Month: February 2022

Categories
Lessons From Warren Buffett

Lessons From Warren Buffett: Growth is Value

With so much talk about growth stocks versus values stocks, Warren Buffett notes that growth is a form of value. Using insurer GEICO as an example, he believes that you can add projected growth to a company’s assets, and in the case of an insurance company, to its float. That is provided that you know a company is going to grow.

“I think it’s quite rational to assume a significant underwriting profit at GEICO over the next decade or two decades, and I think it’s likely that it will have significant growth, Warren Buffett said at the 2012 Berkshire Hathaway Annual Meeting. “And both of those are value, items of enormous value. So that adds to the present float value. . . .”

Hear Buffett’s full explanation

See the complete Lessons From Warren Buffett series

© 2022 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

Commentary: Don’t Count on Berkshire Hathaway to Buy Peloton

(BRK.A), (BRK.B)

With everyone from Apple to Google being talked about as a possible suitor for exercise equipment and media company Peloton Interactive, one name that should probably be struck from the list is Berkshire Hathaway.

This week, Blackwells Capital LLC, an alternative investment management firm that is a significant shareholder of Peloton sent the Peloton Board of Directors a comprehensive presentation outlining the need for immediate change in leadership and demand for the Board of Directors to initiate a strategic alternatives process to maximize value for the benefit of all shareholders.

In its presentation, Blackwells Capital called for the company to immediately put itself up for sale, and listed 18 companies as Potential Strategic Acquirers. Of the companies on that list, only seven checked all the boxes that Blackwells identified as making Peloton attractive as a strong strategic fit.

One of those seven companies was Berkshire Hathaway, which owns a number of leading athletics brands, including Spalding, Russell Athletics, and Brooks Running.

Blackwells states that “At a $75 per share purchase price, an acquisition of Peloton would be accretive to many strategic buyers with very modest cross-selling and penetration assumptions.”

With Berkshire sitting on $146.2 billion in cash as of September 30, 2021, an acquisition of Peloton’s size would barely put a dent in Berkshire’s cash hoard. However, Blackwells own presentation shows why they should not count on Berkshire riding to the rescue. The presentation state that “Peloton is worth significantly more to a strategic acquiror than as a standalone business, especially given the difficult turnaround ahead.”

It’s that “difficult turnaround” that most likely dooms any prospect of a Berkshire acquisition, as Berkshire doesn’t do turnarounds.

Don’t take my word for it, Warren Buffett stated in Berkshire Hathaway’s 2017 Annual Report that his acquisition criteria includes:

Demonstrated consistent earning power (future projections are of no interest to us, nor are “turnaround” situations)

With Peloton in dire need of a turnaround, as Blackwells itself has stated, and the company’s appointment of a new CEO and layoff of nearly 3,000 employees demonstrates, this is exactly what Buffett is not looking for.

Berkshire is looking to acquire companies that are churning out money, not losing it hand over fist.

While Blackwells may have identified companies that would be eager to get into a bidding war for Peloton (something that Berkshire also doesn’t do), it would be well advised to heed Buffett’s other aphorism about acquisitions:

“We’ve found that if you advertise an interest in buying collies, a lot of people will call hoping to sell you their cocker spaniels.”

© 2022 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 Auto Sales Off to Red Hot Start in January

(BRK.A), (BRK.B)

Berkshire Hathaway-backed BYD announced that its New Energy Vehicles (NEV) sales totaled 92,926, soaring 367.6% of sales in January 2021.

Overall, BYD sold 95,180 passenger cars in January, up 126.1% year-over-year.

The strong sales start for 2022 comes on the heels of annual sales of nearly 600,000 vehicles in 2021.

BYD sold 46,386 pure electric vehicles in January, up 220.7% year-over-year. Meanwhile, BYD Dual Mode models sold 46,540 units, rocketing 760.6% year-over-year, thanks to its advanced DM-i super hybrid technology.

The flagship BYD Han model, a mid to large sedan, sold 12,780 units in January, marking the fifth consecutive month with a sales volume exceeding 10,000 units. Along with the Han, the Tang SUV achieved a sales volume of 9,060 units.

BYD and Berkshire Hathaway

In 2008, Berkshire Hathaway bet on BYD’s potential, purchasing 225 million shares for $232 million. It’s an investment that has paid off handsomely. Berkshire’s original investment of $232 million had grown in value to $5.897 billion as of December 31, 2020.

© 2022 David Mazor

Disclosure: David Mazor is a freelance writer focusing on Berkshire Hathaway. The author is long in Berkshire Hathaway and BYD, 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.

Categories
Appointments Kraft Heinz

Berkshire Hathaway to Swap Board Member on Kraft Heinz Board of Directors

(BRK.A), (BRK.B)

The Kraft Heinz Company has announced that Alexandre Van Damme, director nominee of Berkshire Hathaway, will retire from the Company’s Board of Directors following the end of his term.

Berkshire Hathaway has indicated that it plans to nominate Alicia Knapp, President and CEO of BHE Renewables, to fill Mr. Van Damme’s vacancy at the Kraft Heinz 2022 Annual Meeting of Stockholders.

“Berkshire Hathaway is delighted to nominate Alicia to the Board of Kraft Heinz – she has shown tremendous leadership during her 20-plus years at Berkshire Hathaway Energy,” said Greg Abel, member of the Kraft Heinz Board of Directors and Vice Chair, Non-Insurance Operations of Berkshire Hathaway. “We are thrilled to add Alicia’s perspective to Kraft Heinz and believe that her experience will be especially relevant and valuable to the Board and the Company’s environmental, social and governance strategy. Additionally, I would like to thank Alexandre for his many important contributions to the Board over the past four years.”

In her role at BHE Renewables, Ms. Knapp, 43, leads Berkshire Hathaway Energy’s unregulated development and commercial management of renewable projects. BHE Renewables owns solar, wind, geothermal, natural gas and hydroelectric projects that produce energy for both the wholesale market and for customers under long-term power purchase agreements.

Ms. Knapp has earned a reputation as a strategic leader with significant operational, risk management and financial acumen. Before her current role, she served as Vice President of Renewable Generation for MidAmerican Energy, where she was responsible for renewable generation operations and electric trading. Prior to this role, Ms. Knapp served as Vice President of Gas Delivery at MidAmerican Energy, where she managed a natural gas business serving more than 750,000 customers, and also General Manager of Project Development at BHE Renewables, where she managed the development and construction of wind and solar farms. She has been with the Berkshire Hathaway Energy family of businesses since 2001 and held roles in risk management, gas trading, and nuclear and renewable project management earlier in her career.

“It is an honor to be nominated by Berkshire Hathaway to the Kraft Heinz Board of Directors,” said Knapp. “I look forward to the opportunity to add value through this position on the Board and support the Company in its impressive transformation.”

© 2022 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: Start Young, If You Want a Big Snowball

As the world’s most successful investor, Warren Buffett often gets asked his advice on building a fortune. He credits Charlie Munger with the metaphor of a snowball.

“Start young. Charlie’s always said that the big thing about it is we started building this little snowball on top of a very long hill. So we started at a very early age in rolling the snowball down,” Buffett explained at the 1999 Berkshire Hathaway Annual Meeting. “And, of course, the snowball, the nature of compound interest is it behaves like a snowball of sticky snow. And the trick is to have a very long hill, which means either starting very young or living very, to be very old.”

Buffett’s full explanation about building your own fortune

See the complete Lessons From Warren Buffett series

© 2022 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 HomeServices

Berkshire Hathaway HomeServices Expands California Footprint

(BRK.A), (BRK.B)

Berkshire Hathaway HomeServices, a global residential real estate brokerage franchise network, a global residential real estate brokerage franchise network, is pleased to announce its further expansion in the West Region with the addition of Divine Properties.

The award-winning brokerage brings a team of seasoned real estate professionals to the global network and will operate as Berkshire Hathaway HomeServices Divine Properties. The addition marks the brand’s continued growth in the golden state and its 30th network company in California.

The brokerage will be led by real estate veteran, Kandi Thompson. Having a heart for real estate, Kandi brings over a decade of experience to the real estate industry. On why they chose to join the network, Kandi Thompson, owner of the brokerage said, “It was important to align ourselves with a brand that was synonymous with trust and success. A person’s home is the largest investment that most people make in their lives, and for that, we wanted to align with a brand that could help bring certainty in uncertain times.”

“We are excited to welcome Berkshire Hathaway HomeServices Divine Properties to the network,” said Christy Budnick, CEO, Berkshire Hathaway HomeServices. “Kandi Thompson and her team of professionals share our values of Integrity, Trust, Stability and Longevity and lead by example to value education and a strong work ethic.”

By joining the network, Berkshire Hathaway HomeServices Divine Properties agents gain access to Berkshire Hathaway HomeServices’ active referral and relocation networks, and its “FOREVER Cloud” technology suite, a powerful source for lead generation, marketing support, social media, video production/distribution and more.

The brand also provides an exclusive Luxury Collection marketing program for premier listings. Its Prestige Magazine showcases network members’ premium listings with a strong lineup of feature stories covering topics that appeal to high-end real estate clients.

Gino Blefari, Chairman of Berkshire Hathaway HomeServices, also welcomed the company to the network, “We are thrilled to welcome such an impressive group of real estate agents to represent Berkshire Hathaway HomeServices in Jackson, California. Kandi and her team are known for their dedication to providing exceptional service to their buyers and sellers, and I am confident that they will be a great addition to our global network.”

© 2022 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 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.

Categories
Berkshire Hathaway Energy

Berkshire Hathaway Renewables Gets $15 Million Federal Grant for Lithium Extraction

(BRK.A), (BRK.B)

BHE Renewables has been awarded a $15 million grant from the U.S. Department of Energy for in support of its lithium extraction from the geothermal brine at its generating facilities in the Salton Sea, California.

The grant will be part of the funding for the construction of a demonstration plant to convert lithium chloride into battery-grade lithium hydroxide in Calipatria, California.

In 2021, the California Energy Commission (CEC) awarded a $6 million grant towards the facility.

Worldwide lithium demand has soared as lithium-ion battery powered cars have moved from the fringe into the mainstream.

The Salton Sea area, one of California’s poorest and most environmentally damaged, may be on the verge of a lithium “gold rush” that could transform the local economy.

“Successful lithium production from geothermal brine could become the catalyst to revive Imperial Valley’s decades-old geothermal power industry, not just creating new jobs but also making the price of baseload geothermal power more cost effective for the benefit of California customers. These two projects represent bold steps in further solidifying the state’s global leadership in renewable energy and sustainability,” Jonathan M. Weisgall, Vice President of Government Relations at Berkshire Hathaway Energy, said.

© 2022 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 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.

Categories
Berkshire Hathaway HomeServices

Berkshire Hathaway HomeServices Expands to Memphis, Tennessee

(BRK.A), (BRK.B)

Berkshire Hathaway HomeServices, a global residential real estate brokerage franchise network, is pleased to announce its expansion in the South region with the addition of Berkshire Hathaway HomeServices McLemore & Co., Realty.

This marks the Berkshire Hathaway HomeServices brand’s continued growth with its 10th location in the state of Tennessee adding 32 network agents to the global brokerage.

The brokerage is led by industry veteran David McLemore who began his real estate career with Collins-Maury Realtors over two decades ago. Earning many accolades and recognition throughout his successful career in real estate, David has been awarded Rookie of the Year, the Presidential Award and the Inner Circle Award and became a Lifetime Member of the Multi-Million Dollar Club. He is also the proud owner of McLemore Home Builders specializing in residential new construction. Additionally, David is very active in the West Tennessee Home Builders Association where he currently serves as Vice President and will serve as the President in 2023.

“The Berkshire Hathaway HomeServices global brand comes with unlimited potential,” said David McLemore, Owner of Berkshire Hathaway HomeServices McLemore & Co., Realty. “This move gives us the ability to expedite our growth and the growth of our agents with a brand that is highly respected.”

“We are thrilled to welcome David and his dynamic team to the global network,” said Christy Budnick, CEO of Berkshire Hathaway HomeServices. “David and his team bring decades of combined experience to our network. It is exciting to have them begin a new venture and we look forward to working together to grow the firm they have always wanted.”

By joining the network, Berkshire Hathaway HomeServices McLemore & Co., Realty agents gain access to Berkshire Hathaway HomeServices’ active referral and relocation networks, and its “FOREVER Cloud” technology suite, a powerful source for lead generation, marketing support, social media, video production/distribution and more.
The renowned brand also provides an exclusive Luxury Collection marketing program for premier listings. Its Prestige Magazine showcases network members’ premium listings with a strong lineup of feature stories covering topics that appeal to high-end real estate clients.

Gino Blefari, Chairman of Berkshire Hathaway HomeServices, also welcomed the company to the network, “Berkshire Hathaway HomeServices McLemore & Co., Realty are trusted resources within the communities in which they serve and to their buyers and sellers. These qualities align well with Berkshire Hathaway HomeServices’ mission of delivering superior customer service and improving the lives of their clients.”

David McLemore is a Memphis native whose family also has strong entrepreneurial roots in the community and at one time had 21 convenience stores throughout the Midsouth, McLemore Markets. David met his wife of 16 years, Tiffany McLemore, through real estate. She also holds the title of Broker and is a former Relocation Director.

© 2022 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 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.