Month: May 2021

Categories
Berkshire Hathaway Automotive

Former Head of Berkshire Hathaway Automotive Is Now Competing Against Berkshire

(BRK.A), (BRK.B)

Berkshire Hathaway Automotive’s former CEO, Larry Van Tuyl, is now competing with Berkshire Hathaway’s dealerships with his purchase of Team Gillman Honda West in Houston, Texas.

Van Tuyl sold his Van Tuyl Group dealerships, which was founded by his father Cecil, to Berkshire Hathaway in April 2015 for $4.1 billion. At the time, the Van Tuyl Group was the largest independently owned dealership group in the U.S., and its acquisition moved Berkshire Hathaway squarely into the auto retailing business.

Warren Buffett has noted that the $4.1 billion price he paid for Van Tuyl Group also included a billion dollars in securities, as Van Tuyl also had a large float tied to financing and its extended warranty program, which was also acquired by Berkshire. Buffett said that people should “take a billion off the purchase price,” as the reported price has given other dealership groups an inflated sense of their market value.

After the acquisition, Larry Van Tuyl spent five years as the chairman of Berkshire Hathaway Automotive before leaving in 2020.

With the purchase of Team Gillman Honda West, Van Tuyl has shown that his passion for owning auto dealerships has not been sated.

© 2021 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
Acquisitions Clayton Homes

Clayton Homes Acquires Its 11th Site-Builder Company

(BRK.A), (BRK.B)

Berkshire Hathaway’s Clayton Homes has continued to expand its footprint in the site-built homes market with the acquisition of a site-building company in the Boise, Idaho metro area.

Summit Homes, a subsidiary of Berkshire’s Clayton Properties Group, has acquired Berkeley Building Co., a top residential home builder and developer based in Meridian, Idaho. The acquisition took place on May 3.

Berkeley will continue to operate under the Berkeley Building Co. brand name in its current new home communities in Boise metro, with Joe Atalla, Founder, overseeing operations. Heather Atalla will continue as Berkeley’s Founder/CFO and Jenna Englund will maintain her role as President of Berkeley, as well as the other members of their team. The addition of Berkeley will allow Summit to expand its new home footprint into Idaho as well as provide an entry into the Boise new home market.

“We are thrilled to expand into the Boise market and welcome Berkeley to the Summit family,” said Fred Delibero, CEO of Summit Homes. “It was clear that both companies share very similar core values and cultural alignment. We are both focused on providing a high-level of customer experience to our new home buyers.”

Joe Atalla launched Berkeley Building Co. in 2008 in Boise, Idaho. Berkeley currently builds in seven new home communities in the Boise market. The new home builder is also known for its commitment to charitable giving and has been a longtime supporter of St. Jude Research Hospital through its building of the St. Jude Dream Home for over a decade.

“We are excited for the opportunity to not only partner with Summit Homes and join Clayton Properties Group, but to also join the Berkshire Hathaway family,” said Joe Atalla. “Joining forces just makes sense as we are all working toward common goals: to provide a first-class homebuilding experience and provide extraordinary resources to our team members to grow and develop, both of which will be enhanced through this partnership.”

“Berkeley’s success as a builder is an impressive testament to their passion, talent and values. They have developed an outstanding team that builds exceptional homes while upholding the experience as their top priority,” said Delibero. “We could not be more excited about the future and the opportunities this will bring our buyers and team members.”

Berkeley Building Co. is the eleventh site-builder that Clayton Homes has acquired since it first started adding site-builders in 2016.

Acquired by Berkshire Hathaway in 2003 for $1.7 billion, Clayton Homes has grown into a diverse builder offering traditional site-built homes, modular homes, manufactured homes, tiny homes, college dormitories, military barracks and apartments.

© 2021 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

Categories
GEICO Insurance

GEICO on Major Hiring Spree

(BRK.A), (BRK.B)

Berkshire Hathaway’s GEICO is adding to its robust workforce in Indianapolis by hiring as many as 350 new associates as soon as possible in the fields of customer service, claims and sales.

“Just like Indianapolis, GEICO is thriving. We are thankful to be able to hire right now and grow our Indianapolis family. And, as a promote-from-within company, we’re dedicated to ensuring you advance your career,” Assistant Vice President Lona Montgomery said.

GEICO is also adding to its workforce in Macon, Georgia by hiring more than 500 new associates as soon as possible, mostly in Emergency Roadside Service (ERS) Representatives and Customer Service.

© 2021 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
Lessons From Warren Buffett

Lessons From Warren Buffett: Why Warren Buffett Doesn’t Care for IPOs

Usually, at the end of a bull market, companies rush to go public with IPOs (initial public offerings). It feeds the public’s hunger for stocks, but it is of not much interest to Warren Buffett. For Buffett, it’s just not where you are likely to get a good price.

“An auction market, prevailing in the stock market, will offer up extraordinary bargains sometimes, because somebody will sell a half a percent, or one percent of a company at a price that may be a quarter of what it’s worth, whereas in negotiated deals, you don’t get that,” Warren Buffett said at the 2004 Berkshire Hathaway Annual Meeting. “An IPO situation more closely approximates a negotiated deal. I mean, the seller decides when to come to market in most cases. And they don’t pick a time necessarily that’s good for you.”

Buffett’s full explanation on why he avoids IPOs

See the complete Lessons From Warren Buffett series

© 2021 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
Appointments CORT

Berkshire Hathaway’s CORT Announces New President/COO

(BRK.A), (BRK.B)

Berkshire Hathaway’s CORT, the nation’s leading provider of furniture rental and transition services, has announced the promotion of Mike Davis to President and Chief Operating Officer.

In his new role, Davis will be responsible for overseeing all operations and sales for CORT Furniture Rental, CORT Trade Show & Events, CORT Party Rental, 4SITE by CORT and Roomservice by CORT in the UK.

“Mike’s leadership experience across the organization gives him great insight and will assist driving client satisfaction and exceptional results across all of our businesses,” said CORT’s Chairman and CEO, Jeff Pederson.

Davis began his career with CORT in 1997 at CORT Furniture Rental in San Francisco. Over the years he has held executive leadership roles in both sales and operations, including Executive Vice President for CORT Furniture Rental and the Trade Show and Events Divisions. In 2016, Mike was promoted to Chief Operating Officer before his current promotion to President and Chief Operating Officer.

“In this new role I look forward to continuing to execute our long-term strategic plans as we recover from the impact of the pandemic,” said Davis. “We have an exceptional group of people at CORT, and I am confident in our ability to exceed our customers’ expectations as we grow and continue to adapt to their changing business needs.”

© 2021 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
Financial Reports

Berkshire Hathaway Results Q1 2021

Berkshire’s operating results for the first quarters of 2021 and 2020 are summarized in the following paragraphs. However, we urge investors and reporters to read our 10-Q, which has been posted at www.berkshirehathaway.com. The limited information that follows in this press release is not adequate for making an informed investment judgment.

Earnings of Berkshire Hathaway Inc. and its consolidated subsidiaries for the first quarters of 2021 and 2020 are summarized below. Earnings are stated on an after-tax basis. (Dollar amounts are in millions, except for per share amounts).

First Quarter

2021

2020

Net earnings (loss) attributable to Berkshire shareholders

$

11,711

$

(49,746

)

Net earnings (loss) includes:

Investment and derivative gains (losses)

4,693

(55,617

)

Operating earnings

7,018

5,871

Net earnings (loss) attributable to Berkshire shareholders

$

11,711

$

(49,746

)

Net earnings (loss) per average equivalent Class A Share

$

7,638

$

(30,653

)

Net earnings (loss) per average equivalent Class B Share

$

5.09

$

(20.44

)

Average equivalent Class A shares outstanding

1,533,284

1,622,889

Average equivalent Class B shares outstanding

2,299,925,502

2,434,333,367

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) include gains of approximately $2.8 billion in the first quarter of 2021 and losses of approximately $54.5 billion in the first quarter of 2020 due to changes during the first quarters of 2021 and 2020 in the amount of unrealized gains that existed in our equity security investment holdings. Investment gains (losses) also include after-tax realized gains on sales of investments of approximately $1,414 million and $965 million in the first quarters of 2021 and 2020, respectively.

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.

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

First Quarter

2021

2020

Insurance-underwriting

$

764

$

363

Insurance-investment income

1,208

1,386

Railroad, utilities and energy

1,954

1,751

Other businesses

2,619

2,038

Other

473

333

Operating earnings

$

7,018

$

5,871

Approximately $6.6 billion was used to purchase shares of Class A and Class B common stock during the first quarter of 2021. On March 31, 2021, there were 1,525,655 Class A equivalent shares outstanding.

At March 31, 2021, insurance float (the net liabilities we assume under insurance contracts) was approximately $140 billion, an increase of approximately $2 billion since yearend 2020.

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 now 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.