Today, Warren E. Buffett has converted 9,608 A shares into 14,412,000 B shares in order to donate 14,414,136 shares of Berkshire Hathaway “B” stock to five foundations: 11,003,166 to the Bill & Melinda Gates Foundation Trust, 1,100,316 shares to the Susan Thompson Buffett Foundation and 770,218 shares to each of the Sherwood Foundation, Howard G. Buffett Foundation and NoVo Foundation. The donations have been delivered today.
Mr. Buffett’s ownership of Berkshire now consists of 229,016 A shares and 276 B shares.
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.
With all the supply chain issues in the news this past year, one that has flown largely under the radar are mandatory Union Pacific railcar reductions (and a threatened embargo) of Pilot Flying J tank cars carrying urea for Diesel Emissions Fluid (DEF) and ethanol for automobiles.
The Class 1 freight railroad is trying to reduce the number of cars in its system by 2-3% due to congestion that has caused service problems, and Pilot Flying J is warning that an embargo of its tank cars could be “disastrous” for the long-haul trucking industry.
Union Pacific offers the sole service to a number of urea manufacturers that make the key ingredient in DEF, and DEF is required in all diesel trucks manufactured after 2010.
“A single railcar carries 21,500 gallons of DEF on average,” noted Pilot Flying J CEO Shameek Konar in his testimony before the Surface transportation Board in late April. “A single truck takes in 7 gallons of DEF every time they fill. . . .That implies a single railcar is providing 7,000 trucks of DEF fill.” He went on to note every missed railcar “reduces trucking potential mileage by 5 million miles.”
While Union Pacific maintains that it is trying to reduce the number of railcars in its system to reduce congestion, Konar feels that Pilot is being incorrectly penalized based on data that looked at increases in shipments between January 2022 and March 2022 that inaccurately reflect an increase in Pilot shipments, noting that it has not increased the number of railcars it is adding to UP’s system. Instead it has just become the shipper of record for a number of companies that previously shipped the railcars in their own names.
“The total number of cars has stayed the same,” Konar testified.
Konar noted that unless Pilot agreed to UP’s 26% to 50% mandated reduction in shipments, they have been threatened with shipping embargos. He added that he was unaware of any other company being asked to reduce their shipping that dramatically.
Pilot Flying J operates one the largest DEF supply networks in the country, and accounts for approximately 20 percent of the US’s over the road diesel supply and 30 percent of the DEF supply. It supplies 300 million gallons of DEF to truckers on an annual basis.
Konar said that UP’s actions come during a time when diesel inventories are already running 10-15% below the historic lows over the past five years, and that the railcar reductions “will likely sideline trucks and reduce trucking capacity.”
He also added that a 50 percent reduction would also raise fuel prices and cause DEF to run out at some locations.
As for the cuts’ impact on automobiles, Konar also warned that UP’s cutting ethanol railcar shipments by 50 percent for the ethanol needed to blend with gasoline to raise octane that originates at its plant in Nebraska and is shipped by UP to markets in Arizona and Nevada will “substantially reduce the amount of gasoline available in these markets.”
Konar believes that the railroad’s actions are “flawed, disproportionate and unprecedented.” He added that “the current situation is untenable for us.”
With record CPI inflation numbers reported just this past week, if there is any area that calls for the direct intervention of the heads of the Department of Transportation and the Department of Commerce this would be it.
Both the Commerce secretary Gina Raimondo and the Transportation secretary Pete Buttigieg need to directly focus on this issue before a trucking bottleneck sends inflation far higher.
Berkshire Hathaway and Pilot
In 2017, Berkshire Hathaway made a $2.76 billion investment in Pilot, obtaining an initial 38.6 percent stake in the company, and Berkshire will become the majority owner in 2023.
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.
Will the stock market go up? Will it go down? There are so many different forecasts on what markets will do that it is tempting to try and form your own opinion in order to bolster your investing strategy. Warren Buffett says don’t do it. Having bullish or bearish opinions about things that are ultimately unknowable is not only a waste of time, but it can also keep you from focusing on what you can know about.
“Charlie and I never have an opinion about the market because it wouldn’t be any good and it might interfere with the opinions we have that are good,” Warren Buffett said at the 1994 Berkshire Hathaway Annual Meeting. “If we’re right about a business, if we think a business is attractive, it would be very foolish for us to not take action on that because we thought something about what the market was going to do, or anything of that sort. Because we just don’t know. And to give up something that you do know and that is profitable for something that you don’t know and won’t know because of that, it just doesn’t make any sense to us, and it doesn’t really make any difference to us.”
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.
BNSF Railway Company is making progress in its plans to add a fourth main track in San Bernadino, California. At its meeting last week, the San Bernardino City Council voted to certify the Final Environmental Impact Report (EIR) for BNSF’s proposed gap closure project designed to expedite the flow of trains in and out of its existing San Bernardino Intermodal Facility.
The project will improve the facility’s efficiency, with approximately 4.3 miles of new fourth main track in two segments along the current BNSF corridor from the BNSF overpass at State Street/University Parkway to its intermodal facility.
The project will enhance goods movement for this critical BNSF east-west route that connects the Ports of Los Angeles and Long Beach with the rest of the nation.
“We’re pleased that this project is moving forward, as it reflects our continued commitment to improve efficiency for our customers, while providing important benefits to the local community,” noted Tom Williams, Group Vice President – Consumer Products Business Group.
By eliminating track bottlenecks that forced trains to wait to enter BNSF’s facility, train idling will be reduced by 43%, with commensurate noise and air quality improvements. BNSF is also investing in new and enhanced roadways with new sidewalks and lighting, as well as stormwater, drainage and other improvements that exceed what is required.
Earlier this year, BNSF announced a $3.55 billion 2022 capital investment plan, of which $283 million is allocated to California. This project is part of that commitment and now moves into final design/engineering, with construction expected to be complete by 2024.
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-backed BYD UK and Alexander Dennis Limited (ADL) and has delivered its 1,000th zero-emission bus.
The BYD ADL Enviro400EV double decker was part-funded by the Scottish Government and handed over to Stagecoach Bluebird in Aberdeen during Scottish Bus Week in the presence of the Scottish Government’s Minister for Just Transition, Employment and Fair Work.
Working in partnership since 2015, ADL is a subsidiary of leading independent global bus manufacturer NFI Group Inc. (NFI), and BYD is a global leader in batteries, energy management and electric mobility.
Sales of the market-leading, British-built BYD ADL Enviro200EV single decker and BYD ADL Enviro400EV double decker have accelerated rapidly as the transition to zero-emission mobility gathers pace in the United Kingdom. While it took five years to reach the 500th BYD ADL electric bus, the partnership has now delivered its 1,000th vehicle just one year later.
This bus is the last of a fleet of 22 BYD ADL Enviro400EV double deckers which Stagecoach ordered they have since confirmed an order for an additional 13 electric buses of the same type for Aberdeen following the award of funding through the Scottish Government’s follow-on scheme, the Zero-Emission Bus Challenge Fund.
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.
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.
Berkshire Hathaway Energy’s BHE Canada announced that the Rattlesnake Ridge Wind Farm is now commercially operational and supplying low-cost, renewable energy to Alberta’s grid.
The 26-turbine wind farm is located southwest of Medicine Hat. It is the company’s first wind farm in Canada and will provide Alberta consumers with 130 megawatts of energy, enough to power the equivalent of 78,000 homes.
The wind farm is privately financed by BHE Canada through a combination of equity and debt, requiring no government subsidies or tax incentives to support its operation.
“This is an exciting milestone for us, and for Alberta’s energy industry, with new grid-scale wind generation constructed and operating without government subsidies,” said Ed Rihn, President and CEO of BHE Canada. “We’re proud to facilitate a more sustainable energy future for Albertans and look forward to more investment opportunities in Alberta and across Canada.”
BHE Canada signed power purchase agreements with four Canadian corporate partners, providing them with environmental attributes to meet their environmental targets and offset existing carbon production.
Construction began in 2020 with Renewable Energy Systems (RES) providing construction services. RES has extensive experience in building large-scale renewable energy projects around the world. An estimated 150 jobs were provided to local Alberta contractors and suppliers during peak construction.
“The Rattlesnake Wind project is our 20th major renewable construction project in Canada, and we are pleased to see this project achieve commercial operation,” said Liam Duffy, RES General Manager of Construction, Canada. “The addition of this facility showcases our commitment to the construction of wind energy and brings RES closer to fulfilling our vision of a future where everyone has access to affordable zero carbon energy.”
To celebrate the milestone, a ribbon-cutting event was held at the Rattlesnake project site just outside of Medicine Hat. Representatives from BHE Canada and RES were joined by Mr. Grant Hunter, MLA Taber-Warner, and Craig Widmer, Reeve of County of Forty Mile, to help mark the occasion.
“Southern Alberta is home to some of the best supply of wind energy in the world. It is with pleasure that I congratulate BHE Canada on developing the Rattlesnake Ridge Wind Power Project,” said Grant Hunter, MLA Taber-Warner. “The County of Forty Mile will greatly benefit from this renewable wind project, and so will 78,000 homes in Alberta. Rattlesnake stands on its own without any government funding, as Albertans would expect.”
“With southern Alberta being the sunniest and relatively breezy at times, our area provides an exceptional opportunity for renewable energy companies to capture these resources and provide the province with clean renewable energy,” said Craig Widmer, Reeve of County of Forty Mile.
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.
Risk is not something that is always immediately apparent. In fact, it is not until markets plunge, a company goes belly up, or a catastrophic event happens that causes insurers to pay large claims, that the degree of risk truly becomes clear.
“You don’t find out who’s been swimming naked until the tide goes out,” Warren Buffett said at the 1994 Berkshire Hathaway Annual Meeting. “You don’t, you really don’t find out who’s been swimming naked until the wind blows at them.”
Buffett pointed out that the adage applies as much to bonds and reinsurance as it does to the stock market. Investors that chase return through low-rated bonds, or insurance companies that write risky policies, can look like geniuses until circumstances turn against them and expose their true risk, often with catastrophic results.
“Reinsurance business, by its nature, will be a business in which some very stupid things are done en masse periodically,” Buffett noted. “I mean, you can be doing dumb things and not know it in reinsurance, and then all of a sudden wake up and find out, you know, the money is gone.”
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 Specialty Insurance has Berkshire Hathaway Specialty Insurance has further expanded its presence in Europe with the establishment of an office in Lyon, France.
“As we continue to grow steadily across Europe, the time is right to expand with an office and expanded team in Lyon,” said François-Xavier d’Huart, Country Manager, France. “Complementing our office in Paris, our team in Lyon will provide our full line of property, casualty and specialty insurance as well as claims and engineering services locally to customers in southeast France.”
BHSI teams in both Paris and Lyon bring BHSI’s multinational capabilities, which span 170 countries, to local companies in France.
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 Mouser Electronics has been named 2021 e-Commerce Distributor of the Year by Bourns Inc., a leading manufacturer and supplier of electronic components.
Bourns awarded Mouser for achieving exceptional sales success and growth through the design fulfillment distributor’s best-in-class internet marketing programs.
“We are honored to receive this major award, which celebrates the strong partnership between Mouser and Bourns,” said Jeff Newell, Senior Vice President of Products at Mouser Electronics. “Together, we share the highest standards for quality and customer service, which has benefited both companies and our customers for over 20 years.”
“Mouser is continually a major contributor in helping us meet Bourns’ sales and growth goals. Their professionalism and breakthrough programs delivered stellar performance again in 2021,” said James Harrington, Senior Vice President, Worldwide Sales at Bourns. “On behalf of the whole Bourns organization, I am thrilled to recognize Mouser’s achievements in inspiring innovation and their excellent e-commerce representation of Bourns’ products.”
Mouser is an authorized distributor for Bourns and continues to be a leading partner in offering Bourns’ newest products. Mouser stocks an impressive array of Bourns circuit protectors, sensors, controls, and resistive components. Bourns is known for their innovative development of new technologies and the ability to consistently expand manufacturing capabilities to meet their customers’ changing global needs.
Mouser has received multiple top awards in recent years from Bourns, including e Commerce Distributor of the Year award for 2019, 2018, 2015, 2014 and 2012, as well as 2016 Distributor of the Year (Catalog Partner) in EMEA, 2012 European Distributor of the Year POS Growth Award and the 2012 Asia Distributor of the Year POS Growth Award.
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.