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.
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.
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.
Disclosure: David Mazor is a freelance writer focusing on Berkshire Hathaway. The author is long in Berkshire Hathaway, and this article is not a recommendation on whether to buy or sell the stock. The information contained in this article should not be construed as personalized or individualized investment advice. Past performance is no guarantee of future results.
Berkshire Hathaway continues to be high on refiner Phillips 66 (PSX), which has been mostly immune to the downward pressure on oil prices. The demand for refined products, including gasoline, diesel and aviation fuel remains strong.
Berkshire added 2.54 million shares of Phillips 66 worth roughly $198 million stock in ten transactions on January 27 – 29, 2016. Prices of the shares ranged from a low of $76.462 to a high of $79.2699 per share. For the entire month of January, Berkshire bought a total of 10.81 million shares.
In August 2015, Berkshire revealed that it owned more than ten-percent of Phillips 66, and the new purchases ups its stake to 72,293,310 shares. The new purchases bring Berkshire’s stake in the refiner to roughly 13.7-percent.
About Phillips 66
Phillips 66 was spun-off of ConocoPhillips in May 2012, and in addition to its refining and petrochemical business, the company also transports crude oil, refined products, natural gas and natural gas liquids (NGL). It gathers, processes and markets natural gas and NGL to power businesses, heat homes and provide feedstock to the petrochemical industry.
The company’s 52-week share price high was $94.12, and it currently pays an annual dividend of 56 cents, yielding 2.85%.
Despite the weakness in the energy market, Phillips 66 had a profit of $1.31 per share, which exceeded analyst forecasts.
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.
Electric bus manufacturer BYD Co. Ltd, which makes pure electric buses in sizes big and small, has debuted its biggest one yet, a 15-meter bus now in service in São Paulo, Brazil.
The bus, model K10A, is a public transit bus designed for urban settings, and has its batteries stored in the floor of the vehicle.
In addition to the K10A, BYD makes a wide range of pure electric transit buses, including the K7 (8 meters), the K9 (12 meters) and the K11 (18 meters).
According to BYD, the K10A carries up to 95 passengers, has five doors and also relies on the proprietary technology of the BYD Iron-Phosphate Battery, a fire-safe, long-cycle and extended lifetime battery which is totally clean and recyclable. The battery pack enables the K10A to achieve a driving range of around 265 km on a single charge, making the bus capable of covering most of the public transportation routes in Brazil.
The batteries feature a 6,000-cycle lifespan and guarantee of over 15 years of operation. Just like the other BYD buses in Brazil, the K10A features regenerative braking and highly efficient in-wheel motors, making it possible for the bus floor to be lower, greatly simplifying maintenance and significantly reducing operational costs.
São Paulo already has a BYD K9 bus run by Ambiental transport operators.
Berkshire and BYD
In 2008, Berkshire Hathaway bet on BYD’s potential and purchased 225 million shares, and today owns roughly 9.1% of the company.
At the time, Warren Buffett said: “”We are thrilled to be partners with BYD and the people of China. Mr. Wang Chuanfu has an extraordinary managerial record, and we welcome the opportunity to work with him.”
The move has certainly worked out well for Berkshire, as BYD’s electric buses have been hot sellers not only in China, but around the world.
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.
BYD’s electric car business is booming as well, and it is now the number one seller of electric cars worldwide with 11% of the market share.
Berkshire’s stake in BYD is worth roughly $12.3 billion.
Disclosure: David Mazor is a freelance writer focusing on Berkshire Hathaway. The author is long in Berkshire Hathaway, and this article is not a recommendation on whether to buy or sell the stock. The information contained in this article should not be construed as personalized or individualized investment advice. Past performance is no guarantee of future results.
Berkshire Hathaway continues to see the reinsurance business as a low return business and is pulling back from the sector in its own underwriting and in its ownership stake in other underwriters.
Berkshire has again cut its stake in Munich, Germany-based reinsurer Munich Re, this time from 9.7 percent to 4.6 percent. It previously cut its stake from 12 percent to just over 9 percent earlier in 2015.
Berkshire’s own reinsurance business has been less than stellar this year with Berkshire reporting$155 million in losses from storm damage on Australia’s east coast in the 2nd quarter of 2015.
Charlie Says
“The reinsurance business not as good as it once was and is unlikely to get better,” Charlie Munger said at the 2015 Berkshire Hathaway annual meeting. “Money has come in, not because they want to be in reinsurance, but because it’s an uncorrelated asset class. We’re in it for the long haul.”
Uncorrelated (also called non-correlated) asset classes are assets that move in the opposite direction of a particular asset class, thus helping investors reduce risk in exchange for lower upside performance.
Munger’s words were echoed by Ajit Jain, who is the head of Berkshire Hathaway Reinsurance. “What was a very lucrative business is no longer a very lucrative business going forward” Jain was quoted in The Wall Street Journal.
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.
The headlights flashing to pass you on the autobahn just might be coming from an EV built by BYD Company Ltd.
Chinese auto and battery-maker BYD Company Ltd has zoomed into the number one position as the world’s top selling EV manufacturer.
Nissan, Mitsubishi, Tesla, Volkswagen and BMW rounded out the top five, in that order.
BYD Co Ltd, which Berkshire Hathaway holds a minority stake in of nearly 10%, sold 6,099 pure electric cars in October 2015, which was almost double the 3,115 sold by second-place Nissan.
The Winner Month After Month
BYD’s first-place finish in October was the sixth consecutive month since May that it has led worldwide EV sales figures. The company has an eleven-percent market share of the total EV market.
BYD’s success is due to the popularity of its Qin sedan and Tang SUV. The company will introduce two new models, the SUVs Song and Yuan, in 2016.
BYD’s rise to the top is dramatic, as it was only ranked seventh in 2014, and it’s sure to continue to grow, as the company has yet to retail its EV cars in the United States.
In 2008, Berkshire Hathaway bet on BYD’s potential and purchased 225 million shares, and today owns roughly 10% of the company.
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.
BYD Co. Ltd., the Chinese battery and vehicle-maker that is 10% owned by Berkshire Hathaway, has signed a deal in Jordan to provide polycrystalline solar photovoltaic modules for the largest private photovoltaic project in the Middle-East country. The project will supply electricity to a number of luxury hotels.
Partnering with Phoenix Solar, BYD will build three power plants that will supply all the electricity needs of Arab International Hotels, plc (owner of Marriott Amman), Al Dawliyah Hotels & Malls, plc (owner of Sheraton Amman) and Business Tourism Company (owner of Marriott Dead Sea and Marriott Petra).
The goal of the solar project is to reduce to zero the carbon impact of power generation, eliminating 10.7 million kilograms of CO2 emissions per year that would ordinarily be produced through burning fossil fuels.
Phoenix Solar will handle the engineering, procurement and project management. The solar plants will be built in the Mwaqqar and Damikhi/Qatraneh areas, connecting to the electrical networks Jordan Electric Power Co, plc and Electric Distribution Company, plc.
“This project is a milestone in pursuing our ambitious environment targets of zero CO2 emissions,” said Bassam Maayeh, Managing Director of Arab International Hotels, and spokesman for the consortium of hotels involved.
In 2008, Berkshire Hathaway bet on BYD’s potential and purchased 225 million shares, and today owns roughly 9.1% of the company.
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.
BYD Co. Ltd., the Chinese battery and vehicle-maker that is 10% owned by Berkshire Hathaway, has reached a deal to sell 10,000 vehicles to Sudan’s state-run company GIAD Motor Co Ltd.
The cars will include both hybrid and traditional gasoline-powered vehicles, and the deal represents the company’s first major order in Africa.
The vehicles’ power systems and key components will be built in China and the cars will be assembled in Sudan. BYD has assembly plants for gas-powered cars in Sudan and Egypt.
BYD’s Sudanese partner, Giad Motor Co. Ltd., is a subsidiary of Sudan’s Giad Group, the only corporation with a license to produce vehicles in the country, as well as its largest state-owned company.
BYD’s Sale on the Rise
Despite recent turmoil in the China’s stock markets, BYD has had a strong year for global sales.
BYD’s revenues are up 21% to 30.4 billion yuan ($4.75 billion) for the first six months of 2015. Gross profits were up 21.4% for the same period at 4.6 billion yuan with car sales up 14% to 210,000 units.
Berkshire and BYD
In 2008, Berkshire Hathaway bet on BYD’s potential and purchased 225 million shares, and today owns roughly 9.1% of the company.
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.
While Tesla has grabbed major headlines the past few years, China’s BYD Company Limited has grown from just 20 employees in 1995 to over 190,000 today, and in the process become the world’s largest rechargeable battery supplier.
The company has some 16,000 R&D engineers.
In 2015, BYD jumped to number one in worldwide EV sales thanks to the popularity of its Qin sedan and Tang SUV, beating Nissan, Tesla, Volkswagen and Toyota.
The growth directly benefits Berkshire Hathaway. In 2008, Berkshire Hathaway bet on BYD’s potential and purchased 225 million shares for $230 million, and now owns roughly 9.1% of the company.
Today Berkshire’s stake in BYD is worth roughly $1.77 billion.
Like Tesla, BYD is both an automaker and a battery maker. The company purchased Xi’an Tsinchuan Auto Co., Ltd. in 2003 and has aggressively pursued both the auto and bus businesses.
Unlike Tesla, BYD manufactures both gasoline-powered and electric cars, including traditional fuel cars, dual mode electric cars, and electric-only cars and buses. BYD has jumped into the EV market with a broad range of vehicle types, including the bus, coach, taxi, private car, urban logistics truck, sanitation truck and construction truck (concrete mixer); and 4 specific off-road vehicles for use in the warehouse, airports, ports and mining.
Pure Electric Buses
It is in the bus market that BYD is making rapid progress. BYD’s zero-emission pure electric buses have already been deployed in Brazil, China, Columbia, England, India, Malaysia and Thailand.
Air pollution and carbon emissions are the key drivers of the move to pure electric buses. In China, diesel buses make up just 10% of the vehicles on the road but contribute over 30% of city air pollution and GHG emissions.
In January 2018, BYD reached a new milestone with the completion of its 50,000th battery-electric bus.
BYD’s C9, is a two-axle, 40′ coach with the seating capacity to carry 47 people at highway speeds for over 190 miles. The buses use an iron-phosphate battery that after 10,000 charge cycles will still retains 70% of its capacity.
Its largest bus, the K10A, is a 15-meter bus that seats 95 passengers, and is now in service in São Paulo, Brazil.
London saw its first pure electric zero emission double decker bus debut in October 2015, and a fleet of 51 single-deckers debuting in the fall of 2016.
As BYD looks to pure electric bus sales across Europe, it has announced a €20 million investment in a bus assembly plant in the northern Hungarian city of Komárom. The Hungarian plant will begin production in the first quarter of 2017, and will have its own R&D center and battery test facility.
In the U.S. market, BYD has primarily focused on bus sales,becoming the dominant player in the electric bus market. It built a massive 450,000 sq. ft. assembly plant in Lancaster, California.
BYD’s e-buses operate in transit agencies, universities and airports across North America, with more than 40 customers including LA Metro, Los Angeles Department of Transportation, Stanford University, UCLA, UC San Francisco, UC Irvine, Anaheim Resort Transportation, Long Beach Transit, Denver Regional Transportation District, City of Albuquerque, SolTrans, SunLine Transit, Link Transit, COMO Connect, Antelope Valley Transit Authority, and many others.
In the spring of 2015, it also announced a pilot program with Uber in Chicago that uses BYDs E6 sedan. The car is a cross between a sedan and SUV, and currently gets roughly 186 miles (300 km) of driving range per charge. The 2016 E6 will reportedly get a range increase to 250 miles (400 km).
BYD’s biggest breakthrough in the U.S. market came in September 2015, when it won a contract with the Washington State Department of Transportation (WSDOT) for up to 800 heavy duty buses from all different propulsion types that includes 12 different categories for all-electric buses. The buses will serve public transportation systems in the states of Washington and Oregon.
The Explosive Growth of Pure Electric Vehicles in China
In China, it took ten years to go from zero electric vehicles to 1%, but it may take only another five years to reach 10%. In 2018, EVs rose to 3.3% market share.
And, even more amazing is that sales of new energy vehicles in China are projected to hit a whopping 30% by 2025.
BYD sold a total of 520,687 vehicles in 2018 in China alone, of which some 280,000 were pure electric cars.
Strength Around the Globe
While Tesla has struggled in China, laying off 30-percent of its workforce in March 2015, and has its goal of manufacturing in China still on the drawing board, BYD is already a major player. BYD not only has a factory in Shenzhen, but has captured half of the electric car market. Its home field advantage has it selling over 6,000 of its popular stylish QINs per month.
BYD is also having an easier time in emerging markets. It is opening a factory in Brazil by the end of 2015, and is using its strength in pure electric buses as its way to enter the market. What’s more, it beat all U.S. car manufacturers to the Cuba market. In July 2015, the company inked a deal with the Cuban government for the purchase of 719 vehicles to be the first fleet of tourist rental cars. The cars will be traditional fuel vehicles but will give BYD a major foothold in the country, and they are already planning to introduce electric vehicles, and move beyond tourist car rentals to government official vehicles and the nascent private car market.
In September 2015, BYD had its first substantial sale in Africa, signing a deal to sell 10,000 vehicles to Sudan’s state-run company GIAD Motor Co Ltd.
The 7+4 Strategy in Australia
BYD’s comprehensive “7+4” electrification strategy in the Australia region aims at electrification of all forms of ground transportation: urban bus, coach, taxi, passenger car, urban logistics trucks, construction trucks, and urban sanitation trucks (7), as well as vehicles for warehousing, mining, airports and ports (4).
In 2016, the BYD e6 taxi got the green light to access the Australian market becoming the first Chinese made electric vehicle to be certified by the Australian Design Rules (ADRs), the country’s stringent technical standards for emissions, vehicle safety and theft resistance.
The company was already in the Australian market with its pure electric buses in a shuttle service tested for Sidney Airport between December 2014 and May 2015, and it has also sold its pure electric forklifts in Sydney and Melbourne.
A Willing Partner
BYD’s technology makes it an excellent partner with other manufacturers, as cities around the world race to meet ambitious climate change and pollution goals.
In July 2015, BYD signed a deal worth $29.6 million deal with British bus manufacturer Alexander Dennis Limited (ADL) to build 51 single-deck zero-emission buses for London. The buses utilize BYD’s chassis and electric drivetrain with the bodies supplied by ADL. The first 51 buses went into service in September 2016, following a three-year trial that proved the buses could consistently run a 16-hour shift without a recharge. The partnership helps London move towards its goal of having all single-deck buses totally emission-free by 2020.
“Our deep experience of not only battery technology but the critical battery management systems and driveline components necessary to deliver unequaled range and reliability are matched to ADL’s strong track record in building low weight, attractive and durable buses,” said Isbrand Ho, managing director of BYD Europe.
Innovative Mass Transit Solutions
While Elon Musk touts the future prospects of hyperloops in dealing with future transportation needs, Chinese competitor BYD Co. LTD. is looking towards an existing mass transit technology, the monorail, as part of its answer to urban congestion issues. In October 2016, the company debuted its “SkyRail” monorail system in Shenzhen, China.
With a capacity of between 10,000 to 30,000 passengers an hour (each way) and a high speed of up to 80km/h, SkyRail is part of BYD’s focus on the development of layered rail transport that meshes with metro and bus systems. BYD refers to “three-dimensional green traffic” as part of its green mobility platform.
Dramatic Cost Savings Compared to Subways
The electric monorail is a kind of traffic network which interconnects multiple transit backbones in the city at one sixth of the cost of a subway system.
According to BYD, the total market for monorails just in China is in the range of 3 trillion yuan ($450 billion).
BYD’s 4.4 kilometer monorail line at its Shenzhen Headquarters alleviates the traffic problems of 50,000 factory and management employees.
The first commercial sale of BYD’s SkyRail will be to S. Korea.
BYD’s B-Boxes and Vehicle Emergency Power Supply
Like Tesla, BYD has jumped into the home power storage business. The battery maker’s B-Boxes consist of fire-safe, long-cycle Iron-Phosphate rechargeable batteries that perform the same function as the Tesla PowerWall Battery. BYD’s B-Boxes are already on sale in many European countries including Germany, UK, Italy, Spain, as well as in Australia and Africa.
In a move that puts it ahead of Tesla, BYD’s Qin EV300 and e5 cars are equipped with BYD’s signature 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.
Berkshire’s BYD Investment
Despite Berkshire Hathaway’s reputation for avoiding high-tech investments, its stake in BYD, like its more recent stake in eVolution Networks, shows Berkshire is not going to be left out of companies on the cutting edge of technology.
(This article contains updated information from when it was first published.)
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.
Making 100% on your money in a year is something that any investor would be proud of. Any investor that’s not Warren Buffett, that is. However, that pales before the return Berkshire Hathaway is set to make on Friday.
Berkshire Hathaway is poised to make nearly 354,000% on its money on Friday, December 12, 2014, when it exercises its right to purchase 8,438,225 common shares of Restaurant Brands International Inc. (QSR-WI) for a penny a share. The warrants came attached to 68,530,939 Class A 9.00% Cumulative Compounding Perpetual Preferred Shares.
As of December 12, 2014, Restaurant Brands’ shares were trading at $35.41 a share.
The paper profits come as a result of Berkshire Hathaway’s role in financing Burger King’s acquisition of Canadian restaurant chain Tim Hortons, and give Berkshire ownership and control over 4.18% of the outstanding Common Shares and 14.37% of the total number of votes attached to all outstanding voting shares of the Corporation.
Berkshire provided $3 billion in financing, which entitled the conglomerate to preferred stock paying 9% interest, and the right to buy up to 1.75% of the combined company for a penny a share.
After receiving shareholder approval on Tuesday, December, 9, 2014, the deal will close on Friday, December, 12, 2014. Berkshire has already announced its intention to exercise its warrants that will have a value of roughly $275 million.
The combined Burger King and Tim Hortons will have 18,000 restaurants in 100 countries. The total valuation will be $18 billion.
Berkshire is not expected to sell its new stake in Burger King. The shares will join a $100 billion portfolio of leading companies that includes Coca Cola, American Express, IBM, and Wells Fargo among others.
(This article was amended based on the closing price on December 12, 2014.)
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.