Month: January 2018

Categories
Berkshire Hathaway Energy

Bum Knee Leads to Rising Star at Berkshire Hathaway Energy

(BRK.A), (BRK.B)

A torn ACL may have kept Adam Wright from fulfilling his dreams of being a pro football player, but his backup plan led to his becoming one of Berkshire Hathaway’s rising stars.

After Greg Abel was named Vice Chairman of Berkshire, MidAmerican Energy CEO Bill Fehrman was promoted to president and CEO of Berkshire Hathaway Energy, and Adam Wright moved up to become the new CEO of MidAmerican Energy.

Wright had been serving as the vice president for gas delivery.

Wright’s initial career ambitions began on the gridiron where was a star tailback for Nebraska-Omaha. Unfortunately, a torn ACL meant his two year pro career for the New York Giants was limited to rehabbing his knee. Thankfully, the civil engineering major had interned at MidAmerican Energy during his college days, so when his career ended after he tore his ACL running down the field in practice, the Omaha native headed back to Berkshire Hathaway Energy where he spent his first nine years at Northern Natural Gas. He then moved on to manage wind development and operation for MidAmerican.

Now Wright’s the new head of MidAmerican Energy, a Berkshire Hathaway Energy subsidiary that provides electric and natural gas service to nearly 1.5 million customers in Iowa, Illinois, Nebraska and South Dakota.

Who knows? At the ripe old age of 40, it may not be his last promotion.

© 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.

Categories
Commentary Duracell

Commentary: Energizer’s Purchase of Spectrum Brands Battery Division Increases Competition for Berkshire’s Duracell

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The announcement that Energizer Holdings, Inc. has entered into a definitive agreement to acquire Spectrum Brands’ Global Battery and Portable Lighting Business for $2.0 billion in cash means increased competition for Berkshire Hathaway’s Duracell Batteries.

The acquisition puts the Varta and Rayovac brands into Energizer’s product portfolio.

Spectrum Batteries generated 2017 revenue and EBITDA of $866 million and $169 million, respectively.

The acquisition price represents a transaction multiple of 7.5 times Fiscal 2017 EBITDA, net of tax benefits with a net present value of approximately $100 million and including estimated run-rate synergies of $80 to $100 million and the costs to achieve.

The transaction is expected to deliver modest accretion to Energizer’s adjusted earnings per share and free cash flow in the first year, excluding one-time transaction and integration costs, and will achieve additional favorable accretive impacts following our realization of targeted synergies.

“The acquisition of Spectrum Batteries represents a compelling strategic, operational, and financial fit for Energizer,” said Alan R. Hoskins, Chief Executive Officer of Energizer. “The combination will enable us to leverage Spectrum Brands’ manufacturing assets, significantly expand our international business and enhance our long-term brand building capabilities as we broaden our portfolio with the Varta and Rayovac brands and our geographies with Spectrum Batteries’ passionate global colleagues. We have great respect for Spectrum Batteries and the strong business its colleagues have built, and are excited to bring together the talented colleagues from around the globe from both organizations to drive our business to new heights. In addition, the top-line and free cash flow growth from this acquisition, combined with the opportunity to realize meaningful synergies, will further enhance our ability to drive long-term shareholder value.”

Energizer intends to fund the acquisition through a combination of existing cash and committed debt facilities, expected to consist of a new term loan and senior notes.

As for Berkshire’s Duracell, it will still be the biggest player in the alkaline battery market. Sales of Duracell batteries in the U.S. alone topped $1 billion in 2016, eclipsing Eveready’s and Rayovac’s combined sales.

© 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.

Categories
Berkshire Hathaway Energy

Berkshire Promotes Fehrman to CEO of Berkshire Hathaway Energy

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In the wake of Greg Abel being named Vice Chairman of Berkshire Hathaway, William J. Fehrman, 57, has breen promoted to President and CEO of Berkshire Hathaway Energy.

Fehrman had been the head of Berkshire Hathaway Energy’s subsidiary MidAmerican Energy. Fehrman has been with the company since 2006.

During his time at MidAmerican, Fehrman oversaw the company’s growth into one of the leaders in providing renewable energy, primarily from wind power.

Fehrman is one of 18 Chief Executive Officers chosen to represent the electric industry on the Electricity Subsector Coordinating Council (ESCC). As the principal liaison between the federal government and electric power sector, the Council coordinates efforts to prepare for and respond to national-level disasters and threats to critical infrastructure that could impact national security and public safety. Fehrman serves as the executive sponsor of the Cyber Mutual Assistance Program, vice chair of the Electricity Information Sharing and Analysis Center (E-ISAC) Member Executive Committee, and provides leadership to Berkshire Hathaway Energy’s co-chair of the Transformer Transportation Working Group.

Prior to 2006, Fehrman was president and CEO of Nebraska Public Power District, based in Columbus, Nebraska. He joined Nebraska Public Power District in May 1981 and held various positions across the business, including assignments in fossil and nuclear generation, until becoming CEO January 1, 2003.

Fehrman graduated in 1984 from the University of Nebraska in Lincoln with a bachelor’s degree in civil engineering. In 1998, he earned a master’s degree in business administration from Regis University, Denver, Colorado. He also completed the Reactor Technology Program for utility executives from the Massachusetts Institute of Technology and National Academy for Nuclear Training as well as the Institute of Nuclear Power Operations Senior Nuclear Plant Management Course. Fehrman is a former member of the National Nuclear Accrediting Board.

© 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.

Categories
Minority Stock Positions Stock Portfolio

13 BYD Pure Electric Midibuses for Italy

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Four city operators in the Piedmont Region of Italy have placed orders for a total of 13 BYD pure electric Midibuses, a new model which BYD only unveiled at the Busworld Show in October.

GTT, the Turin operator is ordering eight Midibuses (which will join its fleet of 20 12m BYD ebuses), AMAG in Alessandria is taking two as is BUSCOMPANY, the operator in nearby Saluzzo and CHIESA in Carmagnola is ordering one.

The buses, which will be built in BYD’s plants in China, are expected to be delivered in the second half of 2018.

“These orders are doubly significant for BYD: they further under line our growing position in the important Italian bus market where we are making progress in the face of strong competition and they also represent a vote of confidence in our latest model, the Midibus”, said Isbrand Ho, Managing Director, BYD Europe.

“In fact, in this month alone we are able to announce orders for our largest ever vehicles – two 18m articulated ebuses – from our most northerly customer, Nobina in Norway, as well as these 13 vehicles – our smallest model – for our most southerly mainland European customers in Piedmont.”

He added: “Whether its maximum capacity in a cold climate or manoeuvrable ebuses capable of servicing confined streets in historic southern cities, BYD has the right product!” Mr Ho added.

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.

© 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.

Categories
Insurance

General Star Launches Online Individual Real Estate Appraisers with Norman-Spencer

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Berkshire Hathaway’s General Star Management Company, a wholly-owned subsidiary of General Reinsurance Corporation, has launched an online Individual Real Estate Appraisers Program. General Star will partner with Norman-Spencer Agency, Inc., the program administrator.

“In October, General Star partnered with Norman-Spencer to provide coverage for real estate agents and brokers. We are excited to expand this collaboration to include an online platform for individual real estate appraisers. General Star has a long history of insuring real estate appraisers and we are happy to continue that tradition,” said Tom Gersch, Vice President and General Star Programs Unit Manager.

In commenting further upon the program, General Star President and CEO Marty Hacala stated, “General Star is fortunate to partner with Norman-Spencer. They are an established and knowledgeable program administrator. We will be working together to address the changing and developing needs of real estate appraisers.”

The online Appraisers Program provides specialized Errors and Omission coverages designed specifically for the unique needs of individual real estate appraisers. They can choose a range of limits from $300,000/$600,000 to $1 million/$2 million. There is no deductible. Additional services include a toll-free hotline for risk management and pre-claim assistance.

The online individual Real Estate Appraisers Program will be written on an admitted basis by General Star National Insurance Company which is rated A++ (Superior) by A.M. Best Company and carries an AA+ Insurance Financial Strength Rating from Standard & Poor’s Corporation.

© 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.

Categories
Berkshire Hathaway Energy Charlie Munger Insurance Kraft Heinz Warren Buffett

Greg Abel and Ajit Jain Join Berkshire Board

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In a move that clearly foreshadows the next generation of Berkshire Hathaway leadership, Berkshire’s Board of Directors voted to increase the number of directors comprising the entire Board of Directors from twelve to fourteen. After making that move, Gregory E. Abel and Ajit Jain were then elected to serve as Directors to fill the resulting vacancies on the Board of Directors.

In connection with their election to the Board of Directors, Warren Buffett, Berkshire Hathaway’s Chairman and CEO, appointed Mr. Abel to be Berkshire Hathaway’s Vice Chairman – Non-Insurance Business Operations and Mr. Jain to be its Vice Chairman – Insurance Operations.

Mr. Abel joined Berkshire Hathaway Energy Company in 1992 and currently serves as its Chairman and CEO. Mr. Jain joined the Berkshire Hathaway Insurance Group in 1986 and currently serves as Executive Vice President of National Indemnity Company with overall responsibility for leading Berkshire’s reinsurance operations.

In March 2016, Buffett appointed Abel to the Board of Kraft Heinz, a move that showed his confidence in the 55-year-old manager.

For the time being, Buffett and Munger will continue in their existing positions, including being responsible for significant capital allocation decisions and investment activities.

© 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.

Categories
Insurance

Berkshire Hathaway Ranked 7th Among Global Insurers

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Berkshire Hathaway has been ranked as the number seven insurer among the top ten list of global insurers. Berkshire climbed three notches from last year’s ranking.

The ranking of the world’s largest global insurance companies by non-banking assets was released by A.M. Best in the Jan. 1, 2018, issue of BestWeek.

The top 10 global insurers ranked by 2016 non-banking assets are:

1. MetLife Inc., United States
2. AXA S.A., France
3. Allianz SE, Germany
4. Prudential Financial Inc., United States
5. Japan Post Insurance Co., Ltd., Japan
6. Nippon Life Insurance Company, Japan
7. Berkshire Hathaway Inc., United States
8. Prudential plc, United Kingdom
9. Legal & General Group plc, United Kingdom
10. Assicurazioni Generali S.p.A., Italy

© 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.

Categories
BNSF

BNSF Finishes the Year Up Solidly From 2016

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Higher carload numbers brought good news to BNSF Railway when compared to its 2016 numbers.

Slumping volumes in 2016 saw the total intermodal and carload volumes down 4.94% from 2015 levels, with coal shipments slumping 20.88% from 2015 levels.

In 2017, rebounding coal carloads led the way in the recovery, with shipments up a solid 6.49%, as compared to 2016.

Also up a solid 6.23% were intermodal shipments.

Petroleum shipments continued to slide, with final numbers down 13.39%.

In summary, it was strong year for BNSF, with the combined carloads including intermodal up 5.48%.

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.

© 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.

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Categories
Lubrizol

Lubrizol Selects Simko S.A. as New Distributor in Argentina

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Berkshire Hathaway’s Lubrizol Corporation has selected Simko S.A. as the new distributor for the thermoplastic polyurethane (TPU) portfolio of the company’s Engineered Polymers business throughout Argentina.

Simko S.A. distributes engineering plastics, synthetic rubbers, rubber chemicals and industrial equipment for rubber and plastic industries in Argentina. They have warehouse and office facilities strategically located in San Martin near the Buenos Aires highway network.

The agreement, which took effect on October 15, 2017, but was just announced on January 3, 2018, includes the following key product lines which are well-suited for today’s innovative and demanding applications:

– Estane(R) TPU: Estane TPU products are utilized in film and sheet, extrusion, blow molding, injection molding, over molding, calendaring and solution coating processes.

– Isoplast(R) ETP: Isoplast ETP products are hard and high flexural modulus polyurethane engineering resins with excellent chemical resistance and barrier properties.

– Pearlbond(TM) TPU: The Pearlbond TPU portfolio includes products for Hot Melt Adhesives (HMA) and Reactive Hot Melts (HMPUR), typically used in automotive interior parts, bookbinding, furniture, textile and footwear.

– Pearlstick(TM) TPU: Pearlstick TPU products are designed for use in the manufacture of solvent-based adhesives.

Other products that will also be distributed by Simko S.A are: Pearlcoat(TM) TPU, Pearlthane(TM) TPU, Pearlthane(TM) ECO* TPU and Carbo-Rite(TM) Conductive Compounds and Sheet Products.

Rogerio Colucci, Lubrizol Engineered Polymers business manager for Latin America comments, “It is exciting to work with Simko S.A. as they have excellent in-depth knowledge of the engineering plastics and rubber markets in Argentina. When combined with Lubrizol’s innovative and durable TPU solutions for specialized wire and cable, adhesives, consumer and industrial applications, this will further enhance our ability to work closely with customers, helping them solve valuable problems and drive innovation and growth in Argentina.”

Eduardo Simko, CEO of Simko S.A., comments “We are proud of having been selected as Lubrizol’s new distributor. We are impressed by the wide portfolio of products and the quality of the products, as well as Lubrizol’s commitment to market development.”

© 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.

Categories
Minority Stock Positions Stock Portfolio

BYD Brings Its Pure Electric Articulated Buses to Norway

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Norway’s first electric articulated buses, produced by China’s BYD, began service on route 31E in Oslo Norway on 21 December.

Nobina is the first operator in Europe to put the Chinese produced BYD articulated electric bus into operation. Two 18-metre buses are running on route 31 and 31E, Norway’s heaviest duty routes carrying approximately 15 million customers a year and approximately 50,000 daily travelers. The routes are operated by Nobina on behalf of Ruter (PTA).

“We look forward to gaining valuable experience with these climate-friendly and quiet buses. Line 31 is the first route to try such a concept in Norway. In Nobina, we are very pleased to be able to help drive the switch to green buses in Oslo in cooperation with Ruter. This is an innovative contribution to our service in Oslo,” says managing director of Nobina, Jan Volsdal.

Other electric buses are on trial in Norway but, unlike them, the BYD articulated ebuses do not use opportunity charging via pantographs and street facilities, but charge at the depot.

The articulated ebuses running on Line 31 and Line 31E operate between Grorud and Tonsenhagen, a distance of 17 to 24 km.

“We showed off our articulated ebus concept more than two years ago and we are delighted to see it enter passenger-carrying service,” said Isbrand Ho, Managing Director of BYD Europe. “Conditions in Oslo are challenging for electric vehicles but we have every confidence that our ebuses will perform well in this heavily trafficked route even in the deep cold of the Norwegian winter.”

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.