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Kraft Heinz

Kraft Heinz Signs Renewable Energy Agreement With BHE Renewables for US Operations

The Kraft Heinz Company has signed a virtual power purchase agreement with BHE Renewables, a Berkshire Hathaway Energy business, for its operations within the United States, which make up the largest part of the Company’s North America Zone.

This agreement is designed to enable Kraft Heinz to achieve its aspiration of procuring the majority of its electricity from renewable sources by 2025, a key focus area of the Company’s net-zero emissions plans.

“As one of the world’s largest food and beverage companies, we are committed to contributing to global efforts to reduce the ongoing threat of climate change,” said Kraft Heinz CEO and Board Chair Miguel Patricio. “In 2020, we committed to buy the majority of our electricity from renewable sources by 2025. This agreement with BHE Renewables helps put us on track to accomplish that aspiration and brings us one step closer to achieving net zero emissions by 2050.”

By the end of 2022, Kraft Heinz plans to purchase enough renewable energy from BHE Renewables to offset more than 15 percent of the energy usage at its U.S. manufacturing sites; and by the end of 2025, this amount is expected to increase to approximately 60 percent. The renewable energy is planned to come from BHE Renewables’ 158-megawatt Gopher Creek wind farm in Scurry County, TX.

“We are proud to support Kraft Heinz as it carries out its commitment to create a more sustainable environment,” said Steve Rowley, Vice President, Renewable Development and Energy Markets at BHE Renewables. “Kraft Heinz has an ambitious goal to achieve net zero greenhouse gas emissions, and we look forward to working with them to meet their renewable energy needs.”

This agreement is the latest in a series of renewable energy initiatives by the Company, including solar projects at three Kraft Heinz manufacturing sites in China – Qingdao, Foshan, and Shanghai – which are expected to prevent approximately 2,000 tons of carbon dioxide from entering the atmosphere each year for the next two decades. These initiatives also include Kraft Heinz’s recent vPPA with Repsol in Spain.

Kraft Heinz continues to prioritize environmental stewardship by pursuing renewable energy opportunities around the world through utility-scale power purchase agreements (PPAs) and vPPAs.

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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Stock Portfolio

Berkshire Hathaway-Backed BYD Hits New All-Time High

(BRK.A), (BRK.B)

Berkshire Hathaway-backed BYD’s stock jumped to a new all-time high on Tuesday, with the share price up a dramatic 15.7 percent in the past month.

Shares of BYDDF jumped +$1.17 (2.92%) to close at $41.42 on June 28, 2022.

BYD shares had been on a dramatic run since 2020, rising from $4.52 on March 20, 2020 to an intraday peak of $43.61. The 52-week low was $21.42.

BYD has been posting strong sales for its plug-in EVs, including selling 105,475 cars in China in April.

In mid-June, BYD’s board approved a 33 percent rise in the share price the new energy company can pay to buy back its shares. The company can now pay up to 400 yuan each for shares repurchased from the open market.

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 $7.69 billion as of December 31, 2021.

© 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.

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Kraft Heinz

Kraft Heinz Signs Renewable Energy Agreement With Repsol

The Kraft Heinz Company has signed a 12-year virtual power purchase agreement with Repsol, a global multi-energy company operating across more than 20 countries and based in Madrid, Spain.

This agreement is the Company’s first investment in wind energy and is designed to help Kraft Heinz achieve its aspiration of procuring the majority of its electricity from renewable sources by 2025.

Kraft Heinz is expected to source over 90 gigawatt hours/year of renewable energy from Spanish producer Repsol’s largest wind project, Delta II (Aragon, Spain) – equivalent to powering approximately 90 percent of Kraft Heinz’s European manufacturing sites, which is the majority of its European load.

The vPPA is expected to generate enough renewable electricity to power approximately 25,000 average EU households per year at its peak.

“Our agreement with Repsol is a significant step in our efforts to reduce the impact of climate change,” said Rafael Oliveira, Executive Vice President and President, International Markets at Kraft Heinz. “I am proud of this investment in our International Zone, which we expect to contribute to our global goal of achieving net zero emissions by 2050, and reducing 50 percent of our emissions by 2030, while also helping our industry make the transition to renewable power.”

In 2021, Kraft Heinz announced its goal to achieve net zero greenhouse gas emissions across its operational footprint (Scope 1 and Scope 2) and entire global supply chain (Scope 3) by 2050, reaffirming its commitment to contribute to global efforts to reduce the ongoing threat of climate change.

“This agreement with Kraft Heinz confirms once again the potential and attractiveness of our renewable assets for companies that are looking for guaranteed coverage of their long-term energy needs and, at the same time, obtain greater stability, which favors their competitiveness,” said João Costeira, Repsol’s Executive Director of Low Carbon Generation.

In December 2019, Repsol was the first company in its sector to make a commitment to be carbon neutral by 2050. Renewable power generation is one of the pillars of Repsol’s decarbonization strategy: the targets of the company are 20 gigawatts (“GW”) of installed capacity by 2030 and 6 GW by 2025.

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 Secures $235 Million in Financing for Multifamily Property in San Jose, California

(BRK.A), (BRK.B)

Berkadia, Berkshire Hathaway’s joint venture with Jefferies Financial Group, has secured in $235 million financing for The Woods, a 1,841-unit garden-style multifamily property located in San Jose, California.

Managing Director Andy Ahlers of Berkadia San Francisco secured the $235 million in permanent refinancing on behalf of the borrower, The Woods of San Jose LLC. The deal closed on June 6.

The long-term fixed-rate loan was financed through Freddie Mac.

“Berkadia worked with our lending partners at Freddie Mac to lock this loan’s interest rate back in March, well in advance of the required closing date in June,” said Ahlers. “Given the run-up in rates since March, this offered incredible value to the borrower in terms of interest rate risk mitigation.”

Located at 4300 The Woods Drive, The Woods features studio, one-, two- and three-bedroom floor plans with private patios or balconies. Community amenities include six swimming pools, multiple fitness centers and a basketball court. Residents are afforded convenient access to Los Lagos Golf Course, Raging Waters San Jose and the shops and restaurants along Monterey Road and East Capital Expressway.

About Berkadia

Founded in 2009 as a 50/50 joint venture between Berkshire Hathaway and Leucadia National Corporation (now known as Jefferies Financial Group), 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.

© 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.

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Real Estate

Intero Real Estate Scores Top Honors in RealTrends Rankings

(BRK.A), (BRK.B)

Berkshire Hathaway’s Intero, a wholly owned subsidiary of Berkshire’s HomeServices of America, Inc., is pleased to announce recognition of its top 143 individual agents and 27 teams who made the 2022 RealTrends rankings, a state-by-state ranking of the top 1.5% of 1.6 million real estate professionals in the country (America’s Best) and a summary of the top 1,000 independent real estate agents and teams in the United States (RealTrends + Tom Ferry The Thousand).

For The Thousand, three individual agents were recognized in the top 250 Individuals by Sales Volume list, including Eric Fischer-Colbrie (#247), Jordan Mott (#224), and Sean Chen (#180). In addition, two teams from the brokerage made the top 250 Medium Teams by Sales Volume—the Troyer Group (#13) and the top 250 Large Teams by Sales Volume—the Tse Group (#3).

“I am immensely proud of all 143 of our agents and the 27 teams who made the RealTrends rankings and their commitment to excellence,” said Brian Crane, CEO of Intero. “Every year Intero agents demonstrate growth and success in their businesses; this growth reflects their hard work and the Intero culture of training, mentorship and excellence.”

© 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.

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Lessons From Warren Buffett

Lessons From Warren Buffett: You Don’t Have to Make It Back the Way You Lost It

Pouring more money into a money losing stock in the hope of making back your losses is not only dangerous, it is unnecessary Warren Buffett says. There are lots of ways to make money and there is no advantage to making your money back on the same stock that you have previously lost money, rather than buying something else.

“It is true that a very important principle in investing is you don’t have to make it back the way you lost it,” Warren Buffett said at the 1995 Berkshire Hathaway Annual Meeting. “And in fact, it’s usually a mistake to make, try and make it back the way that you lost it.”

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.

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Stock Portfolio

As Shares Soar, BYD Raises Stock Repurchase Ceiling 33 Percent

(BRK.A), (BRK.B)

The board of Berkshire Hathaway-backed BYD has approved a 33 percent rise in the share price the new energy company can pay to buy back its shares. The company can now pay up to 400 yuan each for shares repurchased from the open market.

At last month’s shareholder meeting, BYD had stated its repurchase ceiling was 300 yuan each as part of the company’s 1.85 billion yuan (US$277 million) stock repurchase plan.

The increase in repurchase price was disclosed in an exchange filing this past Thursday, and comes as BYD’s share price is flirting with a new all-time high that has seen its market value move the company into third place among global automakers ahead of Volkswagen.

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 $7.69 billion as of December 31, 2021.

© 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.

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Dairy Queen

Dairy Queen Loses Trademark Dispute Over “Blizzard”

(BRK.A), (BRK.B)

Berkshire Hathaway’s Dairy Queen has lost its lawsuit against office products dealer W.B. Mason over its use of the word “Blizzard.”

Dairy Queen’s Blizzard is a popular frozen confection that the quick service restaurant chain has been selling since 1985, and the company alleged that its trademark was infringed W.B. Mason’s use of the word as names for its copier paper and bottle spring water.

U.S. District Judge Susan Richard Nelson sided with W.B. Mason in a 217-page decision released on June 10, 2022, and released on Friday. She wrote that “Dairy Queen introduced no evidence of an actual association between the two products.”

In Dairy Queen’s 2018 lawsuit that it originally filed its home state of Minnesota, the company asserted that “W.B. Mason’s actions constitute unfair competition and false designation of origin under the common law of Minnesota and all states, and have caused and are likely to cause injury to the public, and have caused and are likely to cause Dairy Queen to suffer irreparable injury.”

In response, W.B. Mason filed a lawsuit in its home state of Massachusetts.

“Indeed, no reasonable person would ever mistakenly believe that copy paper or spring water sold by W.B. Mason and emblazoned with the W.B. MASON mark and logo emanates from, or is associated with (Dairy Queen),” attorneys for W.B. Mason maintained in their filing.

Berkshire Hathaway, which acquired Dairy Queen in 1998, has not decided whether to appeal the decision.

© 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.

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Lessons From Warren Buffett

Lessons From Warren Buffett: How to Evaluate a Company’s Management

A critical component to any successful company, especially over the long term, is the quality of its management. As an investor, Warren Buffett thinks there are two key aspects of relevance to shareholders that they should consider.

“I think you judge management by two yardsticks,” Warren Buffett said at the 1994 Berkshire Hathaway Annual Meeting. “One is how well they run the business and I think you can learn a lot about that by reading about both what they’ve accomplished and what their competitors have accomplished, and seeing how they have allocated capital over time. You have to have some understanding of the hand they were dealt when they themselves got a chance to play the hand. But, if you understand something about the business they’re in, and you can’t understand it in every business, but you can find industries or companies where you can understand it, then you simply want to look at how well they have been doing in playing the hand, essentially, that’s been dealt with them. And then the second thing you want to figure out is how well that they treat their owners. And I think you can get a handle on that, oftentimes.”

Buffett added: “It’s interesting how often the ones that, in my view, are the poor managers also turn out to be the ones that really don’t think that much about the shareholders, too. The two often go hand in hand.”

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.

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Retail

Helzberg Diamonds’ Chairman and CEO Beryl Raff Retiring

(BRK.A), (BRK.B)

Berkshire Hathaway’s Helzberg Diamonds has announced the retirement of Beryl Raff, the company’s chairman and CEO. Raff will continue to advise and consult the Helzberg Diamonds’ executive team as non-executive chairman of the board.

With a remarkable retail career spanning 50 years, Raff has led Helzberg Diamonds with 13 years of dedicated service and unrelenting commitment. Since 2009, she has reshaped and helped the company navigate through the most tumultuous retail economic times with calm, decisive, and strategic leadership and, most importantly, a great heart.

“I’ll never forget the day I was asked to lead Helzberg Diamonds – I couldn’t wait to get started! Fast forward 13 years, it’s been an honor to be on this incredible journey with the talented people at Helzberg, and to serve among the exceptional leaders of Berkshire Hathaway,” said Beryl Raff, chairman and CEO of Helzberg Diamonds. “Together we’ve created a business that is agile and responsive to the ever-changing retail environment. Most importantly, Helzberg Diamonds is my family. The relationships I’ve built with my teams, sales associates, and customers have enhanced my life beyond measure. I’ll miss everything about leading this amazing brand, but I’m ready to start a new chapter.”

Raff guided Helzberg Diamonds to exceed a multitude of significant performance goals. As the longest serving non-family CEO at Helzberg, she made the company relevant again in the retail landscape. A constant learner and never satisfied with the status quo, she challenged herself and every area of the business to view each day as an opportunity to do something new and different to propel the company’s success.

“I want to personally thank Beryl for her industry-leading vision and one-of-a-kind contributions to Helzberg Diamonds. She will be missed,” said Warren Buffett, chairman and CEO of Berkshire Hathaway.

“When Beryl arrived in Kansas City, it wasn’t long before she called Shirley and me and asked us to re-engage with the company’s culture,” said Barnett Helzberg Jr., former chairman, CEO, and founding family member of Helzberg Diamonds. “She valued the people and brought back the heart and family-feeling culture to the company. Shirley and I are proud not only of what she has achieved but also to call her a treasured friend.”

Raff will conclude her tenure as chief executive officer on July 1, 2022. Brad Hampton, who has served as Helzberg Diamonds’ chief financial officer and executive board member for the past five years, will then take over the role of chief executive officer. Julie Yoakum will assume the role of president – chief merchandising officer, and Bruce Pryor, senior vice president – e-commerce, who has elevated Helzberg’s digital capabilities, will report to Yoakum. Mitch Maggart will assume the role of executive vice president – chief operations & real estate officer. Ellen Junger, senior vice-president – chief marketing officer, who has driven Helzberg’s customer-first marketing approach, will report to Hampton. Brad Hampton also will continue serving as CFO in the interim until a successor is selected.

“Beryl’s steadfast leadership helped position Helzberg Diamonds as an efficient and effective organization that is dedicated to meeting its customers’ needs,” said Greg Abel, vice-chairman of non-insurance operations of Berkshire Hathaway. “Helzberg’s newly formed executive leadership team has remarkable business acumen that will ensure the company continues to see success well into the future.”

In addition to serving as non-executive chair at Helzberg Diamonds, Raff will continue her service on the corporate boards of Academy Sports and Outdoors, Inc., Helen of Troy Limited and the Larry H. Miller Group of Companies.

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.