Monthly Archives: November 2020

Mouser Electronics Expands Headquarters with New Building Dedicated to Customer Service

(BRK.A), (BRK.B)

Berkshire Hathaway’s Mouser Electronics, Inc., the industry’s leading New Product Introduction (NPI) distributor with the widest selection of semiconductors and electronic components, has opened a new Customer Service Center building at its corporate headquarters, devoted entirely to customer service and support.

The new two-story, 50,000-square-foot building, located on Mouser’s 78-acre campus of its worldwide headquarters in Texas, is designed to be energy efficient and can also expand to 100,000 square feet to meet demand. The building features state-of-the-art amenities, inside and outside eating areas and a large parking expansion.

“Mouser has been fortunate to see strong growth over the last several years, and we need more space for more people to provide our signature customer service,” said Coby Kleinjan, Vice President of Americas Customer Service and Sales. “The idea is to allow room for additional staffing while boosting efficiency and collaboration. This additional capacity will strengthen our efforts to provide best-in-class customer service across the board.”

Including the new Customer Service Center building, Mouser offers 27 customer support locations located across three continents to provide customer support in local language, time zone and currency. The authorized global distributor provides customers with service and technical support via phone, email, and chat or through its industry-leading website, mouser.com. The company calls the approach “glocal” — giving localized service across the globe.

© 2020 David Mazor

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

Berkshire Hathaway Accelerates Share Buybacks

(BRK.A), (BRK.B)

Investors wondering whether Warren Buffett thinks that Berkshire Hathaway stock has been undervalued, now have their answer. He does.

Berkshire Hathaway dramatically increased its share buybacks in the third quarter.

Approximately $9 billion was used to repurchase Berkshire shares during the third quarter, as compared to $5.1 billion in buybacks in the second quarter. This brings the nine month total share repurchases to approximately $16 billion.

The average share price Berkshire paid was: $188 for $2.5 billion in July, $210 for $3.1 billion in August, and $215.8 for $3.6 billion in September.

Warren Buffett’s annual letter to shareholders for 2019 detailed his thinking on share buybacks:

In past reports, we’ve discussed both the sense and nonsense of stock repurchases. Our thinking, boiled down: Berkshire will buy back its stock only if a) Charlie and I believe that it is selling for less than it is worth and b) the company, upon completing the repurchase, is left with ample cash.

Calculations of intrinsic value are far from precise. Consequently, neither of us feels any urgency to buy an estimated $1 of value for a very real 95 cents. In 2019, the Berkshire price/value equation was modestly favorable at times, and we spent $5 billion in repurchasing about 1% of the company.

Over time, we want Berkshire’s share count to go down. If the price-to-value discount (as we estimate it) widens, we will likely become more aggressive in purchasing shares. We will not, however, prop the stock at any level.

© 2020 David Mazor

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

Berkshire Hathaway Third Quarter Earnings

(BRK.A), (BRK.B)

Earnings of Berkshire Hathaway Inc. and its consolidated subsidiaries for the third quarter and first nine months of 2020 and 2019 are summarized below. Earnings are stated on an after-tax basis. (Dollar amounts are in millions, except for per share amounts).

Third Quarter

First Nine Months

2020

2019

2020

2019

Net earnings attributable to Berkshire shareholders

$

30,137

$

16,524

$

6,686

$

52,258

Net earnings includes:

Investment and derivative gains/losses –

Investments(1)

24,771

8,481

1,271

31,745

Derivatives

(34

)

185

(506

)

961

24,737

8,666

765

32,706

Impairments of intangible assets(2)

(78

)

(214

)

(10,980

)

(214

)

Operating earnings

5,478

8,072

16,901

19,766

Net earnings attributable to Berkshire shareholders

$

30,137

$

16,524

$

6,686

$

52,258

Net earnings per average equivalent Class A Share

$

18,994

$

10,119

$

4,160

$

31,944

Net earnings per average equivalent Class B Share

$

12.66

$

6.75

$

2.77

$

21.30

Average equivalent Class A shares outstanding

1,586,698

1,633,002

1,607,041

1,635,903

Average equivalent Class B shares outstanding

2,380,046,304

2,449,502,430

2,410,561,550

2,453,854,768

Note: Per share amounts for the Class B shares are 1/1,500th of those shown for the Class A.

(1) Generally Accepted Accounting Principles (“GAAP”) require that we include the changes in unrealized gains/losses of our equity security investments as a component of investment gains/losses in our earnings statements. In the table above, investment gains/losses in 2020 include gains of $22.4 billion in the third quarter and $2.3 billion in the first nine months and in 2019 include gains of $8.0 billion in the third quarter and $30.1 billion in the first nine months due to changes during the third quarter and the first nine months in the unrealized gains that existed in our equity security investment holdings. Investment gains/losses in 2020 also include after-tax realized gains on sales of investments of $3.1 billion during the third quarter and $552 million during the first nine months. In 2019, investment gains/losses include after-tax realized gains of $513 million during the third quarter and $1.6 billion during the first nine months.

The amount of investment gains/losses in any given quarter is usually meaningless and delivers figures for net earnings per share that can be extremely misleading to investors who have little or no knowledge of accounting rules.

(2) Impairments of intangible assets in the first nine months of 2020 include charges of $9.8 billion recorded in the second quarter attributable to impairments of goodwill and certain identifiable intangible assets that were recorded in connection with Berkshire’s acquisition of Precision Castparts Corp. in 2016.

An analysis of Berkshire’s operating earnings follows (dollar amounts are in millions).

Third Quarter

First Nine Months

2020

2019

2020

2019

Insurance-underwriting

$

(213

)

$

440

$

956

$

1,182

Insurance-investment income

1,015

1,484

3,769

4,087

Railroad, utilities and energy

2,742

2,644

6,257

6,447

Other businesses

2,346

2,455

5,833

7,142

Other

(412

)

1,049

86

908

Operating earnings

$

5,478

$

8,072

$

16,901

$

19,766

Approximately $9 billion was used to repurchase Berkshire shares during the third quarter bringing the nine month total to approximately $16 billion. On September 30, 2020 there were 1,570,636 Class A equivalent shares outstanding. At September 30, 2020, insurance float (the net liabilities we assume under insurance contracts) was approximately $135 billion, an increase of $6 billion since yearend 2019.

Use of Non-GAAP Financial Measures

This press release includes certain non-GAAP financial measures. The reconciliations of such measures to the most comparable GAAP figures in accordance with Regulation G are included herein.

Berkshire presents its results in the way it believes will be most meaningful and useful, as well as most transparent, to the investing public and others who use Berkshire’s financial information. That presentation includes the use of certain non-GAAP financial measures. In addition to the GAAP presentations of net earnings, Berkshire shows operating earnings defined as net earnings exclusive of investment and derivative gains/losses and impairments of goodwill and intangible assets.

Although the investment of insurance and reinsurance premiums to generate investment income and investment gains or losses is an integral part of Berkshire’s operations, the generation of investment gains or losses is independent of the insurance underwriting process. Moreover, as previously described, under applicable GAAP accounting requirements, we are required to include the changes in unrealized gains/losses of our equity security investments as a component of investment gains/losses in our periodic earnings statements. In sum, investment gains/losses for any particular period are not indicative of quarterly business performance.

About Berkshire

Berkshire Hathaway and its subsidiaries engage in diverse business activities including insurance and reinsurance, utilities and energy, freight rail transportation, manufacturing, retailing and services. Common stock of the company is listed on the New York Stock Exchange, trading symbols BRK.A and BRK.B.

Cautionary Statement

Certain statements contained in this press release are “forward looking” statements within the meaning of the Private Securities Litigation Reform Act of 1995. These statements are not guaranties of future performance and actual results may differ materially from those forecasted.

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.

Berkshire Hathaway’s Pampered Chef Enters the France Market

(BRK.A), (BRK.B)

As part of its international expansion strategy, Berkshire Hathaway’s Pampered Chef has expanded to France.

This is the company’s third market opening in Europe, with the Germany launch in 2000 and Austria in 2019.

“At Pampered Chef, we believe our purpose – to enrich lives one meal and one memory at a time – is one that can have an impact globally, and we are excited to continue our Europe expansion efforts with Pampered Chef France,” said Nevena Srebreva, chief field and international officer for Pampered Chef. “This year, we celebrate our 40th anniversary as a company and our 20th anniversary in Germany. The brand’s tremendous international growth during that time demonstrates how much the power of mealtime resonates with people worldwide.”

French consumers will be able to access Pampered Chef’s high-quality kitchen tools and time-saving cooking solutions, designed to enhance and simplify mealtime without sacrificing quality time with loved ones. This trusted and distinctive product offering is delivered by a global community of more than 50,000 independent cooking consultants, who have a business opportunity that combines their passion for food with products they love.

© 2020 David Mazor

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

Berkshire Hathaway Energy Completes Acquisition of Majority of Dominion Energy’s Gas Transmission and Storage Business

(BRK.A), (BRK.B)

Berkshire Hathaway Energy has completed the purchase of Dominion Energy’s natural gas transmission and storage business, exclusive of Questar Pipeline Group.

The transaction consideration was $8 billion, including approximately $2.7 billion in cash (subject to certain adjustments) and the assumption of approximately $5.3 billion in debt.

The completed transaction also included the acquisition of 25% of Cove Point LNG – an LNG export, import and storage facility in Maryland that Berkshire Hathaway Energy will now operate. The transaction received antitrust clearance under the Hart-Scott-Rodino Act from the Federal Trade Commission in October 2020, and approval to transfer existing licenses from the Federal Communications Commission and Department of Energy earlier this year.

“We are pleased to welcome the natural gas transmission and storage business and its employees to Berkshire Hathaway Energy,” said Greg Abel, Berkshire Hathaway’s vice chairman, non-insurance operations, and Berkshire Hathaway Energy chairman. “With shared values and priorities, the business is a great fit within our organization and will play an important role in our long-term plan to deliver clean, low-cost and sustainable energy solutions to customers and communities.”

On July 5, 2020, Berkshire Hathaway Energy announced it had reached an agreement to acquire substantially all of Dominion Energy’s gas transmission and storage operating segment assets. On September 30, 2020, Dominion Energy announced a dual-phase closing for the transaction as a result of updated timing expectations for receipt of the antitrust clearance from the Federal Trade Commission related exclusively to the sale of Questar Pipeline Group.

On October 5, 2020, the companies entered into a second agreement providing for Berkshire Hathaway Energy’s purchase of Questar Pipeline Group from Dominion Energy Questar Corporation. The second transaction is subject to regulatory approvals and is expected to close in early 2021.

© 2020 David Mazor

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

Berkshire Hathaway Acquires Tenn-Tex Plastics

(BRK.A), (BRK.B)

Berkshire Hathaway’s Marmon Fastener Group has announced the acquisition of Tenn-Tex Plastics Inc., adding it to its lineup of construction fastener companies. No financial terms of the deal were released.

Based in Colfax, North Carolina, Tenn-Tex manufactures plastic injection molded parts for kitchen and bath cabinetry.

The company’s products include: speciality drawer slide brackets designed for easy installation, a patented QuikTray Rollout System, Shelf Clips, Shelf Supports, Institutional Shelf Supports, Corner Braces, Glue Blocks, False Front Clips, Glass Door Retainers, Slide Brackets for Undermount and Side Mount Slides, Brackets for Ball Bearing Slides, Cover Caps, Shipping Clips, Spacers, Inset brackets, Toe Kick Endcaps, Paint Caps, Furniture Glides and much more.

“Tenn-Tex is a great fit for the Marmon Fastener Group as we grow and innovate in both existing and adjacent markets to meet customer needs,” said Group President Steve Semmler. “Tenn-Tex is particularly well aligned with Pan American Screw.”

“We look forward to growing in service to our customers and markets through the excellent synergy of Pan American / Deerwood Fasteners and Tenn-Tex,” said Pan American President Phil Lail.

© 2020 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.