Month: November 2016

Dairy Queen Has Big Plans For Riverside County, California

Post author By David Mazor
Post date November 15, 2016

(BRK.A), (BRK.B)

Dairy Queen has big plans for Riverside County, California. Fourteen new Dairy Queen “Grill & Chill” restaurants will be developed in the area over the next five to ten years.

Currently, Blizzard lovers have to be satisfied with a tiny walk-up only stand that dates from the 1950s. While it’s charming, it doesn’t showcase the DQ experience that has greatly boosted the companies sit-down business.

Dairy Queen is aggressively looking for franchisees for underserved areas, and the Riverside area is one of its top priorities.

The first of the new DQ Grill and Chills was opened in Cathedral City in September 2015, and a lot more will be coming.

Major California Expansion

Dairy Queen is also planning to triple its northern California locations, adding another 200 locations to its existing 98 locations, as Dairy Queen hasn’t been a common sight in the Bay area, with only 12 locations currently open.

In all, Dairy Queen, which has moved from a summer treats business to a year-round food and ice cream business model, plans to add 400 locations in California.

For more information read a Mazor’sEdge special report on Dairy Queen.

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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.

Tags Dairy Queen

Commentary MiTek

Commentary: Legalization of Marijuana Means “Gold Rush” for Berkshire Hathaway

Post author By David Mazor
Post date November 14, 2016

(BRK.A), (BRK.B)

Marijuana may make its users relaxed and sluggish, but it will be a booming high time for one of Berkshire Hathaway’s companies.

Based in New Berlin, Wisconsin, Cubic Designs builds prefabricated custom mezzanine systems, standard steel platforms, pipe racks and canopies that add space to facilities.

It’s the kind of space that is needed for marijuana growing operations.

With California, Nevada, Arizona, Massachusetts and Maine all having just legalized the growing and sale of pot within their borders, Berkshire Hathaway’s Cubic Designs, a unit of MiTek, now has plenty of opportunities to market its wide variety of special platforms that maximize floor space in warehouses.

In addition, Arkansas, Florida, Montana, and North Dakota all just legalized the medical use of marijuana, which means that growing and distribution operations will begin in those states, as well.

For Cubic Designs, the marketing plan is ready and tested. When marijuana was legalized in Colorado, the company mailed fliers to marijuana dispensaries touting that they could double their growing space and improve their profits using Cubic Designs’ systems.

With the U.S. Cannabis Spot Index price currently at $1,393 per pound, as of November 4, 2016, maximizing growing and storage space can make millions of dollars of difference for a grower.

The New Gold Rush

Unlike most commodities that get grown in one region and shipped for sale in another, there is inherent duplication within the marijuana industry that benefits equipment suppliers. With marijuana still illegal on the Federal level, the harvested plants can’t cross interstate lines, so all the growing, processing and distribution operations need to be established separately in each state. These redundant operations offer business opportunities for establishing every phase of the infrastructure needed to support.

Much like the California Gold Rush in 1849 made big money for people supplying the panning equipment, this new “Marijuana Gold Rush” means lots of money to be made for equipment suppliers for growers and retailers.

With twenty-five percent of the U.S. population suddenly having access to legal marijuana, the growth opportunities for Cubic Designs will have a lot of upside ahead of it.

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Tags MiTek

Minority Stock Positions Stock Portfolio

BYD’s Pure Electric Buses to Hit the Streets in Macau

Post author By David Mazor
Post date November 11, 2016

(BRK.A), (BRK.B)

BYD Company – the Chinese battery and vehicle manufacturer – has signed an agreement to introduce Macao’s first pure electric buses through local tourism operator Ocean View Tour and Travel Agency.

Motor vehicle carbon emission is a major source of air pollution in Macao, a tiny city that experienced a 73 percent increase in the number of motor vehicles between 1999 and 2010.

According to figures by the Macao Special Administrative Region government, electric buses will produce 56 percent less carbon dioxide and 60 percent less nitrogen oxide for every hundred kilometers traveled compared to diesel buses.

The Macao SAR government has taken measures to improve the local living environment since 2011.

“Macao is a tourist destination with millions of visitors every year. Our electric buses are well built to navigate the city’s meandering roads and steep slopes,” said Liu Xueliang, General Manager of BYD’s Asia Pacific Sales Division. “The introduction of pure electric vehicles demonstrates our joint commitment to environmental protection while boosting the image of Macao as an international city.”

BYD and Berkshire Hathaway

In 2008, Berkshire Hathaway bet on BYD’s potential, purchasing 225 million shares. It’s an investment that has paid off handsomely. Berkshire’s original investment of $230 million is now worth roughly $1.77 billion.

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

Tags BYD Co

Marmon Group

Cornelius Says “Concentrate”…Beer That Is

Post author By David Mazor
Post date November 10, 2016

(BRK.A), (BRK.B)

Cornelius, Inc., a Marmon/Berkshire Hathaway company, and the leading global producer of beverage dispensing systems, is partnering with Sustainable Beverage Technologies, a Colorado based developer of high density beer technologies, to showcase new craft beer formulas to beverage brands and foodservice retailers worldwide at BrauBeviale 2016 located in Nuremburg, Germany.

Sustainable Beverage Technologies (SBT) has partnered with four major breweries: New Belgium, Crazy Mountain, Denali and Flat12 Bierwerks to produce craft beer using high density technology. High density craft beer is a 6:1 concentrate made with traditional ingredients (water, malt, hops, and yeast) that is blended with carbonated water and baseline alcohol. The result, the company claims, is a taste profile that matches the premium beer produced by each brewery.

“These beers taste as good as any other craft beer being served from draft. I wouldn’t know they were produced any differently.” – Grandy Hull, Lead Brewer at New Belgium Brewing.

By creating high density beer using the patented SBT BrewVo® technology, craft brewers benefit from increased production and supply chain efficiencies, allowing their brands to become more accessible to consumers. Delivering high density craft beer through an innovative draft format, this technology will allow draft beer entry into previously inaccessible outlets lacking space for conventional kegs.

Kevin Selvy, Founder and CEO of Crazy Mountain Brewing Company, explained: “We’re excited to be involved with this technology. It is going to fundamentally change the landscape of how the beer industry functions.” Sassan Mossanen, President of Denali Brewing Co., said: “With this approach, we will be able to grow our brand into new markets we couldn’t previously serve [profitably].”

Cornelius touts as revolutionary its next generation tap system that is exclusive to the high density craft beer made by SBT.

The next generation system will support bars and restaurants with a cost effective increase in brand offerings. Jeff Garascia, Senior Vice-President of Growth & Innovation at Cornelius, had this to say,

“Cornelius has partnered with SBT to create a new draft beer platform that provides craft breweries with an opportunity to enter thousands of new locations. The Cornelius Four Paq and Six Paq craft beer dispensers can dispense up to six draft beers in the space used by one today. The use of high density beer dispenser will expand the market for craft beers on draft while providing economic and sustainability benefits across the supply chain. We expect to see high density beer make an impact in the market in 2017 and beyond.”

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Tags Cornelius, Marmon Group

Acquisitions CTB

CTB Acquires Volito Group B.V.

Post author By David Mazor
Post date November 9, 2016

(BRK.A), (BRK.B)

Do you want chicken or fish? Whether you are picking an airline meal, or the entrée at your favorite restaurant, Berkshire Hathaway is very likely to be involved in bringing it to you.

Just days after Berkshire Hathaway’s CTB, Inc. finalized the purchase of a majority share in Cabinplant A/S, one of the world’s leading manufacturers of processing equipment for vegetables and fish, CTB has announced that it has acquired the Volito Group B.V., a designer and manufacturer of cage-free layer housing systems.

Volito has three locations in the Netherlands, including its headquarters in Veenendaal and manufacturing plants in Dodewaard and Amersfoort, all southeast of Amsterdam, and works through a global partner network.

Terms of the transaction were not disclosed.

Volito’s core products include aviary and nest systems for commercial layers (hens which lay eggs for consumption), nest systems for layer breeders (hens which lay hatching eggs) and rearing systems, as well as egg collection equipment, slats and perches. One of the earliest manufacturers of aviary systems, Volito’s cage-free hen housing complements the laying system offerings of CTB’s Chore-Time business unit, which include Chore-Time’s cage and colony systems, its widely used Ultraflo® feeding system, and drinkers, egg collectors and ventilation equipment.

“An early pioneer of aviary systems, Volito brings a long legacy and knowledge base of cage-free systems,” said CTB’s chairman and chief executive officer Victor A. Mancinelli. “Their first designs were installed in Switzerland more than 25 years ago, and their installed base now covers many other European countries as well,” Mancinelli went on to say. “Volito’s products will provide our customers with a complete line of aviary and nest systems through our worldwide Chore-Time distribution network.”

Volito was founded in 1989 based on the vision that aviary systems were the future, even outside Switzerland. Since then, the company has successfully installed and is servicing thousands of poultry houses with aviary systems and/or nest systems. In recent years, the company added new ranges of aviary systems, including Valego, an advanced and patented nest system for layers and breeders.

Commenting on the acquisition, Hans Donker, general manager of Volito, stated, “We are pleased that Volito will now have the resources and backing of CTB to extend its reach into additional market areas. CTB is a strong partner and will also benefit from Volito’s expertise. Our long history with cage-free technology should be welcomed by Chore-Time’s customers seeking cage-free options.”

Tags CTB Inc.

Minority Stock Positions Stock Portfolio

BYD Wins Bid to Bring Pure Electric Buses to Cape Town, South Africa

Post author By David Mazor
Post date November 8, 2016

(BRK.A), (BRK.B)

BYD Company – the Chinese battery and vehicle manufacturer – will supply a fleet of 11 battery electric buses to the city of Cape Town, South Africa.

The City of Cape Town has awarded the tender for the procurement of
battery-powered electric buses and ancillary equipment for the MyCiTi
service to BYD SA Company.

Cape Town aims to become the first city on the African continent to
use electric buses for public transport. The city’s transport
administration will initially use the easy access 12-metre-long buses
as an express service on a 35 to 40-kilometre route between the city’s
central business district and the Metro South East region.

The administration plans to subsequently reassign the buses to Cape
Town’s Bus Rapid Transit (BRT) system following completion of
supporting infrastructure.

“Electric buses generate less noise than those with traditional diesel
engines and provide a smoother ride for passengers and bus drivers,”
said AD Huang, General Manager of BYD Middle East and Africa Auto
Sales Division. “These clean-running buses will help provide Cape
Town’s residents with a more sustainable public transport system while
assisting the country in achieving its environmental ideals.”

Huang added, “Cape Town’s deployment of electric buses is the first
showcase of a clean and sustainable transport system in Africa, the
success of this project will encourage other African cities to develop
their own green public transport projects.”

Cape Town aims to reduce carbon emissions through a range of policies
that affect households, businesses, the city’s transport system and
electricity generation. Its “Energy 2040 Strategy” outlines a plan to
increase transport efficiency so that carbon emissions targets are
reduced by 3.2 percent by 2020. Transport accounts for 34 percent of
carbon output in this city of 3.8 million people.

“BYD could potentially supply five more single deck electric buses and
five additional double decker electric buses, depending on the city
government’s approval,” AD Huang said. “We look forward to continuing
our contribution to the development of South Africa’s renewable energy
scene.”

BYD’s battery electric bus employs many advanced technologies
developed in-house by a staff of more than 16,000 R&D engineers,
including the BYD iron-phosphate battery that can sustain more than
80% of capacity even after 4,000 cycles. Combined with BYD’s
proprietary in-wheel hub motors and regenerative braking system, the
BYD “ebus” offers the lowest life cycle cost of ownership compared to
conventional diesel buses.

The BYD ebus delivers a host of operational and environmental benefits
for public transit riders, bus operators and residents of the
community, including a quiet and comfortable ride without vibrations,
jerks, or the noise associated with the conventional buses and
combustion engines. The bus can also drive for more than 250
kilometers – even in heavy city traffic – on a single charge.

As of July 2016, BYD bus fleets have completed more than 191 million
kilometers “in revenue service” and have been evaluated by more than
170 cities in 38 countries and regions around the world. To date, BYD
has built over 10,000 electric buses globally.

BYD and Berkshire Hathaway

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

Tags BYD Co, Stock Portfolio

Acquisitions CTB

CTB Completes Purchase of Majority Share in Denmark-Based Cabinplant

Post author By David Mazor
Post date November 7, 2016

(BRK.A), (BRK.B)

Berkshire Hathaway’s CTB, Inc. has finalized the purchase of a majority share in Cabinplant A/S, one of the world’s leading manufacturers of processing equipment for vegetables and fish.

Cabinplant’s poultry processing equipment complements that made by CTB’s Meyn poultry processing subsidiary.

The acquisition agreement was originally announced on September 5, 2016. Terms of the transaction were not disclosed.

The acquisition adds tailor-made processing solutions for fish and shellfish, fruit and vegetables, and convenience foods, as well as additional poultry processing equipment to CTB’s existing line of Meyn processing equipment for poultry. Cabinplant’s high-yield processing solutions broaden the range of processing options CTB can offer customers in the food industry.

About CTB

Acquired by Berkshire Hathaway in 2002 for $180 million, CTB is a leading global designer and maker of systems and solutions for storing, conveying and preserving grain; producing poultry, pigs and eggs; and processing poultry, fish, vegetables and other foods.

Tags CTB Inc.

Berkshire Hathaway Energy

Money Flowing Into Solar Development to Benefit Berkshire Hathaway

Post author By David Mazor
Post date November 4, 2016

(BRK.A), (BRK.B)

Money is flowing into the solar development and construction sector, and this could benefit Berkshire Hathaway’s portfolio of utilities.

The money speeds the construction of utility-scale solar power projects that utilities then purchase to replace antiquated fossil-fuel powered generation plants.

One example is Origis Energy, a Miami based international solar development and construction firm with a photovoltaic portfolio of over 600 megawatts, and Baltisse, the European private investment firm of Mr. Filip Balcaen.

Baltisse has committed to provide up to a total of $100 million in growth capital for Origis. The capital comes as private investment money is ramping up investment in the U.S. solar market.

The funding empowers Origis to strengthen its offerings to utilities and large scale corporate energy buyers seeking solar as a clean energy alternative for their power generation needs.

Origis has already developed more than 100 projects worldwide totaling 600+ megawatts to date of solar capacity for utilities, including Berkshire Hathaway’s Pacific Corp.

“The strength of our balance sheet as an independent power producer in the U.S. is a critical consideration for utility and corporate procurement executives,” said Guy Vanderhaegen, Chief Executive Officer of Origis Energy. “We have crossed major milestones in our work for leading utilities in the U.S. This investment and the board guidance of Filip Balcaen makes Origis an even stronger partner to fulfill the solar objectives of large scale energy users in the U.S.”

Berkshire Hathaway Energy has been busy buying up renewable energy projects, including two portfolios of projects developed by Geronimo Energy, LLC. that were acquired in 2015 and 2016.

Tags Berkshire Hathaway Energy

Berkadia

Berkadia Hits Overdrive as it Expands Operation in Houston

Post author By David Mazor
Post date November 3, 2016

(BRK.A), (BRK.B)

With its Houston-based team on target to reach $3.5 billion in debt production volume, Berkadia, Berkshire Hathaway’s joint venture with Leucadia, has expanded its Houston operations in order to accommodate the growing team of investment sales and commercial lending experts.

The Houston Berkadia team tripled its office space when it relocated from a 6,200 square foot space at 2200 Post Oak Boulevard to an 18,000-square-foot office at 2229 San Felipe Street.

At the same time, it noted that it its mortgage banking team had reached a milestone in its production volume, on target to hit $3.5 billion in debt production volume alone over the last 18 months.

To accommodate this massive growth in production, Berkadia’s Houston team has added approximately 30 new professionals over the past 18 months, warranting the more expansive office space for the larger team.

“We’re very bullish on the Houston market in the long-term and we are seeing tremendous demand for Berkadia’s expertise in commercial real estate and mortgage banking both locally and regionally,” said Tucker Knight, Berkadia Senior Managing Director. “Our business has expanded despite many in the market contracting.”

Added Berkadia Senior Managing Director Ryan Epstein, “Berkadia provides a combination of investment sales and mortgage banking expertise all under one roof, which has resonated wit’h clients across the spectrum. We anticipate a very strong pipeline of business in the months and years ahead.”

About Berkadia

Founded in 2009 as a 50/50 joint venture between Berkshire Hathaway and Leucadia National Corporation, Berkadia is a third-party commercial mortgage servicer, as well as an approved lender for Fannie Mae, Freddie Mac, and HUD/FHA. The company was among the top Freddie Mac and Fannie Mae multifamily lenders for 2013.

Berkadia owes its origins to GMAC Commercial Mortgage Corporation, which was acquired in 2009 by Kohlberg Kravis Roberts & Co., Five Mile Capital Partners LLC, and Goldman Sachs Capital Partners. Christened Capmark Financial, the company had $10 billion of originations in 2008 and a servicing portfolio of more than $360 billion before running into bankruptcy in October 2009.

In a deal approved by the bankruptcy court, Capmark sold its mortgage loan and servicing to the newly formed Berkadia in a deal worth $515 million.

The deal brought Berkshire into the heart of the commercial loan serving business, and the company has one of the largest commercial real estate servicing portfolios.

Tags Berkadia

Berkshire Hathaway Specialty Insurance Insurance

Berkshire Hathaway Specialty Insurance Rolls Out Civil Liability Insurance for Financial Institutions in Australia and New Zealand

Post author By David Mazor
Post date November 2, 2016

(BRK.A), (BRK.B)

Berkshire Hathaway Specialty Insurance Company (BHSI) has launched Professional First Financial Institutions Civil Liability Insurance in Australia and New Zealand.

“Many forces have shifted the risk landscape for financial institutions, from the lessons learned from the complex litigation of the global financial crisis, to the rise of new disruptive technologies and novel ways of conducting business,” said Vincent Barker, Manager, Financial Institutions, BHSI, Australia. “We’re pleased to offer a market-leading civil liability policy wording that keeps pace with these changes and provides clarity of coverage and flexibility for financial institutions.”

BHSI’s new policy expressly addresses the broad range of claims financial institutions can face as they provide diverse services to many different parties. It uses an expansive ‘professional services’ trigger not linked to a client, fee or specified service. The policy also covers bail bond costs, deprivation of assets expenses, court attendance and prosecution costs, providing peace of mind to insured professionals.

BHSI’s new Civil Liability policy also includes pre-investigation loss coverage. Contractual liability and mandatory contractual terms coverage is provided as well.

BHSI has a broad appetite for mid-size and large financial institutions of all types—from insurance companies and banks, to financial administrators, financial technology providers, and M&A/corporate advisory firms.

“Our new Civil Liability policy wording for financial institutions provides certainty for the often complex risks of the financial institutions space,” said Karen Poching, Senior Underwriter, Executive and Professional Lines, BHSI, New Zealand. “We are pleased to add this essential coverage to our growing suite of policies for financial institutions.”

Tags Berkshire Hathaway Specialty Insurance, Insurance