Category: Minority Stock Positions

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BYD Debuts Two New Pure-Electric Cars

(BRK.A), (BRK.B)

When the electricity goes out in your house, you don’t usually look to your car for emergency backup, but two new cars from BYD provide just that.

Chinese battery maker and electric vehicle manufacturer BYD Company Ltd. has added two new pure-electric Sedans to its lineup of EVs, and both cars are equipped to serve as emergency power sources, or even just power for non-emergency setting such as trips or parties.

Currently marketed solely in China, the Qin EV300, will come in four versions with prices ranging from 259,800 to 309,800 Chinese Yuan; and the e5, coming in three versions with prices ranging from 229,800 to 249,800 Chinese Yuan.

According to the company, it based the recent rollouts on a thorough assessment of what EV potential users value the most, and after finding out that range anxiety is still a major factor in purchase decisions, it provided both models with a 300km driving range, although a potential customer, upon testing the Qin EV300, managed to drive 349.5 km on a single charge.

The Qin EV300 is equipped with BYD’s high-efficiency, high-speed permanent magnet synchronous motor, with a maximum power of 160kW and maximum torque of 310Nm, accelerating from 0 to 100 km/h in 7.9 seconds, and features re-generative braking system. The model also features BYD’s signature Insta-Pure Technology, a function that purifies the air in the interior of the vehicle by quickly lowering PM2.5 values.

Emergency Power Supply

Both the Qin EV300 and the e5 are equipped with another of BYD’s signature features: the VtoL function, in which the vehicle serves as a massive mobile electricity supply to power appliances like cookers, refrigerators, power tools and many others, so that users can rely on the vehicle to plan outdoor activities that depend on electricity, or in case of emergencies like power cuts or blackouts.

While BYD has yet to market its cars in the U.S., preferring to focus more on its pure-electric buses in the territory, it has moved into the number one spot worldwide for electric vehicle sales.

BYD and Berkshire Hathaway

In 2008, Berkshire Hathaway bet on BYD’s potential, purchasing 225 million shares, and today owns roughly 9.1% of the company.

For More on BYD, read the Special Report: BYD, Berkshire’s Tesla.

© 2016 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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Acquisitions Commentary Minority Stock Positions Warren Buffett

Commentary: Will Berkshire Ever Seal the Deal on USG?

(BRK.A), (BRK.B)

If ever there was a company that looks like the perfect fit for Berkshire Hathaway it would have to be USG–the leading manufacturer of gypsum wallboard. After all, Berkshire already owns insulation manufacturer Johns Manville, Acme Brick, and presently has a 41.91% stake in USG.

USG and Berkshire

Berkshire played a key role in saving USG during the nadir of the Great Recession.

In 2008, with the housing market imploding and lending all but frozen, Berkshire came to USG’s rescue with $300 million of convertible notes that paid Berkshire 10-percent interest. At the time, the boost in confidence that USG received from Warren Buffett’s financing helped the company avoid bankruptcy. Boost investor confidence it certainly did, and the day of the transaction USG’s stock soared 22-percent to $6.89 a share.

Five years later, in December 2013, Berkshire exchanged $243.8 million of the convertible notes for common stock, and with additional purchases, its stake in USG now makes it the company’s single largest shareholder.

USG is a solid earner with a Price/Book of 2.16, a P/E of only 3.73, and EPS of $6.72. The stock currently pays no dividend and USG has stated they have no plans to do so. USG does carry a substantial amount of debt, which as of December 31, 2014, totaled $2.209 billion.

Wallboard Numbers Are Up

So, is now the time for Berkshire to fully bring USG into the Berkshire family of companies? Demand for gypsum wallboard is up. According to the Gypsum Association, a not-for-profit trade association, roughly 21.8 billion square feet of gypsum board were shipped in 2014. This was an increase of approximately 4% from 20.9 billion square feet in 2013. USG’s share of the gypsum board market in the U.S was approximately 26% in 2014, basically unchanged from 2013.

The Chinese Drywall Scandal

As an American manufacturer, USG has been a beneficiary of the Chinese drywall scandal that came to a head in 2009. Imported wallboard from China that had high sulfur content brought reports of fumes that created upper respiratory problems, and the market for wallboard from China was hit hard. Thousands of homes in Florida and other states needed to have their wallboard ripped out and replaced.

About USG

In 1902, 30 independent gypsum rock and plaster manufacturing companies merged to form the United States Gypsum Company. Over more than a century, USG has been issued 1,100 patents for its products. In addition to wallboard, the company is a leading manufacturer of acoustical panel and specialty ceiling systems. The company has 34 manufacturing plants in the U.S., and has roughly 9,000 employees in more than 30 countries.

USG’s a true market leader with a 26% market share of the U.S. gypsum wallboard market. It is followed by National Gypsum at 21%, and Georgia-Pacific at 16%. It has an even more commanding 50% share of the joint compounds market.

Time to Pull the Trigger?

The Chicago-based company has seen its ups and downs, including three bankruptcies. The last bankruptcy was in July 25, 2001 under Chapter 11 in order to deal with a mountain of asbestos litigation costs related to asbestos containing joint compounds. The establishment of the The United States Gypsum Asbestos Personal Injury Settlement Trust put the company’s asbestos woes in the rear-view mirror, and its stock price reflects it.

Also on the upside is the extensive cost cutting the company has done over the past decade. USG has closed high-cost manufacturing plants, and used salaried workforce reductions and other cost reductions to trim an additional $22 million to $28 million annually. In all, its cost reductions have totaled $500 million.

With a market cap of just over $3.66 billion ($1.46 billion of which is already owned by Berkshire), USG is a great fit for Berkshire if it wants to gobble up the whole thing. USG would fit nicely into the Marmon Group of companies, which include a host of companies that supply the construction industry.

So, will Berkshire pull the trigger? A two billion dollar deal is not a big one for Berkshire these days, and with new housing starts hitting a nine-year high, and slowly heading back towards the historical levels of 1.5 million starts a year, USG looks like a solid company worth adding to the Berkshire portfolio.

© 2016 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

BYD’s Pure-Electric Buses Hit the Streets in London

(BRK.A), (BRK.B)

Double-decker buses are synonymous with London, and soon they will be synonymous with clean, pollution-free transportation.

Chinese battery and vehicle manufacturer BYD Co. Ltd. has delivered the first of a fleet of five pure-electric double-decker buses that will shortly be entering service on Route 98 operated on behalf of TfL by Metroline.

BYD is working with TfL and Metroline on an introduction program, which includes driver training and the installation of fast charging equipment at Metroline’s Willesden Bus Garage in north London.

The 100% BYD designed and developed vehicle is 10.2m long, features full air conditioning, and offers seats for a total 54 passengers with a further 27 standees spaces (total passengers: 81).

The bus is powered by BYD’s Iron Phosphate batteries that deliver 345 kWh of power, and can run for up to 190 miles of typical urban driving according to the internationally recognized SORT test conditions.

Recharging the bus takes just four hours and can be completed overnight using low-cost off-peak electricity. The single charge cycle is expected to be more than enough to handle most daily duty cycles.

“The Mayor of London challenged us saying that he did not believe an electric double decker was technically feasible but we took up the challenge and in less than two years created the bus Londoners can see today,” said Isbrand Ho, Managing Director of BYD Europe. “This is not a hybrid bus but a totally emissions free product which will give London a world leading position in its efforts to improve air quality.”

Leon Daniels, TfL’s Managing Director for Surface Transport, said: “BYD are a brilliant supplier. They lead the world in electric bus technology and we thank them for their efforts to make this new double decker a reality.”

BYD and Berkshire Hathaway

In 2008, Berkshire Hathaway bet on BYD’s potential, purchasing 225 million shares, and today owns roughly 9.1% of the company.

For More on BYD, read the Special Report: BYD, Berkshire’s Tesla.

© 2016 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

India Latest Country for BYD’s Pure-Electric Buses

(BRK.A), (BRK.B)

Bangalore has been dubbed the “Silicon Valley of India,” but it’s also a city choked by air pollution that on some days is twice as bad as Delhi’s notorious pollution.  And as much as 20% of the city’s total exhaust is produced by diesel buses.

Those skies took the first tiny step to becoming cleaner, as Chinese battery and vehicle manufacturer BYD Co. Ltd. has sold its first pure-electric bus to the Bangalore Metropolitan Transport Corporation.

“Operating electric buses not only to initialize and support new technologies, shows our respect to the city and urban residents with our social and environmental responsibility,” stated the Transportation Minister.

Although the electric bus comes with a higher initial price tag, officials expressed confidence that the total cost of ownership for the vehicle would make initial investments well-worth the price.

“The list of vehicle benefits is long; including the fact that it is quiet, does not pollute, and has low operational and maintenance costs. The bus has been operating successfully in various European countries besides China,” officials said.

Lower Cost of Fuel

Given the difference of the electricity price and diesel price, the BYD electric bus is not only zero emission but also has higher economic value.

Traditional diesel buses consume 0.55 L of diesel per kilometer in India, but by comparison, BYD’s 40 foot all-electric bus only consumes about 1 Kwh electric per kilometer (with no HVAC). The results are that millions in cost savings can be realized in Bangalore.

Last year, the Indian government reviewed the “national electric vehicle plan (2020)” and announced that India planned to put in place as many as 6-7 million new energy vehicles by 2020. The national heavy industry ministry is responsible for implementing the plan.

“The ambitious plan will promote the development of new energy automobile industry, the industry enterprises with large scale operating experience and strong technical strength, such as BYD will benefit the most,” a Hong Kong based observer said.

BYD and Berkshire Hathaway

In 2008, Berkshire Hathaway bet on BYD’s potential, purchasing 225 million shares, and today owns roughly 9.1% of the company.

For More on BYD, read the Special Report: BYD, Berkshire’s Tesla.

© 2016 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

SolTrans Orders Pure-Electric Buses From BYD

(BRK.A), (BRK.B)

Chinese battery and vehicle manufacturer BYD Co. Ltd. continues to make advances in the U.S. bus market, picking up its first pure-electric bus orders for the public transit system serving the southern California cities of Vallejo and Benicia.

The Solano County Transit (SolTrans) in Vallejo, California, has ordered two forty-foot zero emission electric buses from BYD’s U.S. division, BYD Coach & Bus. The buses will go into service in the summer of 2016.

BYD notes its K9 40-foot bus is the most popular electric bus platform in the world, with more than 6,000 now running in revenue service in cities from Los Angeles, to London and Hong Kong.

Public transit systems are increasingly turning to pure-electric buses as they work to meet stricter carbon emission goals. The prior generation of hybrid buses are now aging out of service, and BYD’s pure-electric buses are ready replacements.

“This is a historic moment for Solano County,” said Mona Babauta, Executive Director of SolTrans. “This decision, supported by the SolTrans board of directors, is an excellent example of the forward-thinking attitude towards technology and transportation that contributes to making Solano County a great place to live. ”Our decision to go electric includes taking positive steps towards reducing greenhouse gas emissions, reducing our dependence on petroleum, and cleaner air,” continued Babauta. In addition “these buses are whisper-quiet, and will drastically reduce noise pollution along their daily routes.”

BYD’s Battery Electric bus employs many advanced technologies developed in-house by a staff of more than 15,000 R&D engineers, and includes the BYD Iron-Phosphate battery which boasts the only 12-year-battery warranty in the industry. Combined with BYD’s proprietary in-wheel hub motors and regenerative braking system, the BYD battery electric bus offers the lowest life cycle cost of ownership. The BYD electric bus delivers a host of operational and environmental benefits for public transit riders, bus operators and residents of the community — it is very quiet and ensures a comfortable ride without vibrations, jerks or the noise associated with the conventional buses and combustion engines. The bus can also drive for more than 155 miles, even in heavy city traffic, on a single charge.

As of April 1st, 2015, BYD bus fleets had completed greater than 100 million miles in revenue service, and have been evaluated by more than 150 cities in 36 countries around the world.

To date, BYD has built over 7,000 electric buses globally, making it by far the most popular electric transit vehicle on the planet.

BYD and Berkshire Hathaway

In 2008, Berkshire Hathaway bet on BYD’s potential, purchasing 225 million shares, and today owns roughly 9.1% of the company.

For More on BYD, read the Special Report: BYD, Berkshire’s Tesla.

© 2016 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 Stock Portfolio

BYD’s B-Box Takes on Tesla’s Powerwall

(BRK.A), (BRK.B)

Tesla gained a lot of attention in May of 2015 when it announced its Powerwall home battery, a rechargeable 7-10 kwh lithium-ion battery that could be used by solar panel owners to store power when the sun doesn’t shine. For some, it pointed the way towards living completing off the grid. Tesla is not the only company eyeing the home electric power storage market.

BYD Co. Ltd. – the world’s largest supplier of rechargeable batteries – and GoodWe Power Supply Technology Co. Ltd. have announced the full compatibility of BYD’s B-Box Modular Energy Storage System with GoodWe’s ES and BP Series Inverters to provide households with efficiency in home energy storage.

Unlike Tesla, which uses lithium-ion batteries, BYD’s B-Box uses BYD’s fire-safe, completely recyclable and long-cycle Iron-Phosphate battery, which it notes features high thermal stability.

According to BYD, the B-Box features a wide range of output power to meet heavy load applications, high discharge currency, free and flexible utilization for off-grid and on-grid usage, as well as worldwide applicability.

As a modular energy storage system, the BYD B-Box features additional usage freedom and flexibility with the key advantage of easy expansion. In the B-BOX 10.0, each module has a 2.5KWh storage capacity, and the box can house up to four modules, for a maximum of 10KWh capacity. The B-Box10.0 can also be laid out in parallel, reaching a maximum capacity of 80KWh. BYD has also launched the B-BOX 12.8, which can reach a maximum capacity of 409kwh when paralleled with multiple boxes.

The BYD B-BOX is already on sale in many European countries including Germany, UK, Italy, Spain, as well as in Australia and Africa.

As BYD moves forward, Tesla has scaled its highly-touted home power storage plans, dropping it previously announced but never marketed 10 kwh Powerwall. Tesla instead will market only the 7 kwh Daily Powerwall.

BYD and Berkshire Hathaway

In 2008, Berkshire Hathaway bet on BYD’s potential, purchasing 225 million shares, and today owns roughly 9.1% of the company.

For More on BYD, read the Special Report: BYD, Berkshire’s Tesla.

© 2016 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

BYD Receives Big Pure-Electric Bus Order from AVTA

(BRK.A), (BRK.B)

The Antelope Valley Transit Authority (AVTA), which serves some 450,000 residents of the cities of Lancaster and Palmdale, California, and the unincorporated portions of northern Los Angeles County, has ordered up to 85 pure-electric buses from China’s BYD Company Limited.

The buses will be built at BYD’s manufacturing facility in Lancaster, California.

Berkshire Hathaway owns roughly 9.1% of the company, and Berkshire’s stake is worth roughly $12.3 billion.

“BYD Coach and Bus is proud to partner with AVTA on its groundbreaking decision to completely electrify its fleet,” said Stella Li, president of BYD Motors. “With more than 6,000 electric buses deployed world wide and 90 million miles of dependable service already accumulated, we know that our technology will help AVTA save money and improve local air quality. Pure-electric powered transportation is no longer in the future – it’s here now. I hope other transit agencies in California and across the country take note and follow the example AVTA has set today.”

AVTA notes that it is anticipating a cost savings as a result of electrifying its fleet. Over the lifetime of the new electric bus fleet, the transit agency forecasts it could save more than $46 million compared to an all diesel bus fleet, equivalent to $46,000 per bus per year in savings. And, by reducing dependence on foreign oil imports, AVTA will no longer be subject to oil price volatility for its bus fleet. This will help create greater stability for budget forecasting for the fleet manager – an important factor for a public agency.

The AVTA expects to take delivery of 29 electric buses within the next 12 months and is working to secure additional grant funding from the Air Resources Board to purchase another 17 buses.

“This is a historic day for AVTA which has been working diligently to secure grant funding to purchase these state-of-the- art zero-emission vehicles,” said Len Engel, executive director of AVTA. “We are proud to be the first transit system to adopt a goal of ‘100% Green in 2018’ and we look forward to leading the nation toward a new alternative in public transportation.”

Additional benefits AVTA will see as a result of electrifying its entire fleet include:

• Noise Pollution Reduction: noise pollution will be reduced by 50 percent, making it a more pleasant ride for bus operators and transit passengers.

• Emissions Reductions: AVTA’s all-electric fleet will provide elimination of CO2, NOx, PM10 and PM2.5, thereby improving air quality and positively impacting human health.

• Safer Work Environment for Technicians: The electric batteries are safe, thermal runaway proof, non-toxic, and maintenance free. There are no diesel or diesel emission fluids needed for bus maintenance, providing a safer and healthier working environment for vehicle technicians.

BYD’s Pure-Electric Buses Around the Globe

BYD’s electric buses have been hot sellers not only in China, but around the world, with orders from the U.S, Brazil, Columbia, England, Malaysia and Thailand.

In September 2015, BYD scored a massive order in the U. S. from the state of Washington. BYD won a contract from the Washington State Department of Transportation (WSDOT) for up to 800 pure electric buses.

For More on BYD, read the Special Report: BYD, Berkshire’s Tesla.

© 2016 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 Stock Portfolio Todd Combs and Ted Weschler

Buffett’s Belief in Todd Combs and Ted Weschler Continues to Grow

(BRK.A), (BRK.B)

Todd Combs and Ted Weschler, the former hedge fund managers that Warren Buffett hired to manage a portion of Berkshire Hathaway’s stock portfolios, have continued to see their portfolios grow.

Combs was hired in 2010, and Weschler was hired in 2011, and each was initially given a billion dollar portfolio to separately manage. Over the past five years Buffett has increased their portfolios as he has grown confident in their abilities, with the portfolios reaching $7 billion each in 2014.

Those portfolios have now reached $9 billion each, according to information in Warren Buffett’s 2015 annual shareholder’s letter.

The total stock holdings for Berkshire total a whopping $132 billion.

As Warren Buffett’s handpicked protégés, Buffett has praised their success, noting that “They have made Berkshire billions already that we wouldn’t have otherwise made,” Buffett said on CNBC in 2014. “They both have a fundamental combination of soundness and brilliance.”

That brilliance has certainly played out big in 2014 and 2015.

It was Todd Combs’s belief in aerospace manufacturer Precision Castparts that directly led to Buffett’s $32 billion acquisition of the company.

“You have to give Todd Combs credit for the deal,” Buffett said, noting that he had never heard of the company before Combs brought it to his attention. ”Todd told me a lot about it, and over the last few years I have become familiar with it,” he added.

Another winner was Combs and Weschler’s positions in DirecTV in 2014. The satellite broadcaster’s acquisition by AT&T brought an over $3 billion windfall for Berkshire, as its 4.5 million shares were purchased at roughly half the tender price of $95 per share offered by AT&T.

Sooner or later, the day will come when the entire Berkshire portfolio will be in Todd Combs and Ted Weschler’s hands, and Berkshire’s shareholders will be able to sleep well at night knowing it is well-managed.

© 2016 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

BYD Profits Surge as Electric Vehicle Sales Soar

(BRK.A), (BRK.B)

BYD Company Limited, the Chinese battery and vehicle-maker that is 9% owned by Berkshire Hathaway, saw its net profits in 2015 grow a dramatic 550% to 2.82 billion yuan ($431 million).

The growth comes as BYD took over the number one position as the world’s top selling EV manufacturer.

BYD was only ranked seventh in 2014, and its position as the global leader comes while it has yet to retail its EV cars in the United States.

BYD’s success is due in part to the popularity of its Qin sedan and Tang SUV in China, and on the growing sales of its pure-electric buses, not only in China, but around the world.

BYD has pure-electric bus orders from the U.S, Brazil, Columbia, England, Malaysia and Thailand.

In September 2015, BYD scored a massive order in the U. S. from the state of Washington. BYD won a contract from the Washington State Department of Transportation (WSDOT) for up to 800 pure electric buses.

On the auto front, the company will introduce two new models in 2016, the SUVs Song and Yuan.

In 2008, Berkshire Hathaway bet on BYD’s potential and purchased 225 million shares, and today owns roughly 9.1% of the company.

For More on BYD, read the Special Report: BYD, Berkshire’s Tesla.

© 2016 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 Stock Portfolio Todd Combs and Ted Weschler

Heavyweights Agree with Berkshire on Kinder Morgan

(BRK.A), (BRK.B)

George Soros’s Soros Fund Management has moved into Kinder Morgan, as other heavyweight investors seem to see the opportunity in the pipeline company that Berkshire Hathaway does.

Berkshire Hathaway recently reported that it had acquired 26.53 million shares of Kinder Morgan in the fourth quarter of 2015, with a market value of roughly $456 million.

In the fourth quarter of 2015, Soros Fund Management purchased 50,700 shares of Kinder Morgan, and hedge fund manager David Tepper of Appaloosa Management acquired 9,445,321 shares of the company.

As with many of Berkshire’s stock holdings in recent years, it’s not known whether the purchase was made my Warren Buffet, or his lieutenants Todd Combs and Ted Wechsler.

While global oil prices have tumbled, they haven’t kept Berkshire from investing in Kinder Morgan and refiner Phillips 66.

Berkshire recently raised its Phillips 66 stake to 72,293,310 shares. The new purchases bring Berkshire’s stake in the refiner to roughly 13.7%. In contrast, its stake in Kinder Morgan is only 1.2% of the company.

Kinder Morgan owns an interest in or operate approximately 84,000 miles of pipelines and approximately 180 terminals. Its stock price has dropped by two-thirds in a year.

Apparently, now is the time to buy.

© 2016 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.