Month: November 2023

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Commentary

Honoring the Legacy of Charlie Munger: A Maverick in American Investing

As we bid farewell to Charlie Munger, who gracefully concluded his journey at the remarkable age of 99, we mourn the loss of a titan in the world of investing. His departure has left a void, robbing the financial landscape of not only sagacity but also the sharpness of his acerbic wit.

Charlie Munger, distinguished as one of the most astute investors, held a unique perspective. Contrary to the common belief that investment success hinged solely on shrewdness, Munger contended that true triumph lay in steering clear of the pitfalls that transformed intelligent investors into imprudent gamblers. In his own words, he advised, “What you’ve got to do is be averse to the standard stupidities. You just keep those out. You don’t have to be smart.”

The legacy Munger leaves behind is a treasure trove of investing wisdom and life insights, a legacy that will continue to enrich the minds of investors across the globe for decades to come. His teachings, a blend of intelligence and practicality, serve as a guiding light for those navigating the intricate realms of finance.

In the annals of investment history, Charlie Munger’s name will be etched as an American original–a trailblazer who not only accumulated wealth but shared the invaluable lessons learned along the way. His absence will be keenly felt, leaving a void that resonates with the collective sentiment of investors who recognized the profound impact of his wisdom.

© 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.

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Charlie Munger

Charlie Munger: 1924-2023

Berkshire Hathaway Inc. News Release

November 28, 2023 03:57 PM Eastern Standard Time

OMAHA, Neb.–(BUSINESS WIRE)–(BRK.A; BRK.B) – Berkshire Hathaway a few minutes ago was advised by members of Charlie Munger’s family that he peacefully died this morning at a California hospital.

Warren Buffett, CEO of Berkshire Hathaway, wishes to say: “Berkshire Hathaway could not have been built to its present status without Charlie’s inspiration, wisdom and participation.”

The family will handle all affairs pursuant to Charlie’s instructions.

About Berkshire

Berkshire Hathaway and its subsidiaries engage in diverse business activities including insurance and reinsurance, utilities and energy, freight rail transportation, manufacturing, retailing and services. Common stock of the company is listed on the New York Stock Exchange, trading symbols BRK.A and BRK.B.

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Minority Stock Positions

Berkshire Hathaway’s Paytm Investment Ends in a $140 Million Loss

(BRK.A), (BRK.B)

Berkshire Hathaway’s foray into India’s payment platform, Paytm, has concluded on a sour note, as the conglomerate exits its position with a substantial $140 million loss.

Back in 2018, Berkshire made a strategic investment by acquiring a stake in One97 Communications Ltd, the parent company of Paytm.

In a recent development, Berkshire opted to sell its stake for $164.7 million (13.71 billion rupees) through a bulk deal on Friday. Notably, this investment reflected a departure from the traditional investment strategies championed by Warren Buffett, who has historically been averse to technology stocks, save for his large position in Apple.

The Paytm investment was orchestrated by Berkshire portfolio manager Todd Combs, signaling a potential shift in the next generation of Berkshire’s investment management towards a more diverse approach.

Expressing optimism at the time of the investment, Combs stated, “I have been impressed by Paytm and am excited about being a part of its growth story, as it looks to transform payments and financial services in India.” Unfortunately, the anticipated success of the venture did not materialize as Paytm encountered hurdles early on.

In 2020, Paytm faced a setback when it was removed from Google’s Play Store for violating gambling policies. The Play Store’s prohibition on unregulated gambling apps, including online casinos facilitating sports betting in India, led to Paytm’s removal. The challenges persisted into 2021 when Paytm’s initial public offering (IPO) underperformed expectations.

During its stock market debut, Paytm’s share price plummeted by 26 percent, with intraday trading pushing the stock down as much as 28 percent from its issue price. This turn of events underscores the volatility and challenges present in the dynamic fintech landscape, demonstrating that even strategic investments made by established entities like Berkshire Hathaway can face unforeseen obstacles.

© 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.

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Lessons From Warren Buffett

Lessons From Warren Buffett: Ignore Macro Noise and Focus on Long-Term Investments

Negative economic news seems to be dominating headlines on a daily basis. As investors grapple with the question of whether to factor in macroeconomic trends into their investment strategies, Warren Buffett offers a resounding “no.”

During the 2004 Berkshire Hathaway Annual Meeting, Buffett emphasized that his investment philosophy doesn’t hinge on reacting to macroeconomic indicators. “We don’t really pay attention to that sort of thing,” he stated firmly. Using the example of the tumultuous year of 1974, when stocks were undervalued, Buffett illustrated that even during times of apparent crisis, it’s unwise to let negative news dictate investment decisions.

Buffett pointed out, “You could’ve sat down in 1974, when stocks were screaming bargains, and you could’ve written down all kinds of things that would have caused you to say, you know, the future is going to be terrible.” Despite the challenges, the stock market has weathered wars, pandemics, and various adversities over the years.

Over the course of the 20th century, the Dow Jones Industrial Average demonstrated remarkable resilience, climbing from 66 to over 10,000. Buffett highlighted the enduring truth that “there’s always problems in the future, there’s always opportunities in the future.” In the context of the United States, historical evidence suggests that opportunities have consistently triumphed over problems in the long run.

Buffett’s timeless advice boils down to not allowing macroeconomic uncertainties, such as the size of the federal deficit, to dissuade investors from pursuing well-researched opportunities in individual stocks. While challenges persist, Buffett’s perspective reminds us that focusing on the long-term potential of investments can yield favorable results, even in the face of seemingly insurmountable economic headwinds.

Hear Buffett’s full explanation

See the complete Lessons From Warren Buffett series

© 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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Warren Buffett

Warren Buffett’s Generous Thanksgiving Gesture: A Legacy of Giving Back

(BRK.A), (BRK.B)

On November 21, renowned investor Warren E. Buffett made a significant philanthropic move by converting 1,600 A shares into 2,400,000 B shares. The purpose behind this strategic maneuver was to donate these B shares to four family foundations, continuing his longstanding tradition of charitable giving. The breakdown of the donations includes 1,500,000 shares to The Susan Thompson Buffett Foundation, and 300,000 shares each to The Sherwood Foundation, The Howard G. Buffett Foundation, and NoVo Foundation. These generous contributions have been officially delivered as of today.

In a heartfelt message to his fellow shareholders, Mr. Buffett reflected on the recurring nature of these donations, noting their similarity to those made during the previous Thanksgiving. These contributions supplement the lifetime pledges he made in 2006, outlining various conditions that are consistently met by the recipients, as detailed on berkshirehathaway.com.

Buffett, now 93 years old, expressed amazement at the fact that his three children are between 65 and 70 years old. Over the years, their respective foundations have disbursed substantial sums, often supporting different causes. One common belief shared by the Buffett family is a skepticism toward dynastic wealth, despite its legality and prevalence worldwide. They acknowledge that wealth, in itself, does not guarantee wisdom or virtue. Emphasizing their faith in the positive impact of capitalism, despite its flaws, they celebrate the opportunities the United States has afforded them.

Buffett’s three children serve as both executors of his current will and trustees of the charitable trust set to receive 99%-plus of his wealth upon his demise. Although unprepared for this responsibility in 2006, they are now fully equipped to manage this significant philanthropic legacy. The testamentary trust, designed to be self-liquidating after a decade, will operate with a lean staff and be funded, to the extent possible, by Berkshire shares.

In acknowledging the inevitability of human errors within large organizations, public or private, Buffett expressed confidence in Berkshire’s ability to recognize and rectify mistakes. He assured shareholders that the company is well-positioned with the right CEO and Board of Directors to ensure its enduring success.

Looking ahead, Buffett stressed the importance of maintaining Berkshire’s distinctive characteristics and behavior. While his substantial holdings will provide short-term support, he emphasized that Berkshire will ultimately earn the reputation it deserves. Anticipating changes in laws related to philanthropy, he emphasized the need for a broad charter for the testamentary trust and the importance of wise trustees guiding its operations.

In a move that reflects transparency and openness, Buffett outlined his posthumous plans, assuring that the disposition of his assets will be an open book. Rejecting elaborate trusts or foreign entities, he opted for a simple will that will be available for public inspection at the Douglas County Courthouse.

As Thanksgiving approaches, Buffett expressed gratitude for the opportunities life has afforded him and extended warm wishes to all shareholders, hoping for health and happiness for them and their families. This latest act of generosity continues to expand Warren Buffett’s legacy as not only a financial wizard but also a philanthropist committed to making a positive impact on the world.

© 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.

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BNSF

BNSF, J.B. Hunt and GMXT Create New Intermodal Service to Boost Transportation Efficiency Between Mexico and the U.S.

(BRK.A), (BRK.B)

In a strategic collaboration, BNSF Railway, GMXT, and J.B. Hunt Transport Services Inc. have announced the launch of a cutting-edge intermodal service connecting key regions in Northern and Central Mexico to the United States. This groundbreaking initiative is set to commence operations on January 1, 2024, offering businesses a faster and more sustainable transportation solution for seamlessly moving goods across the border.

BNSF Railway, recognized as North America’s largest intermodal rail, joins forces with GMXT, Mexico’s leading rail provider, and J.B. Hunt Transport Services Inc., a major player in supply chain solutions. The collaboration aims to enhance connectivity between Monterrey, Silao-Bajio, and Pantaco-Mexico City regions through the Eagle Pass, Texas border gateway.

This upcoming intermodal service is designed to be a day faster than the existing route from Monterrey to Chicago, providing customers with a reliable and eco-friendly option for cross-border transportation. By leveraging the capabilities of the largest intermodal railroad in the U.S., the largest railroad in Mexico, and the largest domestic intermodal carrier, this joint effort ensures a seamless connection within the North American intermodal network.

Katie Farmer, BNSF President and CEO, highlighted the commitment to growth in Mexico, stating, “Our organizations are committed to growth in Mexico and this joint service offering is a direct reflection of that commitment.” The collaboration is positioned to facilitate economic expansion and trade opportunities between the two nations.

The intermodal containers will interchange at Eagle Pass, Texas, with GMXT operating trains between the border crossing and Monterrey, Silao-Bajio, and Pantaco-Mexico City six days a week. An alternative option via the El Paso, Texas border gateway will also be available, providing flexibility for businesses.

John Roberts, CEO of J.B. Hunt, emphasized the resilience and cross-border solutions this new service brings to customers, stating, “This new service offering will provide resilient, cross-border solutions that give our customers optionality to support their growing supply chain needs in Mexico.” The collaboration aims to capitalize on the cost savings and sustainability benefits inherent in intermodal services, promoting a more efficient and environmentally friendly approach to transportation.

J.B. Hunt, with the largest intermodal fleet in North America boasting over 117,000 containers and nearly 7,000 trucks, stands at the forefront of this innovative venture. As the intermodal landscape evolves, this collaborative effort is poised to unlock new opportunities for businesses looking to thrive in the expanding markets of Mexico.

© 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.

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Lessons From Warren Buffett

Lessons From Warren Buffett: Balancing Perfection with Pragmatism in Investing

Warren Buffett often draws parallels between investing and baseball, emphasizing the importance of waiting for the right opportunities. His analogy compares an investor to a baseball batter with the advantage of not facing called strikes, allowing them to patiently wait for the perfect pitch. This concept underscores the significance of discipline and patience in making investment decisions.

However, in the pursuit of the ideal investment, Buffett warned against a common pitfall at the 2011 Berkshire Hathaway Annual Meeting. He cautioned against the tendency to measure every investment against the best deal one has ever made. This mindset, he emphasized, can lead investors to set unrealistically high standards for every transaction, potentially causing them to miss out on valuable opportunities.

Buffett highlighted the error of expecting each investment to be an absolute home run, stating, “One of the errors people make in business is that they try and measure every deal against the best deal they’ve ever made.” He pointed out that individuals may remove themselves from the investment game by holding out for deals that match or exceed their past successes, ultimately hindering their ability to capitalize on current opportunities.

The key lesson from Buffett is to recognize that not every investment needs to surpass previous achievements. Instead, he advocates for making satisfactory deals that align with the opportunities available at the time. According to Buffett, the goal is not to replicate the best deal one has ever made but to secure the best possible deal under the prevailing circumstances.

Hear Buffett’s full explanation


See the complete Lessons From Warren Buffett series

© 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
BNSF

J.B. Hunt and BNSF Unveil Quantum: Revolutionizing Intermodal Freight Solutions

(BRK.A), (BRK.B)

In a groundbreaking collaboration, J.B. Hunt Transport Services Inc. and BNSF Railway, two major players in North America’s supply chain and intermodal rail sectors, have introduced Quantum, a game-changing intermodal service designed to cater to the service-sensitive freight needs of customer supply chains.

Quantum is set to redefine the landscape of intermodal shipping by offering the consistency, agility, and speed required to transport service-sensitive highway freight efficiently using rail. The service is tailored to each customer’s unique requirements, considering service expectations, transit needs, and operational procedures.

The Quantum team, comprising operators from both J.B. Hunt and BNSF, is headquartered at the newly established Intermodal Innovation Center in Fort Worth, Texas. This collaborative hub ensures seamless integration of workflow at every stage of the intermodal shipping process, from planning to execution and oversight to exception management.

Darren Field, President of Intermodal at J.B. Hunt, emphasized, “Quantum allows customers with service-sensitive freight to benefit from the cost savings of intermodal, while reducing their carbon footprint and maintaining the level of service and consistency needed in their supply chains.”

Quantum customers can expect up to 95 percent on-time delivery service, approximately a day faster than traditional intermodal services. The planning process involves aligning forecasts for dray, container, and rail capacity with customer needs, incorporating priority drayage and rail movement to ensure faster and more consistent transits.

Tom Williams, Group Vice President of Consumer Products at BNSF, expressed excitement about bringing this innovative vision to life, stating, “Quantum will provide a faster and more consistent intermodal solution to customers, fostering continued collaboration between our companies to create the intermodal solution of the future.”

The Quantum team provides 24/7 oversight of every Quantum load, swiftly detecting and resolving issues before they impact final delivery. The integration of service and technology enables the team to identify variability and recommend alternate solutions, including standard intermodal, expedited intermodal, and over-the-road options.

Spencer Frazier, Executive Vice President of Marketing and Sales at J.B. Hunt, highlighted, “Quantum provides the exceptional intermodal service needed to consistently meet the demands of the most complex freight. Its solutions are flexible to address supply chain challenges in real time.”

Quantum, positioned as a premium intermodal service, offers flexible pricing based on individual needs, ranging between traditional intermodal and over-the-road service costs. J.B. Hunt estimates that as many as 7 to 11 million loads of freight could potentially convert from over-the-road truck service to intermodal service, significantly reducing carbon emissions by an average of 60 percent compared to traditional truck transportation.

The name “Quantum” pays homage to the historic collaboration between J.B. Hunt and BNSF (formerly Santa Fe Railway), dating back to 1989 when the two companies launched the industry’s first modern intermodal transportation solution with 150 trailers. Now, Quantum stands as a testament to their ongoing commitment to innovation and sustainability in the realm of intermodal freight solutions.

© 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.

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Jazwares

Jazwares, A Toy Sensation, Boosts Berkshire Hathaway’s Revenues

(BRK.A), (BRK.B)

Berkshire Hathaway, renowned for its shrewd investments and diverse portfolio, has found a jewel in Jazwares, one of the world’s fastest-growing toy companies.

This acquisition, as part of Berkshire Hathaway’s October 2022 takeover of Alleghany Corp., is proving to be a game-changer for the conglomerate, as it previously had little presence in the toys and games market. Notably, Jazwares is the creative force behind the toy sensation, Squishmallows—the number one toy in the world.

In the first nine months of 2023, the Jazwares acquisition has yielded substantial dividends for Berkshire Hathaway. The company reported revenues of an impressive $847 million, showcasing Jazwares’ significant contribution to the conglomerate’s financial performance.

Jazwares, a global toymaker with a reputation for innovation and creativity, has rapidly gained recognition in the industry. Squishmallows, the flagship product of Jazwares, have been a resounding success in the toy market. These adorable, soft, and huggable plush toys have become a phenomenon, sparking a craze among collectors and enthusiasts. The lovable characters have made their way into countless households, offering comfort and companionship, and even helping some individuals deal with stress and anxiety.

© 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: We Have No Master Plan

With all of Warren Buffett’s success in building Berkshire Hathaway, you might think that he knew where he was going from the start, but that’s not the case.

“We didn’t know, twenty-five, thirty years ago, we didn’t know we would be in the insurance business,” Warren Buffett pointed out at the 1997 Berkshire Hathaway Annual Meeting. “I mean, Berkshire, we have no master plan. And Charlie and I did not sit down in 1960, early ’65, and say, ‘We’re going to do this and that,’ and all that.”

Hear Buffett’s full explanation

See the complete Lessons From Warren Buffett series

© 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.