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Minority Stock Positions Stock Portfolio

BYD Partners With AMPLY to Provide Charging Infrastructure

(BRK.A), (BRK.B)

With the high costs and operational complexities surrounding electric vehicle (EV) deployments within commercial fleets, EV manufacturer BYD (Build Your Dreams) has announced a preferred partnership with charging infrastructure provider, AMPLY Power.

The partnership allows fleet operators such as transit agencies, shuttle bus operators, universities, school districts, and municipalities to more rapidly migrate to electric vehicles through joint products and services encompassing vehicles and infrastructure.

In a 2018 survey by Greenbiz, fleet operators cited high cost and complex infrastructure as main deterrents in expanding their electric truck and bus pilots to full deployment. The two companies aim to answer these challenges by providing bundled, affordable solutions and charging infrastructure that guarantees uptime.

“Together, BYD and AMPLY Power offer a great benefit to our customers,” BYD President Stella Li said. “This partnership leads to a total and affordable solution that will help municipalities, universities and businesses achieve their climate goals.”

AMPLY provides comprehensive end-to-end services to fleet operators, including operational upgrades and utility interconnections, optimal charging strategy based on drive cycle and duty cycle, debt financing or grant funding for reducing capital expenditures, and implementing resiliency plans where needed. The company assumes the full financial responsibility of utility account and provides the fleet with flat usage rates. AMPLY also performs onsite operations and maintenance services, and invests in technology upgrades as the needs of the fleet evolve.

“If we want to accelerate electric vehicle fleet adoption, we must make it as simple as possible for commercial fleet operators,” said Vic Shao, CEO of AMPLY Power. “By establishing a relationship with BYD, we now open the door to vehicle and management options for operators, making the switch to electric even easier.”

BYD produces transit buses and motor coaches at its manufacturing plant in Lancaster, California. BYD is the only battery-electric bus manufacturer that has both a union workforce, covered by SMART Local 105, and a community benefits agreement, which prioritizes hiring of veterans, single parents, second-chance workers, and other groups that face obstacles to gaining manufacturing employment.

AMPLY and BYD have been working with joint customers since early 2019. This partnership formalizes the relationship as the two companies begin to deploy a number of electric bus customer projects, with the earliest expected to launch this year.

BYD and Berkshire Hathaway

In 2008, Berkshire Hathaway bet on BYD’s potential, purchasing 225 million shares. It’s an investment that has paid off handsomely. Berkshire’s original investment of $230 million has grown in value almost ten-fold, and is now worth roughly $1.96 billion.

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

© 2019 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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BNSF

BNSF to be Sued by Environmental Groups Over Grizzly Bear Deaths

(BRK.A), (BRK.B)

Wildlife advocates have notified Burlington Northern Santa Fe Railway of their intent to sue the business over its role in trains in Montana killing numerous grizzly bears, which are protected under the Endangered Species Act.

A train recently killed two grizzly cubs near Whitefish. In addition, five grizzly bears died earlier this month near East Glacier Park as a result of railway activities. A train struck and killed a cow, which then attracted five bears to the tracks.

In five separate incidents, two died in train collisions and three were killed by cars on Highway 2.

This year alone, trains have killed at least eight grizzlies in Montana.

“While Burlington Northern has twiddled its thumbs for 15 years rather than taking essential measures to protect grizzly bears, trains have killed dozens of grizzlies, including at least four cubs,” said Sarah McMillan, Conservation Director at WildEarth Guardians. “This neglect, that has such lethal impact on protected bears, is simply unacceptable.”

The lawsuit targets BNSF’s railroad across northern Montana, which runs from eastern Montana, just south of Glacier National Park, and into Idaho. The best available data show that from 1980-2018, trains along its railways killed or contributed to the deaths of approximately 52 grizzly bears from the Northern Continental Divide Ecosystem.

Approximately 1.2-1.5 BNSF trains run per hour on these railways in Montana, averaging 35 miles per hour. There is a slight increase in train frequency at twilight, when grizzly bears often feed.

“The 67-mile stretch of railway between West Glacier and Browning is where trains reportedly killed 29 grizzlies between 1980 and 2002,” said Pete Frost, attorney at the Western Environmental Law Center. “Slowing the trains down, ensuring carrion are promptly cleared from tracks, and perhaps scheduling trains to run during the day and not at feeding time might reduce trains killing grizzlies.”

“The deaths of these grizzly bears and cubs was entirely preventable and there is no excuse for BNSF’s continued failure to safeguard the railroad from these lethal collisions,” said Josh Osher, Montana Director for Western Watersheds Project. “Whether it’s a lack of concern, laziness or just plain greed, it’s time for BNSF to be held accountable and to take immediate steps to stop further killings.”

The Western Watersheds Project notes that a company’s activities kill threatened species like the grizzly bear, it is legally required to propose solutions in a habitat conservation plan that then can lead to an incidental take permit. For more than 15 years, Burlington Northern has said it is working on a habitat conservation plan for grizzlies along its northern Montana train route, but one has never materialized.

© 2019 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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BNSF

BNSF Certifies Six New Sites

(BRK.A), (BRK.B)

Six new industrial locations have been awarded BNSF Railway Company’s Certified Sites designation.

Four of the new Certified Sites are the first for their state in Arizona, Minnesota, Mississippi and Missouri.

Two new Illinois Certified Sites bring the state’s total count to four.

In order to be considered for the designation, sites must undergo a thorough analysis, which includes an evaluation of environmental and geotechnical standards, available utilities, site availability and existing and projected infrastructure.

“Since the program’s inception in March 2016, BNSF’s Certified Sites have attracted more than $140 million of customer investments,” said Colby Tanner, assistant vice president, economic development. “This is a testament to our communities’ partnerships and commitments to keeping pace with the speed of development.”

The newly-designated Certified Sites feature hundreds of acres ready for industrial development:

• Becker Industrial Park, Becker, Minn. – Adjacent to US Highway 10 with easy access to two additional major highways, Becker Industrial Park consists of 67 acres of contiguous lots zoned for heavy industrial use.

• Duane Michie Industrial Park, Hayti, Mo. – Located one-half mile from the Pemiscot County Port Authority and in close proximity to two Missouri state highways and two interstate highways, Duane Michie Industrial Park has approximately 250 acres available for development.

• Springs Industrial Park, Holly Springs, Miss. – Just north of Highway 22 and about 40 miles southeast of Memphis International Airport, the Springs Industrial Park site has more than 1,200 acres available for development.

• Railplex Industrial Park, Surprise, Ariz. – Surprise’s two-square-mile Railplex is shovel-ready with all major utilities to site including water, sewer, power, rail and telecommunications. The Railplex has attracted over $150 million in capital investment with 292 acres available for development.

• Elion Logistics Park 55, Wilmington, Ill. – Elion Logistics Park 55 is a rail-served, mixed-use industrial park located off BNSF’s Southern Transcon. Up to 12 million square feet of potential rail-served sites are available.

• Lincoln Prairie South, Yorkville, Ill. – Situated at the intersections of State highways 34, 47, 71 and 126 plus access to I-88 to the north, I-80 to the south, and I-55 to the east, the Lincoln Prairie South site is a prime location for development of more than 220 divisible acres.

Certified Sites are a part of BNSF’s Premier Parks, Sites and Transload program. The program is a strategic approach that addresses the increasing demand for customer site locations by developing various types of facilities across BNSF’s network. Businesses looking to locate at any of these properties could save six to nine months of construction time as a result of this analysis.

BNSF Certified Sites are reviewed by an industry expert in order to ensure accurate, reliable data. The goal of the program is to provide an inventory of rail-served sites that are available for immediate development.

© 2019 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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Berkshire Hathaway Specialty Insurance Insurance

Berkshire Hathaway Specialty Insurance Names Javier Villalba as Head of Claims in Spain

(BRK.A), (BRK.B)

Berkshire Hathaway Specialty Insurance has appointed Javier Villalba to its expanding leadership team in Spain as Head of Claims.

“We are thrilled to have Javier, with his extensive industry experience, bringing BHSI’s commitment to claims excellence to customers in Spain and throughout Europe. Claims is our product — and Javier is exceptionally equipped to bring this product to the marketplace, the BHSI way,” said Ignacio Almazan, Country Manager, Spain, BHSI.

Javier comes to BHSI with nearly 20 years of claims experience. He was most recently Director for Expert Claims (Spain) and Claims Customer Relationship Manager at Zurich in Spain. Prior to that he spent 16 years in Claims at AIG, beginning as a claims adjuster and rising to the position of AIG South Europe Claims & Operations Officer. He earned a law degree from Universidad Complutense de Madrid and completed his studies in Procedural Law at C.E. Ignacio de Loyola.

Javier is based in BHSI’s office in Madrid.

© 2019 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 Marmon Group

Berkshire Hathaway Acquires Provider of Specialty Medical Devices

(BRK.A), (BRK.B)

Berkshire Hathaway’s Marmon Holdings, Inc., has acquired a majority interest in the Colson Medical Companies, a global provider of specialty medical devices, from Colson Associates, Inc.

The purchase price was not disclosed.

Marmon acquired 60 percent of the Colson Medical Companies and will acquire the remaining 40 percent over the next five years.

Colson Associates was founded by the late Robert Pritzker, a long-time Chicago business and civic leader. Mr. Pritzker co-founded Marmon in 1953 and served as CEO until 2002. Upon concluding his five-decade Marmon career, he formed Colson Associates, at which time he acquired the Colson Medical Companies and other businesses from Marmon. He led Colson Associates until his passing in 2011.

Colson Medical provides highly-engineered plates, screws, and related precision tools for orthopedic surgery through its six businesses: Acumed, OsteoMed, MicroAire, Precision Edge, Apex, and Skeletal Kinetics. All but Apex and Skeletal Kinetics were acquired under Marmon between 1979 and 1999. The companies employ more than 1,300 people at locations in the U.S., China, the U.K., Spain, and Germany.

“We are excited to welcome the Colson Medical Companies back home to Marmon,” said Marmon Chairman and CEO Angelo Pantaleo. “Their innovative, proprietary products and processes and outstanding reputation make them an ideal fit for Marmon and provide our organization with another strong growth platform.”

Warren Buffett, Chairman and CEO of Berkshire Hathaway Inc., added: “We couldn’t be more pleased about Marmon’s acquisition of Colson Medical. The specialty medical device market is an attractive growth opportunity and the Colson businesses are highly regarded. Berkshire and Marmon will provide a home where these businesses can continue to flourish.”

The acquired companies will become a new sector within Marmon, led by Colson’s current President, Chris Smith.

“Our dad would be pleased to know that Colson Medical is going back home,” Karen and Linda Pritzker said in a joint statement. “Marmon shares the values and ethics on which Colson Associates was founded and we believe Colson will have the best possible future under Marmon’s ownership.”

Chicago-based Marmon Holdings is a global industrial organization comprising 10 diverse business sectors and more than 125 autonomous manufacturing and service businesses. Revenues exceeded $8.1 billion in 2018.

© 2019 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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Financial Reports

Berkshire Hathaway Releases Third Quarter Results

(BRK.A), (BRK.B)

Berkshire’s operating results for the third quarter and first nine months of 2019 and 2018 are summarized in the following paragraphs. However, we urge investors and reporters to read our 10-Q, which has been posted at www.berkshirehathaway.com. The limited information that follows in this press release is not adequate for making an informed investment judgment.

Earnings of Berkshire Hathaway Inc. and its consolidated subsidiaries for the third quarter and first nine months of 2019 and 2018 are summarized below. Earnings are stated on an after-tax basis. (Dollar amounts are in millions, except for per share amounts).

Third Quarter

First Nine Months

2019

2018

2019

2018

Net earnings attributable to Berkshire shareholders

$

16,524

$

18,540

$

52,258

$

29,413

Net earnings includes:

Investment and derivative gains/losses –

Investments

8,481

11,552

31,745

10,113

Derivatives

185

108

961

239

8,666

11,660

32,706

10,352

Operating earnings

7,858

6,880

19,552

19,061

Net earnings attributable to Berkshire shareholders

$

16,524

$

18,540

$

52,258

$

29,413

Net earnings per average equivalent Class A Share

$

10,119

$

11,280

$

31,944

$

17,885

Net earnings per average equivalent Class B Share

$

6.75

$

7.52

$

21.30

$

11.92

Average equivalent Class A shares outstanding

1,633,002

1,643,556

1,635,903

1,644,519

Average equivalent Class B shares outstanding

2,449,502,430

2,465,333,662

2,453,854,768

2,466,777,764

Note: Per share amounts for the Class B shares are 1/1,500th of those shown for the Class A.

Due to a change in Generally Accepted Accounting Principles (“GAAP”) in 2018, we are required to include the changes in unrealized gains/losses of our equity security investments as a component of investment gains/losses in our earnings statements. In the table above, investment gains/losses in 2019 include gains of approximately $8.0 billion in the third quarter and approximately $30.1 billion in the first nine months and in 2018 include gains of approximately $10.2 billion in the third quarter and approximately $7.5 billion in the first nine months due to changes during the third quarter and during the first nine months in the unrealized gains that existed in our equity security investment holdings. Investment gains/losses also include after-tax realized gains on sales of investments of approximately $513 million and $995 million during the third quarters of 2019 and 2018, respectively, and gains of approximately $1.6 billion and $2.3 billion during the first nine months of 2019 and 2018, respectively.

The amount of investment gains/losses in any given quarter is usually meaningless and delivers figures for net earnings per share that can be extremely misleading to investors who have little or no knowledge of accounting rules.

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

Third Quarter

First Nine Months

2019

2018

2019

2018

Insurance-underwriting

$

440

$

441

$

1,182

$

1,791

Insurance-investment income

1,484

1,239

4,087

3,393

Railroad, utilities and energy

2,644

2,484

6,447

6,104

Other businesses

2,455

2,411

7,142

7,024

Other

835

305

694

749

Operating earnings

$

7,858

$

6,880

$

19,552

$

19,061

At September 30, 2019, insurance float (the net liabilities we assume under insurance contracts) was approximately $127 billion, an increase of $4 billion since yearend 2018.

Use of Non-GAAP Financial Measures

This press release includes certain non-GAAP financial measures. The reconciliations of such measures to the most comparable GAAP figures in accordance with Regulation G are included herein.

Berkshire presents its results in the way it believes will be most meaningful and useful, as well as most transparent, to the investing public and others who use Berkshire’s financial information. That presentation includes the use of certain non-GAAP financial measures. In addition to the GAAP presentations of net earnings, Berkshire shows operating earnings defined as net earnings exclusive of investment and derivative gains/losses.

Although the investment of insurance and reinsurance premiums to generate investment income and investment gains or losses is an integral part of Berkshire’s operations, the generation of investment gains or losses is independent of the insurance underwriting process. Moreover, as previously described, under applicable GAAP accounting requirements, we are now required to include the changes in unrealized gains/losses of our equity security investments as a component of investment gains/losses in our periodic earnings statements. In sum, investment gains/losses for any particular period are not indicative of quarterly business performance.

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.

Cautionary Statement

Certain statements contained in this press release are “forward looking” statements within the meaning of the Private Securities Litigation Reform Act of 1995. These statements are not guaranties of future performance and actual results may differ materially from those forecasted.

Categories
Lubrizol

French Prosecutors Launch Investigation Into Lubrizol Fire in Rouen

(BRK.A), (BRK.B)

French prosecutors on Tuesday launched an investigation into whether there was negligence on behalf of Berkshire Hathaway’s Lubrizol Corporation that caused the massive fire that destroyed the Lubrizol plant in Rouen, Normandy, France.

Paris prosecutor Remy Heitz released a statement that prosecutors where investing whether there was “involuntary destruction caused by fire due to an obviously deliberate breach of a security obligation”.

Fears of toxic chemical contamination from the September 27 fire are ongoing, but France’s Minister of Health previously announced that “first samples remain below the recommended thresholds of the normal environment.”

The Rouen plant was founded in 1954, and manufactured and packaged additives for lubricants and paint.

No casualties have been reported.

© 2019 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

Categories
Berkadia

Berkadia Arranges $47 Million Sale of Apartment Community in Broward County, Florida

(BRK.A), (BRK.B)

Berkadia, Berkshire Hathaway’s joint venture with Jefferies Financial Group, has arranged the sale of 72 West, a 291-unit, Class B multifamily community located in Tamarac, Florida.

Managing Directors Roberto Pesant and Jaret Turkell of Berkadia’s Miami office, and Director Yoav Yuhjtman of Berkadia’s Boca Raton office, arranged the sale on behalf a New York-based investment group.

A Canadian investment group acquired the property for $47 million.

“The seller bought this property as a fractured condo (222 out of 291 units) in 2016 for $22 million, and has since fully executed its strategy to buy back the privately owned units, collapse the HOA, and stabilize and rebrand the property as 72 West,” said Yuhjtman. “With occupancy at 95.5 percent in this submarket and no new deliveries in the immediate area this year, the new owner has an opportunity to capture some upside from growing demand for high-quality apartment rentals in western Broward County.”

Located at 8650 NW 61st Street in Tamarac, 72 West was built in 1987 and consists of one- and two-bedroom apartments ranging from 756 to 899 square feet. The asset is comprised of nine buildings; six are three-story, garden-style elevator served buildings and three are single-story villas with semi-private entrances and patios. Amenities include two clubhouses with pools.

72 West is ideally located within five minutes of the Sawgrass Expressway and 10 minutes from Florida’s Turnpike, and feeds into the highly rated Coral Springs public school system. The property is close to Sawgrass Mills Mall and the BB&T Center, and just a 30-minute drive to the Boca Raton and Plantation employment markets.

About Berkadia

Founded in 2009 as a 50/50 joint venture between Berkshire Hathaway and Leucadia National Corporation (now known as Jefferies Financial Group), Berkadia is a third-party commercial mortgage servicer, as well as an approved lender for Fannie Mae, Freddie Mac, and HUD/FHA.

The company is among the top Freddie Mac and Fannie Mae multifamily lenders.

Berkadia owes its origins to GMAC Commercial Mortgage Corporation, which was acquired in 2009 by Kohlberg Kravis Roberts & Co., Five Mile Capital Partners LLC, and Goldman Sachs Capital Partners. Christened Capmark Financial, the company had $10 billion of originations in 2008 and a servicing portfolio of more than $360 billion before running into bankruptcy in October 2009.

In a deal approved by the bankruptcy court, Capmark sold its mortgage loan and servicing to the newly formed Berkadia in a deal worth $515 million.

The deal brought Berkshire into the heart of the commercial loan serving business, and the company has one of the largest commercial real estate servicing portfolios.

© 2019 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 Pure Electric Buses Rule Chile

(BRK.A), (BRK.B)

New energy company BYD now has 183 zero-emission buses in service in Chile.

The fleet of BYD K9’s is over half of the 285 zero-emission BYD buses Chile has purchased since 2017.

The positive environmental effect is equivalent to taking some 7,695 cars off the road, eliminating 481,650 tons of CO₂ and 2,850 tons of NOₓ emissions.

BYD and Berkshire Hathaway

In 2008, Berkshire Hathaway bet on BYD’s potential, purchasing 225 million shares. It’s an investment that has paid off handsomely. Berkshire’s original investment of $230 million has grown in value almost ten-fold, and is now worth roughly $1.96 billion.

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

© 2019 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 Insurance

Berkshire Hathaway Specialty Insurance Expands in France

(BRK.A), (BRK.B)

Berkshire Hathaway Specialty Insurance has commenced underwriting casualty and construction insurance in France and filled two key in-country leadership posts, naming Olivier Antiphon as Head of Construction and Anne-Sophie Bonifay as Head of Casualty.

“We are pleased to continue to round out our capabilities in France as we welcome Olivier and Anne-Sophie to lead our entry into the local construction and casualty markets,” said François-Xavier d’Huart, Country Manager, France, BHSI. “Their expertise, coupled with BHSI’s financial strength and commitment to claims handling excellence, will serve our customers and brokers well for years to come.”

Olivier comes to his role with three decades of experience in construction underwriting and engineering. For the past 12 years he was Construction & Engineering Underwriting Manager at XL Insurance Company SE in Paris. Prior to that, he was Engineering Underwriting Manager at Gerling in Paris. He began his career as Head of the Firefighting Engineering Team at Alstom Power. He has a degree in Health & Security from the Institut Universitaire de Technologie in Saint-Denis.

Anne-Sophie joins BHSI with 25 years of experience spanning both middle market and large account casualty underwriting. She began her career in casualty underwriting at AGF (Allianz), and then Commercial Union, in Paris. She then held increasingly senior positions in casualty underwriting at Chubb Insurance Company of Europe, and was Casualty Underwriting Manager, Large Corporate Accounts, at Zurich Global Corporate France. She served as Casualty Underwriting Manager, Middle Market, at XL Insurance Company Limited, and most recently was Casualty Underwriting Manager, Middle Market, at AXA XL in Paris. She holds a master’s degree in Insurance Law from the University of Paris Panthéon Assas.

Olivier and Anne-Sophie are based in BHSI’s office in Paris.

© 2019 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.