not only a waste of time, but it can also keep you from focusing on what you can know about.

“Charlie and I never have an opinion about the market because it wouldn’t be any good and it might interfere with the opinions we have that are good,” Warren Buffett said at the 1994 Berkshire Hathaway Annual Meeting. “If we’re right about a business, if we think a business is attractive, it would be very foolish for us to not take action on that because we thought something about what the market was going to do, or anything of that sort. Because we just don’t know. And to give up something that you do know and that is profitable for something that you don’t know and won’t know because of that, it just doesn’t make any sense to us, and it doesn’t really make any difference to us.”

Hear Buffett’s full explanation

See the complete Lessons From Warren Buffett series

© 2022 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 Making Progress on Adding 4th Track in San Bernardino Corridor

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BNSF Railway Company is making progress in its plans to add a fourth main track in San Bernadino, California. At its meeting last week, the San Bernardino City Council voted to certify the Final Environmental Impact Report (EIR) for BNSF’s proposed gap closure project designed to expedite the flow of trains in and out of its existing San Bernardino Intermodal Facility.

The project will improve the facility’s efficiency, with approximately 4.3 miles of new fourth main track in two segments along the current BNSF corridor from the BNSF overpass at State Street/University Parkway to its intermodal facility.

The project will enhance goods movement for this critical BNSF east-west route that connects the Ports of Los Angeles and Long Beach with the rest of the nation.

“We’re pleased that this project is moving forward, as it reflects our continued commitment to improve efficiency for our customers, while providing important benefits to the local community,” noted Tom Williams, Group Vice President – Consumer Products Business Group.

By eliminating track bottlenecks that forced trains to wait to enter BNSF’s facility, train idling will be reduced by 43%, with commensurate noise and air quality improvements. BNSF is also investing in new and enhanced roadways with new sidewalks and lighting, as well as stormwater, drainage and other improvements that exceed what is required.

Earlier this year, BNSF announced a $3.55 billion 2022 capital investment plan, of which $283 million is allocated to California. This project is part of that commitment and now moves into final design/engineering, with construction expected to be complete by 2024.

© 2022 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 UK & Alexander Dennis Limited (ADL) Deliver 1,000th Electric Bus

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Berkshire Hathaway-backed BYD UK and Alexander Dennis Limited (ADL) and has delivered its 1,000th zero-emission bus.

The BYD ADL Enviro400EV double decker was part-funded by the Scottish Government and handed over to Stagecoach Bluebird in Aberdeen during Scottish Bus Week in the presence of the Scottish Government’s Minister for Just Transition, Employment and Fair Work.

Working in partnership since 2015, ADL is a subsidiary of leading independent global bus manufacturer NFI Group Inc. (NFI), and BYD is a global leader in batteries, energy management and electric mobility.

Sales of the market-leading, British-built BYD ADL Enviro200EV single decker and BYD ADL Enviro400EV double decker have accelerated rapidly as the transition to zero-emission mobility gathers pace in the United Kingdom. While it took five years to reach the 500th BYD ADL electric bus, the partnership has now delivered its 1,000th vehicle just one year later.

This bus is the last of a fleet of 22 BYD ADL Enviro400EV double deckers which Stagecoach ordered they have since confirmed an order for an additional 13 electric buses of the same type for Aberdeen following the award of funding through the Scottish Government’s follow-on scheme, the Zero-Emission Bus Challenge Fund.

BYD and Berkshire Hathaway

In 2008, Berkshire Hathaway bet on BYD’s potential, purchasing 225 million shares for $232 million. It’s an investment that has paid off handsomely. Berkshire’s original investment of $232 million had grown in value to $7.69 billion as of December 31, 2021.

© 2022 David Mazor

Disclosure: David Mazor is a freelance writer focusing on Berkshire Hathaway. The author is long in Berkshire Hathaway and BYD, and this article is not a recommendation on whether to buy or sell a stock. The information contained in this article should not be construed as personalized or individualized investment advice. Past performance is no guarantee of future results.