Month: November 2022

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Berkshire Hathaway Energy Commentary

Will Berkshire Hathaway Buy Dominion Energy’s Stake in Cove Point LNG?

(BRK.A), (BRK.B)

If ever there was a natural acquisition for Berkshire Hathaway it would be acquiring the majority stake in a company that it currently owns 25 percent of, and already runs on a daily basis.

Dominion Energy is reportedly looking to sell its 50% stake in Cove Point LNG, and Berkshire Hathaway would seem to be a natural suitor, if the price is right.

The offshore liquid natural gas shipping terminal is operated by Berkshire Hathaway’s BHE GT&S, a standalone subsidiary of Berkshire Hathaway Energy.

Berkshire Hathaway Energy acquired a 25% stake in the facility in November 2020 when it bought Dominion Energy’s natural gas transmission and storage business, exclusive of Questar Pipeline Group.

Located near Lusby, Maryland, on the western shore of the Chesapeake Bay, the facility is the first such facility on the East Coast. It is recognized as one of the most technically advanced and environmentally sensitive LNG facilities in the world, and has a storage capacity of 14.6 billion cubic feet (BCF) and a daily send-out capacity of 1.8 BCF.

Cove Point produces LNG under 20-year contracts for ST Cove Point, a joint venture of Sumitomo Corporation and Tokyo Gas, and for Gail Global (USA) LNG, the U.S. affiliate of GAIL (India) LTD.

Since the facility first entered commercial service in April 2018 for natural gas liquefaction and export, LNG produced from the facility has supported the energy needs of 28 countries, including many in Europe in recent months. And Cove Point LNG loaded its 300th commercial cargo at the end of July.

The terminal connects, via its own pipeline, to the major Mid-Atlantic gas transmission systems of Transcontinental Gas Pipeline, Columbia Gas Transmission and Eastern Gas Transmission and Storage.

The Cove Point facility is unique among U.S. LNG terminals for its operational flexibility and demonstrated ability to perform all the functions of an LNG facility, including import, export, vaporization and send out, and liquefaction.

According to Bloomberg, Dominion Energy has begun talking to companies about buying its stake in the facility, and while Berkshire’s separate deal to acquire Dominion Energy’s Questar Pipeline Group was abandoned in 2021 due to antitrust concerns, antitrust issues are unlikely to be a problem with a Cove Point LNG acquisition.

In addition to Dominion Energy and Berkshire Hathaway, Brookfield owns 25%, invested through its Super Core-infrastructure fund.

Berkshire Hathaway, which owns roughly 18 percent of the nation’s natural gas pipelines, would seem to be the most logical choice to become majority owner of Cove Point LNG, and it probably won’t be long before we learn whether that is in the cards.

© 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: Why I Don’t Worry About Selling at the Top

It would seem logical that an investor wants to buy low and sell high, and that ideally that sale should be at or near the highest share price that a stock reaches. However, Warren Buffett sees it differently, and he has no fear that others make money off a stock that he’s sold. In fact, he thinks it is an indicator that as an investor you are on the right track when it comes to looking for superior businesses.

“I would worry, frankly, if I sold a bunch of things right at the top, because that would indicate that, in effect, I was practicing the bigger fool-type approach to investing, and I don’t think that can be practiced successfully over time,” Warren Buffett said at the 1998 Berkshire Hathaway Annual Meeting. “I think the most successful investors, if they sell at all, will be selling things that end up going a lot higher, because it means that they’ve been buying into good businesses as they’ve gone along.”

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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Minority Stock Positions

Berkshire Sells More BYD Shares

(BRK.A), (BRK.B)

Berkshire Hathaway is continuing its reduction of the number of shares it owns in Chinese automaker BYD. Berkshire sold 5.78 million of BYD’s Hong Kong-listed shares on November 8, according to its latest stock exchange filing.

The latest sale reduces Berkshire’s stake in BYD to 16.62 percent.

Berkshire first began trimming its stake in BYD in mid-July, and just last week, Berkshire sold 3.297 million Hong Kong-listed shares.

In 2008, Berkshire Hathaway bet on BYD’s potential, purchasing 225 million shares for $232 million.

© 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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Berkshire Hathaway Specialty Insurance

Berkshire Hathaway Specialty Insurance Ups Katharina Rütz to Head of Commercial Lines E&P in Germany

(BRK.A), (BRK.B)

Berkshire Hathaway Specialty Insurance has promoted Katharina Rütz to Head of Commercial Lines E&P in Germany. She was previously Senior Underwriter, D&O, in Germany.

“BHSI’s commitment to serving our Executive & Professional Lines customers and business partners in Germany and throughout the DACH region is stronger than ever,” said Andreas Krause, Head of DACH, BHSI.

“I am pleased to have Katharina leading our talented team as we build long-term relationships in our marketplace with stable E&P solutions, backed by our long-view underwriting, financial strength, and CLAIMS IS OUR PRODUCT philosophy,” said Carsten Keune, Head of E&P, Germany, at BHSI.

Katharina, who joined BHSI in 2021, has more than 13 years of experience in the German insurance market. She holds a law degree from Westfälische Wilhelms-University and a Bachelor of Arts degree from Cologne University of Applied Sciences.

She will continue to be based in Cologne.

© 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
Minority Stock Positions

Lease Agreement Gives Occidental Space for up to 3 Billion Metric Tons of Carbon Sequestration

(BRK.A), (BRK.B)

Energy producer Occidental, which is over 20-percent owned by Berkshire Hathaway, and its subsidiary 1PointFive and King Ranch, a privately-held agricultural production and resource management company, today announced a lease agreement to support large-scale Direct Air Capture (DAC) projects for dedicated carbon dioxide (CO2) sequestration on 106,000 acres in Kleberg County, Texas.

The agreement provides access to land for the potential to remove up to 30 million metric tons of CO2 per year through DAC and pore space estimated to store up to 3 billion metric tons of CO2 in geologic reservoirs.

The agreement will advance 1PointFive’s development plans for commercial-scale DAC plants as a decarbonization solution to accelerate a net-zero economy. In addition to DAC emissions capture, the King Ranch acreage is also located near industrial emitters in the Gulf Coast region, including Corpus Christi, where emissions can be captured, transported and sequestered in the pore space. Each DAC plant in the site is expected to be capable of removing up to 1 million metric tons of CO2 per year yielding a total capacity of up to 30 million metric tons per year when all facilities are operational.

“We are excited to work with King Ranch on what will be the largest DAC deployment project in the world, as we continue our plans to provide affordable and practical industrial-scale decarbonization solutions,” said Vicki Hollub, President and CEO, Occidental. “We believe large-scale DAC, which is an innovative engineered CO2 removal solution, will play an important role in helping organizations and nations reduce their net CO2 emissions and provide the scale necessary to make a difference in addressing climate change globally.”

“King Ranch has been focused on conservation for more than a century. While these methods to capture carbon are relatively new, they are consistent with our vision and values. We’re proud to partner with Occidental while continuing a focus on stewardship of our natural resources,” said Robert Hodgen, CEO of King Ranch, Inc.

Occidental’s first DAC plant in the Texas Permian Basin is currently under construction and builds on Occidental’s 50 years of carbon management experience. 1PointFive is working with Carbon Engineering to commercialize their technology and enable the global deployment of large-scale DAC projects. Worley is handling engineering, procurement, and construction (EPC) services for the first DAC plant.

© 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
Lessons From Warren Buffett

Lessons From Warren Buffett: When It Comes to Money, It All Spends the Same

It is easy for investors to get so wrapped up in a hot sector or company that they can lose sight of the fact that it in the end it is all about making money, and as Warren Buffett points out, a dollar from the hottest high tech company is no better than a dollar from a completely out of fashion industry.

“Whether the money comes from a bank, whether it comes from an internet company, or whether it comes from a brick company, the money all spends the same,” Warren Buffett said at the 2002 Berkshire Hathaway Annual Meeting. “Now the question is, what are the economic characteristics of the internet company or the bank or the brick company that tell you how much cash they’re going to generate over long periods in the future.”

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
Financials

Berkshire Buys Back $1.05 Billion in Stock in 3rd Quarter

(BRK.A), (BRK.B)

Warren Buffett continues to see Berkshire Hathaway stock as a good value and use of Berkshire’s profits. Approximately $1.05 billion was used to repurchase Berkshire shares during the third quarter bringing the nine month total to approximately $5.25 billion.

The buybacks come as Berkshire posted $7,761 billion in operating earnings for the third quarter, up from $6,466 billion for the same quarter in 2021.

At September 30, 2022, insurance float (the net liabilities we assume under insurance contracts) was approximately $150 billion, an increase of $3 billion since yearend 2021.

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

Third Quarter

First Nine Months

2022

2021

2022

2021

Insurance-underwriting

$

(962

)

$

(784

)

$

(334

)

$

356

Insurance-investment income

1,408

1,161

4,484

3,588

Railroad

1,442

1,538

4,477

4,305

Utilities and energy

1,585

1,496

3,101

2,939

Other controlled businesses

3,247

2,706

9,521

8,329

Non controlled businesses*

362

310

874

665

Other**

679

39

1,961

(12

)

Operating earnings

$

7,761

$

6,466

$

24,084

$

20,170

* Includes certain businesses in which Berkshire has between a 20% and 50% ownership interest.

© 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 in Tennessee and Georgia

(BRK.A), (BRK.B)

Berkshire Hathaway HomeServices has announced its further expansion in the Southeastern region with the addition of Berkshire Hathaway HomeServices Southern Routes Realty, which will operate in the states of Tennessee and Georgia.

The office will be owned by industry veteran Vickie McBryar, who brings over two decades of industry experience to the brand. Her son, Chase Jolander, will closely oversee the companies’ daily operations. The mother-son duo plans to lead the company to new heights with this transition.

“We are thrilled to continue servicing our clients, now under the prestigious Berkshire Hathaway HomeServices brand name,” said Jolander. “The global brokerage brand not only supports its network agents globally but also provides us with the tools and support to service our clients effortlessly. We could not be happier to be part of this forward-thinking brand as we approach the new year.”

“Given the demand we are seeing for homes in this region, we are thrilled to welcome Vickie, Chase, and their team to help service clients while they support this growing market,” said Christy Budnick, CEO, Berkshire Hathaway HomeServices. “Their team can now provide first-hand knowledge and service only a Forever Agent can supply, through our global network assets.”

© 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
Insurance

Berkshire Receives Loan Prepayment From Seritage

(BRK.A), (BRK.B)

Berkshire Hathaway now has another $110 million that it needs to invest.

Seritage Growth Properties, a national owner and developer of 150 retail, residential and mixed-use properties, has announced that on October 28, 2022, the Company made a voluntary prepayment of $110 million toward its $1.6 billion term loan facility provided by Berkshire Hathaway Life Insurance Company of Nebraska.

With the prepayment, $1.16 billion of the term loan facility remains outstanding. The prepayment will also reduce Seritage’s total annual interest expense related to the term loan facility by approximately $7.7 million.

© 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.