Month: November 2017

Categories
Minority Stock Positions Stock Portfolio

BYD Wins Innovation Award

(BRK.A), (BRK.B)

China’s BYD Co. Ltd., the world’s leading supplier of rechargeable lithium batteries, has received an industry award for its high voltage lithium storage system B-Box HV. The versatile concept and its features for high efficiency have been recognized by the industry experts on a jury panel from pv magazine award 2017 for top innovation.

BYD’s B-Box HV drives progress in three categories: with the modularity, the charging and discharging performance and the efficiency. The efficiency had also been tested in a recent storage system performance test and could show impressive results, surpassing the competition.

The B-Box HV lithium storage system was launched in spring 2017 and employs the successful modular design of the B-Box series with battery capacities ranging from 6.4 to 11.5 kWh, providing more than enough energy for the average household and can be scaled up to 57.5kWh for light commercial. The B-Box features excellent efficiency, delivering higher capacity for the best return on investment. The system supports constant 1C and 2C peak charge and discharge rates, and provides best in class useable capacity ratios. As a result it can support household electric devices longer with more power. An innovative connection system allows for an extremely easy plug-and-play installation without the need to connect cables.

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 $1.8 billion.

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

© 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.

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Berkadia

Berkadia Names New Head of Mortgage Banking

(BRK.A), (BRK.B)

Berkadia, Berkshire Hathaway’s joint venture with Leucadia National Corporation, has announced the addition of prominent industry veteran Hilary Provinse as Executive Vice President and Head of Mortgage Banking. She will oversee a team of 130 experienced mortgage bankers located in 31 offices across the country. Ms. Provinse will be a member of Berkadia’s Management Committee and report to Ernie Katai, Executive Vice President and Head of Production. She joins Berkadia from Fannie Mae after a 15-year career, where she most recently served as Senior Vice President and Head of Multifamily Customer Engagement.

“We are extremely fortunate to have Hilary join the Berkadia team,” said Berkadia CEO Justin Wheeler. “With more than 20 years of experience and leadership in CRE capital markets, she is a dynamic leader and forward thinker. Her positive energy and relentless drive to perfect the customer experience will continue to push our platform to new levels. A talent of her caliber is an incredible addition.”

Most recently at Fannie Mae, Provinse led a team of 85 professionals in offices across the country, overseeing all of Fannie Mae’s multifamily debt lending activities and customer engagement. She oversaw Fannie Mae’s transformation to a relationship-based, customer-centric sales organization and led the multifamily production team to double their production volume over a four-year period.

“I could not be more excited to join Berkadia, a client-first organization that provides holistic commercial real estate solutions through its integrated mortgage banking, investment sales and servicing platform,” said Ms. Provinse. “While at Fannie Mae, I saw Berkadia investing in its people and culture and focusing on innovation, process and technology to grow its mortgage banking footprint exponentially to better serve customers, and I’m thrilled to have the opportunity to build upon that success.”

Prior to her tenure at Fannie Mae, Ms. Provinse spent nearly a decade on Wall Street in investment banking and fixed income trading at Goldman Sachs and Bear Stearns. She earned a Bachelor’s degree from Dartmouth College and a Master of Business Administration degree from Northwestern University’s J.L. Kellogg Graduate School of Management.

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 is among the top Freddie Mac and Fannie Mae multifamily lenders. In 2016, Berkadia’s loan origination volume was $20 billion, ranking first with U.S. Department of Housing and Urban Development, second with Freddie Mac and fourth with Fannie Mae in delivered loan volume—the only lender in the top four for all three organizations.

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.

© 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.

Categories
LiquidPower

LiquidPower Specialty Products Opens New Manufacturing Plant

(BRK.A), (BRK.B)

Berkshire Hathaway’s LiquidPower Specialty Products Inc. (LSPI), has opened a new drag reducing agent (DRA) manufacturing plant.

Berkshire Hathaway acquired the company in 2014, and it was previously known as ConocoPhilips Specialty Products.

The second facility, located within LSPI’s manufacturing complex in Bryan, Texas, doubles LSPI’s capacity and ensures that LSPI continues to meet growing global demand and maintain its global leadership position.

“With this significant expansion, LSPI is well-positioned to continue its strong history of growth, supply reliability and quality manufacturing. We are fortunate to have long-term commercial relationships with industry leaders and we are confident that our expanded capabilities will allow us to continue to meet the needs of our customers and remain the global leader in the DRA market,” said Mike Brown, CEO and President of LSPI.

LSPI’s two independent manufacturing facilities on the same complex offer production-supply reliability through redundancy and significant economies of scale. Each facility will maintain its own day-to-day operational staff, producing DRA from raw material to finished product. While quality control labs are located within each manufacturing plant, the same quality management team will oversee both facilities to ensure consistently high quality. Both manufacturing plants will also be managed under LSPI’s rigorous HSE programs. The new facility will be supported by our existing robust global supply chain network, providing supply flexibility and agility for delivery for our customers around the world.

LSPI specializes in maximizing the flow potential of hydrocarbon pipelines by increasing operational flexibility and throughput capacity while substantially increasing bottom-line profit for its customers. LSPI’s technology, developed in the 1970s, uses DRA to lower frictional energy loss by reducing turbulence in the pipeline. This technology allows pipeline operators to increase throughput and reduce energy costs while limiting capital investment.

Since inception, LSPI has continued to develop innovative solutions, working with customers in over 40 countries on 6 continents, and treating tens of millions of barrels of hydrocarbon liquids per day. LSPI has the most extensive DRA patent portfolio in the world with 57 granted US patents, numerous patents pending, as well as a significant international patent portfolio. LSPI’s portfolio of application-specific flow improvers offers reliable DRA performance and maximum profitability.

LSPI’s DRA offering is part of a comprehensive, full-service solution that encompasses industry-leading technology, quality manufacturing, experienced technical support and consulting, reliable supply chain, and injection equipment and field service. The new facility is one of many efforts undertaken by LSPI to ensure that our customers continue to receive best-in-class DRA service.

© 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.

Categories
Berkshire Hathaway Specialty Insurance Insurance

Berkshire Hathaway Specialty Insurance Adds to Marine Capabilities Coverage in Australia

(BRK.A), (BRK.B)

Berkshire Hathaway Specialty Insurance Company (BHSI) has introduced a new Contractors Plant & Equipment (CP&E) Policy for customers in Australia.

“We are pleased to bring to market a considered solution for Contractors Plant & Equipment, backed by BHSI’s financial strength and responsive service,” said Dimitry Zilberud, Head of Marine, BHSI Australasia. “With this new policy, contractors can easily and efficiently address their property damage and liability exposures, including road risk, in a single policy. This new product is an excellent complement to our existing capabilities in Property, Construction, Mining and Casualty.”

BHSI’s CP&E policy wording combines the breadth of coverage required in today’s marketplace with the flexibility to respond to the specific needs of customers across a multitude of industries. Our new single package policy includes numerous coverages including;

• Material damage (with a range of automatic benefits)
• Hired in plant
• Financial protection for plant and interruption
• Road risk
• General liability
• Replacement value for plant (up to 36 months old) after total loss

Strong property and liability cover offers far-reaching coverage for a wide range of sectors, including earthmoving and excavation contractors, road works, builders/construction, plant hire companies, farming and agriculture.

© 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.

Categories
Minority Stock Positions Stock Portfolio

BYD Electric Buses Rolling in Santiago, Chile

(BRK.A), (BRK.B)

The first two BYD 100% electric buses are operating in Santiago, Chile. With the debut of the buses, Santiago moves forward as one of the pioneers in the field of electromobility in Latin America, consolidating the new requirements included in Transantiago’s bidding basis.

The electric buses will be operated permanently by Metbus on route 516 and their routes will include the most important arteries of 8 districts of the city. According to the information available, the operational costs will be reduced by 70% compared to conventional diesel buses, reaching a value of 70 Chilean pesos per kilometer, against 300 Chilean pesos for diesel. The full charge of the vehicle has a cost of 19,500 Chilean pesos. BYD’s new energy vehicle footprint currently covers over 200 cities in 50 countries and regions.

Secretary of State, Paola Tapia, stated that “Electromobility is not the future; it is the present we are living today in the capital’s transportation system. We are moving forward in providing quality for users by incorporating the electric buses today, fulfilling the commitment to offer more comfort, greater service efficiency and care for the environment. In 2018 we will have another 90 of these buses circulating; making us electrified public transportation pioneers in Latin America. Our embrace of this technology prioritizes passengers, which forms the basis of the bidding process.” Additionally, Paola said that this strategy highlights the importance of electric vehicles, for their significant contribution to the reduction of pollutants and noise levels in areas of high exposure.”

The Minister of Environment, Jorge Canals, said that “the metropolitan region suffers increased pollution problems during winter, largely by emissions from mobile sources. Therefore, the incorporation of these electric buses comes as a cleaner alternative in urban transport. It is important to emphasize that a vehicle during traffic congestion contaminates 4 times more than one circulating normally.”

The Minister of Energy, Andrés Rebolledo, explained that “the entry of these first two electric buses are great news for a country like Chile, since the transport sector represents one third of the energy consumption, and it imports practically all the fuel used for transportation.”

The General Manager of E-Solutions of Enel Chile, Simone Tripepi, commented that “at Enel we want to be part of the solution of important issues such as the decontamination of cities. Therefore, we have strongly promoted electric mobility in Chile, based on clean energy and lower prices as compared to other fuels. We have the capacity to provide the necessary electrical infrastructure to facilitate the dissemination of electrified public transportation in Santiago and regions.”

Tamara Berríos, BYD’s Country Manager in Chile explained that “One single electric bus prevents the equivalent to the emissions and pollution from 33 gasoline vehicles. So far, BYD has supplied 27 thousand pure electric buses to over 200 cities worldwide, so we are confident that our experience and maturity in this sector will ensure we can successfully deliver a high quality service that will set a new standard of comfort for users and city dwellers in Chile.”

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 $1.8 billion.

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

© 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.

Categories
Fruit of the Loom

Russell Athletic Goes Upscale with Designer Line

(BRK.A), (BRK.B)

Berkshire Hathaway’s Russell Athletic has gone upscale with a new clothing line that’s being sold at Barneys New York, and features $225 sweatshirts and $250 hoodies.

Russell Athletic is partnering with Los Angeles designer Tracey Mills, who worked for several celebrity-favorite streetwear labels before launching his Visitor On Earth line in 2016. The name represents Mills’ aim to produce fashion in harmony with the planet. Blending minimalist shapes and earth tones, the collection of T-shirts, hoodies, and pants creates a unisex uniform that defies a time or place.

Mills is well known for his work with Kanye West, co-designing his Yeezy collections.

The Russell x VOE collection is a unisex capsule featuring tracksuits, oversize sweatshirts, T-shirts and socks in washes and proportions that represent the new school take on classic Nineties old school. Prices range from $70 to $600 and most of the line features the Russell “R” logo and a Visitor on Earth Logo. The t-shirts and sweatshirts feature graphic slogans that deliver a message of positivity and empowerment, such as “Peace in the Hood,” “The World Is Yours” and “Shut Down the System.”

The messaging is key for Mills, who grew up in the foster care system in inner city of Los Angeles. He pitched collaboration to Russell, which was incidentally looking for a project that would create a bridge into the fashion/street world, with the goal of creating a collection that would not only offer something

Just last month, Fruit of the Loom’s Russell Athletic brand announced that it will cease making athletic uniforms. The move marks the end of a long history in a product line that in the last decade has seen skyrocketing marketing costs.

The designer Russell x VOE line fits with Russell Athletic’s new focus on the growing athletic and lifestyle apparel market that has athletic wear as a fashion statement apart from the gym.

Sofia Richie, Justin Bieber, and Bella Hadid are some of the celebrities that have been spotted wearing the new clothing line.

© 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.

Categories
Berkadia

Berkadia Announces $41 Million in Financing for Multifamily Property in New Jersey

(BRK.A), (BRK.B)

Berkadia, Berkshire Hathaway’s joint venture with Leucadia National Corporation, has announced the financing of a $41 million first mortgage for The Woods at Blue Heron Pines, a multifamily community in Galloway Township, New Jersey. Managing Director Jim Badolato and Senior Analyst Patti Henne of Berkadia’s Philadelphia office structured the financing through the firm’s partnership with Freddie Mac. The borrower is an entity controlled by DiLucia Management, a Pennsylvania-based management company.

Utilized to refinance a maturing loan, the new 10-year financing carries a sub-4 percent fixed interest rate and five years of interest only.

“DiLucia’s long-term commitment to the asset and its residents is evident, making this an ideal lending opportunity for Berkadia,” said Badolato. “Freddie Mac understood the fundamental strengths of the property and location. Despite proximity to Atlantic City, there is a diverse base of employment drivers and a limited supply of quality rental housing in the area. Major employers within five miles of the property include AtlantiCare’s headquarters, AtlantiCare Regional Medical Center, Stockton University, Atlantic City Airport and the Federal Aviation Administration William J. Hughes Technical Center, which employs over 2,500 people.”

The Woods at Blue Heron Pines is located at Bally Bunion Drive, affording convenient access to the Atlantic City Expressway and the Garden State Parkway. The Class A community has 330 units on over 58 acres with views of Ron Jaworski’s Blue Heron Pines Golf Club. The property features large floorplans averaging 1,458 square feet, each with a private garage. Developed by DiLucia in 2001, the asset is in excellent condition and has consistently performed at over 95 percent occupancy.

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 is among the top Freddie Mac and Fannie Mae multifamily lenders.

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.

© 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.

Categories
McLane

McLane Company Lands Kum & Go Convenience Stores

(BRK.A), (BRK.B)

McLane Company Inc., a Berkshire Hathaway-owned supply chain services company, has announced that Kum & Go, one of the nation’s most respected convenience retailers, has reached an agreement for McLane Company to serve as its grocery wholesaler effective in the second quarter of 2018.

Established in Hampton, Iowa, in 1959, Kum & Go has grown to employ more than 5,000 associates in more than 400 stores in 11 states (Iowa, Arkansas, Colorado, Minnesota, Missouri, Montana, Nebraska, North Dakota, Oklahoma, South Dakota and Wyoming).

“McLane’s commitment to technology and operational excellence will be critical as we work together to develop and implement solutions benefitting our customers and associates,” said Chris Jones, senior vice president of marketing at Kum & Go.

Under the multi-year agreement, McLane will begin servicing all Kum & Go stores in early spring of 2018. Kum & Go LC manages and operates more than 400 stores across 11 states.

“Kum & Go is an organization focused on bringing the best product offerings and innovation to its stores so its associates can deliver more than their customers expect. Kum & Go, like McLane, understands the value teamwork brings to the success of a company. On behalf of all the teammates of McLane Company, we are honored to be chosen to not only service Kum & Go, but to work hand-in-hand and implement solutions that bring great value to both organizations,” said Tony Frankenberger, president of McLane Grocery.

© 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.

Categories
Forest River

Forest River Riding Wave of Record Industry-Wide RV Sales

(BRK.A), (BRK.B)

Berkshire Hathaway’s recreational vehicle maker Forest River is benefiting from industry-wide record sales for recreational vehicles.

After slumping during the Great Recession, sales are now hitting new highs as Millennials have embraced RVs as a popular vacation alternative to hotel and motel lodging.

According to the Recreational Vehicle Industry Association’s September survey of manufacturers, RV wholesale shipments finished at 43,598 units, an increase of 29.4% over the 33,704 units shipped last September. September 2017 shipments are the best September on comparable record.

RV wholesale shipments have climbed to 378,006 units through nine months of 2017, up 16.6% over the 324,286 units shipped during the same period last year.

All towable RVs, led by conventional travel trailers, totaled 38,543 units for the month, an increase of 31.8% compared to the 29,233 units shipped in September 2016. Year-to-date totals for towable RVs are up 17% to 330,673 units.

September motorhome shipments are up 13.1% to 5,055 units over last year; paced by solid gains in Type C motorhomes. Year-to-date motorhome shipments have reached 47,333 units on 13.8% growth over the 41,599 units shipped during the same time last year.

Forest River is working hard at increasing its capacity, with facility expansions at its plants in the Indiana cities of LaGrange and Butler.

The company will spend $2.9 million to build a 100,000-square-foot facility in Butler, and will employ 150 workers when it is completed.

© 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.

Categories
Berkshire Hathaway Specialty Insurance Insurance

Berkshire Hathaway Specialty Insurance Offers Network Security & Privacy Liability Insurance in Canada

(BRK.A), (BRK.B)

Berkshire Hathaway Specialty Insurance has unveiled the Professional First Network Security & Privacy Liability Policy in Canada, a solution that combines cyber liability and breach response coverage with risk management resources for commercial enterprises and financial institutions.

“Our new policy simplifies the complex endeavor of managing cyber exposures for both our business partners and our customers,” said Michael Densham, SVP, Executive & Professional Lines, BHSI Canada. “We are excited to round out our Executive and Professional Lines offerings with this flexible cyber solution, backed by BHSI’s commitment to service and unparalleled financial strength.”

The Professional First Network Security & Privacy Liability Policy is designed to deliver multi-faceted coverage and crisis management services for large commercial enterprises and a wide range of financial institutions, including credit unions, banks, asset managers, and insurance companies.

Policy highlights include:

• Coverage for both first and third party exposures resulting from data security and privacy breaches, including regulatory investigations, fines and penalties.

• Breach expense and extortion threat coverage, addressing the direct expenses an Insured incurs to effectively respond to a breach or extortion threat.

• Media liability coverage, which responds to traditional media exposures (e.g. through a company’s website) arising from electronic content.

• Business interruption coverage to pay lost income and related expenses incurred as a result of the Insured’s partial or full business interruption due to a network security failure.

• Online access to eRiskHub® tools and resources to help policyholders understand cyber exposures, establish a breach response plan, and prepare to mitigate the impact of a breach on their organization. eRiskHub is provided via NetDiligence, a leading cyber security and e-risk assessment firm.

BHSI policyholders also have access to legal experts to help them manage their obligations following a breach, forensic IT services to identify and contain a breach, and public relations and credit monitoring firms to manage the reputational damage that can accompany an incident.

© 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.