Month: October 2023

Categories
Minority Stock Positions

Berkshire Hathaway Dives into Diageo: A New Addition to the Portfolio

(BRK.A) (BRK.B)

Berkshire Hathaway, the conglomerate led by Warren Buffett, has added Diageo plc to its ever-expanding portfolio. Diageo, a renowned liquor purveyor, boasts a vast array of over 200 brands, with a global presence in more than 180 countries.

In a recent filing with the U.S. Securities and Exchange Commission (SEC), Berkshire disclosed its acquisition of 227,750 shares of Diageo. This investment represents a relatively modest 0.04% ownership stake in the company, but it signifies Berkshire’s interest in the liquor giant.

Diageo, a name synonymous with top-quality beverages, offers a stellar lineup of best-selling brands, including the iconic Johnnie Walker Scotch whisky, Tanqueray gin, Smirnoff vodka, Guinness stout, and Baileys cream liqueur. These brands have long been favorites among consumers and have played a significant role in establishing Diageo as a leading player in the spirits industry.

Notably, Diageo has set ambitious goals for the future. Currently holding a 4.7% share of the global Total Beverage Alcohol (TBA) market, the company has its sights set on increasing that value share to an impressive 6% by the year 2030. This aspiration reflects Diageo’s commitment to growth and innovation within the dynamic world of beverages.

Moreover, Diageo recently announced a share buy-back program, demonstrating their dedication to creating value for their shareholders. This program aims to return up to $1.0 billion of capital to investors and is scheduled to be completed before June 26, 2024. The buy-back follows the successful completion of Diageo’s return of capital program during the second half of fiscal 2023, in which £0.5 billion of capital was returned to shareholders.

© 2023 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: Beware Projecting High Growth Rates for an Extended Time

Warren Buffett points out that no matter how successful a company is, and how good its future prospects look to be, you can get into a lot of trouble as an investor projecting too high a future growth rate for an extended period of time. “There are a lot of managements around who like to think their stocks are worth infinity, but we haven’t found one yet,” Buffett wryly notes.

“The idea of projecting out extremely high growth rates for very long periods of time has caused investors to lose, you know, very, very large sums of money,” Warren Buffett pointed out at the 2004 Berkshire Hathaway Annual Meeting. “There aren’t many companies, just take a look at the Fortune 500, go back 50 years… and look at the companies that were there and how many have really maintained rates much above 10 percent. It’s not an easy hurdle. And when you get up to 15, you know, you’re in the atmosphere and rarified atmosphere…There’s a real danger in projecting out high growth rates. And Charlie and I will very seldom, virtually never, get up into high digits. You can lose a lot of money doing that.”

Hear Buffett’s full explanation

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© 2023 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
Mouser Electronics

Mouser Electronics Opens European Customer Service Center in Lithuania

(BRK.A), (BRK.B)

Berkshire Hathaway’s Mouser Electronics has announced the inauguration of its latest European Customer Service Center, located in Lithuania’s capital city, Vilnius. This strategic move is aimed at bolstering support for the burgeoning design activity in the region’s expanding tech ecosystem and established industries.

Mark Burr-Lonnon, Mouser’s Senior Vice President of Global Service and EMEA and APAC Business, expressed his enthusiasm, stating, “Our business across Europe continues to grow significantly – in 2022, we saw our European business surge by 30 percent. Lithuania is home to a burgeoning tech sector and ecosystem with an increasing amount of electronics design and manufacturing activity. We are proud to deliver localized services globally and are excited to support European design engineers and buyers with their purchases of the newest semiconductors and electronic components.”

Mouser Electronics provides specialized customer support in the customer’s local language, offered across its locations in Europe, the Americas, and the Asia/Pacific regions.

The newly established Customer Service Center in Lithuania is staffed with a dedicated team ready to provide personal assistance with orders and respond to customer inquiries, all in the local language, time zone, and currency. Notably, this center marks Mouser’s 11th office in the EMEA region, further expanding its footprint in the European market. Other European locations include Germany, the United Kingdom, France, Israel, Italy, Spain, The Netherlands, Poland, Sweden, and the Czech Republic.

Lithuania boasts the largest economy in the Baltic region, and its capital city, Vilnius, has garnered international recognition as a prime destination for investment. In 2021, Vilnius was listed among the top 25 global cities of the future by foreign investment company FDI Intelligence. The city is also witnessing remarkable developments, with a $110 million investment by Tech Zity to create a 55,000-square-meter tech campus. Once completed, this tech center will stand as the largest of its kind in all of Europe, further underscoring the region’s tech-driven growth and innovation.

Mouser Electronics’ latest European Customer Service Center in Lithuania signifies the company’s commitment to meeting the evolving needs of design engineers and buyers in the region, ensuring that they have easy access to the latest semiconductors and electronic components, all while benefiting from localized support. This expansion aligns with Mouser’s mission to empower innovation and provide exceptional service to its growing customer base in Europe and beyond.

© 2023 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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Lubrizol

Lubrizol and Grasim Break Ground on World’s Largest CPVC Resin Plant, Boosting India’s Piping Industry

(BRK.A), (BRK.B)

In a significant development for the Indian piping industry, Berkshire Hathaway’s Lubrizol, a global leader in specialty chemicals, and Grasim Industries Limited, a flagship company of the Aditya Birla Group, have initiated the construction of the first phase of a massive 100,000 metric-ton CPVC resin plant in Vilayat, Gujarat, India.

This collaborative effort is poised to revolutionize CPVC production in the region, catering to the burgeoning demand for piping applications not only in India but also in neighboring countries such as Nepal, Bangladesh, and Indonesia.

The new CPVC resin plant, situated at Grasim Industries’ complex, is set to become the largest single-site facility for CPVC resin production globally. It is designed to address the escalating need for CPVC materials in India’s construction and plumbing sectors, ensuring a steady supply of high-quality, locally manufactured CPVC resin. The plant will be equipped with Lubrizol’s cutting-edge CPVC resin manufacturing technology and will leverage Grasim’s expertise in reliable manufacturing processes.

In addition to this groundbreaking project, Lubrizol is doubling its existing CPVC compound manufacturing capacity at its Dahej, Gujarat, India site. This expansion will see production capacity soar from 70,000 metric tons to an impressive 140,000 metric tons, solidifying Lubrizol’s position as the largest CPVC producer in the region. It also distinguishes Lubrizol as the sole company with end-to-end CPVC capabilities, enabling its partners to meet the projected 10-12% annual increase in CPVC demand within the Indian market. Furthermore, Lubrizol is planning to establish a research and development center at its Dahej site, catering to the rapidly evolving needs of the Indian market.

The initial phase of the Vilayat resin plant and the expansion at the Dahej facility are scheduled to be operational by early 2025. These projects are anticipated to create over 4,000 direct and indirect job opportunities, contributing significantly to the local economy. In addition, Lubrizol is taking steps to establish a Global Capability Center in India, aimed at supporting regional growth and fostering closer collaboration among employees in the region. Over the next year, Lubrizol plans to hire 150 to 200 new employees at this location, with plans to expand its workforce further in the coming years.

Scott Mold, General Manager of Lubrizol TempRite, expressed his pride in these milestones, emphasizing that Lubrizol’s investment in India is geared toward servicing and supporting the growing demand for CPVC materials, particularly for ensuring access to clean, safe drinking water. India represents a key market for Lubrizol’s global CPVC leadership ambitions.

Lubrizol has been a pioneer in introducing CPVC into the Indian market for the past 25 years, offering a substantial economic development opportunity for the region. Today, India stands as one of the largest consumers of CPVC, primarily for plumbing pipes and fittings, and the increasing demand for clean water in residential and commercial buildings is set to propel continued growth in this sector.

© 2023 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

Categories
Minority Stock Positions

BYD’s DOLPHIN Wins Carbuyer.co.uk Top Honour

China’s fast-growing EV maker BYD, backed by Berkshire Hathaway, has been named Carbuyer.co.uk Best Small Electric Car and Carbuyer.co.uk Car of the Year in the 2024 Carbuyer New Car Awards.

The Carbuyer judges said:

Best Small Electric Car: BYD DOLPHIN

“Compact on the outside, capacious on the inside, the BYD DOLPHIN is efficient, good to drive, loaded with tech and, with the bigger of the two batteries, comes with a sensible real-world range. It might not be pocket change, but the BYD DOLPHIN costs a good chunk less than its mainstream rivals.”

Carbuyer Car Of The Year: BYD DOLPHIN

“It really is quite extraordinary how a brand you’ve probably never heard of – albeit one that sells millions of cars in its home market – can so drastically undercut the competition and still offer such a compelling package. The BYD DOLPHIN isn’t a cheap car, it’s a great-value car. There’s a difference.”

© 2023 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
Lessons From Warren Buffett

Lessons From Warren Buffett: The Biggest Risk to a Company is the One They Never List

There are a lot of risks that businesses list in their prospectuses and annual reports, but Warren Buffett points out that the number one risk factor to a business is the one that they never list. And that risk is bad management.

“The number one risk factor, you never see it, the number one risk factor is that this business gets the wrong management. And you get a guy or a woman in charge of it that are — they’re personable, the directors like them. They don’t know what they’re doing, but they know how to put on an appearance,” Warren Buffett said at the 2021 Berkshire Hathaway Annual Meeting. “That’s the biggest single danger that a business — and that that person stays and runs it for ten or fifteen years, and either stays in the textile business or department store business and expands. And, you know, I’ve looked at a lot of businesses. And that’s what’s caused the number one problem. And it isn’t the kind of thing where they list them all because the lawyers tell them to list them.”

Hear Buffett’s full explanation

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© 2023 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
BYD

BYD Motors and Cox Automotive Join Forces to Provide Support for Electric Fleets in the U.S.

In a move that underscores the accelerating shift towards electric vehicles in the United States, BYD Motors, backed by Berkshire Hathaway, and Cox Automotive have recently announced a service agreement for EV fleet maintenance. This partnership bolsters the support network for BYD customers, particularly those operating class 6 and class 8 trucks, by offering round-the-clock roadside assistance and access to a nationwide cadre of EV-trained service technicians.

“This agreement with a nationally respected fleet services leader in Cox Automotive bolsters the confidence of our customers and gives new customers assurance their service needs will be addressed by the top professionals in the business,” said Audrey Li, BYD Vice President Operations. “We’re very excited by this announcement.”

Cox Automotive, a renowned player in the fleet industry, is equally committed to leading the charge in the electrification of America’s fleets. With a shared vision of creating a more sustainable future for fleet operations, Cox Automotive brings its expertise and a network of trusted, skilled EV technicians into this partnership. Kevin Clark, AVP of Vehicle Operations at Cox Automotive Fleet Services, remarked, “Cox Automotive is driven to lead America’s fleet industry in the electric vehicle transformation, working alongside innovative companies like BYD Motors with a shared mission to create a more sustainable fleet future. Our trusted and skilled EV technicians keep America moving safely and efficiently.”

BYD Motors’ global reach continues to expand, with over 85,000 heavy-duty battery electric vehicles deployed worldwide, including more than 25,000 trucks. In the U.S., BYD has made significant inroads, with more than 500 of these electric trucks already serving customers from coast to coast. Operating from nearly 40 locations across the country, Cox Automotive Fleet Services boasts a team of over 1,400 elite technicians, making it the nation’s largest provider of 24/7 emergency repair and towing services.

© 2023 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
Minority Stock Positions

Surprising Turn of Events: Berkshire Hathaway’s Top Performer in 2023 is a Digital Financial Platform

(BRK.A), (BRK.B)

Berkshire Hathaway, the renowned conglomerate helmed by legendary investor Warren Buffett, is not typically associated with high-tech investments. However, this year’s top-performing stock in Berkshire’s portfolio might raise a few eyebrows. It’s none other than NU Holdings, one of the world’s largest digital financial services platforms.

Based in São Paulo, Brazil, NU has rapidly risen to become one of the globe’s premier digital financial service providers. Remarkably, it ranks as the fifth-largest financial institution in Latin America, boasting an impressive number of customers. This unforeseen success in NU is a testament to the changing landscape of finance and technology’s growing role in the industry.

During the second quarter of 2023, NU experienced an impressive surge in its customer base. The platform added a staggering 4.6 million new customers, a testament to its widespread appeal and competitive offerings. In a year-over-year comparison, NU saw strong growth of 18.4 million customers, reaching an overall total of 83.7 million customers worldwide by June 30th, 2023. This surge represents a remarkable 28% growth when compared to the previous year.

What makes this story even more intriguing is Berkshire Hathaway’s substantial stake in NU. The conglomerate owns a substantial 107,118,784 shares of the company, valued at approximately $845 million. This strategic investment is a clear indicator of Berkshire’s confidence in the future of digital financial services.

NU Holdings’ place in Berkshire Hathaway’s portfolio emphasizes the changing dynamics of the financial sector. Traditional investment giants are recognizing the potential of innovative digital platforms, which have demonstrated tremendous growth and resilience in today’s fast-paced, technology-driven world. As the global economy continues to evolve, such investments may become an increasingly common occurrence, surprising investors and industry experts alike.

© 2023 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: Earnings Expectations Become Impossible Over Time

The unreasonable expectation that businesses will report ever increasing earnings quarter after quarter is something that Warren Buffett warns against because it incentivizes managers to cheat, or face getting punished by investors.

“Businesses do not meet expectations quarter after quarter and year after year. It just isn’t in the nature of running businesses. And, in our view, people that predict precisely what the future will be are either kidding investors, or they’re kidding themselves, or they’re kidding both,” Warren Buffett noted at the 2005 Berkshire Hathaway Annual Meeting. “Charlie and I have been around the culture, sometimes on the board, where the ego of the CEO became very involved in meeting predictions which were impossible, really, over time. And everybody in the organization knew, because they were very public about it, what these predictions were and they knew that their CEO was going to look bad if they weren’t met. And that can lead to a lot of bad things. You get enough bad things, anyway, I mean. But setting up a system that either exerts financial or psychological pressure on the people around you to do things that they probably really don’t even want to do, in order to avoid disappointing you, I mean, I just think that it’s a terrible mistake.”

Hear Buffett’s full explanation

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
Berkshire Hathaway Specialty Insurance

Berkshire Hathaway Specialty Insurance Adds Ana Fuertes as Head of Energy and Construction in Spain

(BRK.A), (BRK.B)

Berkshire Hathaway Specialty Insurance has named Ana Fuertes as Head of Energy and Construction in Spain.

“Energy and construction are among the most dynamic and vital sectors in Spain, and we are committed to being a long-term partner to the energy industry, including the burgeoning renewables sector, and to infrastructure and other major construction projects across Spain,” said Tomás Blas, Head of Property, Spain, BHSI. “I’m so pleased to have Ana leading our efforts, bringing BHSI’s solutions-focus to these sectors and enabling customers to seize opportunities with the assurance of stable protection in place.”

Ana comes to BHSI with 20 years of insurance industry experience. Her career has included several leadership roles in construction, energy and technical lines at other global insurers in Spain.

In Spain, BHSI underwrites single projects as well as annual contractor works and can provide CAT-only capacity for construction customers. Coverages for energy and power generation customers include all risk property damage and business interruption, machinery breakdown, and property CAT insurance.

Ana is based in Madrid.

© 2023 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.