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BNSF

BNSF Restrictions Creates Rush for New Tank Cars

(BRK.A), (BRK.B)

After BNSF suffered a June derailment that saw ruptured tank cars spill some 230,000 gallons of crude oil spilled into an Iowa river, the class 1 railroad has reportedly responded by limiting the number of retrofitted tank cars called DOT 117Rs.

According to Reuters, BNSF banned the retrofitted cars, which were the type of cars that leaked in the Iowa spill, from all new contracts. The move sent refiners and producers scrambling to lease new tank cars.

BNSF has not confirmed the restriction.

The lease price of new tank cars has more than doubled from $400 a month last year to $1,000 today.

BNSF does not own the tank cars that run on its lines hauling crude oil and ethanol. The cars are owned by companies such as ConocoPhillips, or leased from brokers.

Ironically, BNSF, which is owned by Berkshire Hathaway, is limiting the very tank cars that are retrofitted by UTLX, another Berkshire company. UTLX has retrofitted almost 5,000 DOT-111 tank cars to the new DOT-117R standards.

In 2016, UTLX opened a tank car remanufacturing facility in Marion, Ohio to bring older tank cars up to DOT-117R standards and continue to be used for flammable liquids service.

The retrofits includes new top fittings protection, thermal insulation, an 11-gauge steel jacket, full ½-inch thick head shields, and a bottom outlet valve handle that disengages from the valve when the car is in transit.

© 2018 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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Dairy Queen

Arkansas Dairy Queen Breaks One-Day Record

(BRK.A), (BRK.B)

“Everything old is new again,” goes the old saying. That’s definitely true for Dairy Queen, which is proving to be one of the hottest brands around.

A new Dairy Queen in Cabot, Arkansas has opened to DQ-record-breaking business. The store claims to have set a DQ record for the most transactions in one day and a worldwide DQ record for highest one-day sales, which included “outpacing all 7,000 DQ stores in the company’s 78-year history.”

DQ devotees began camping out on the restaurant patio at 7:30 p.m. of the previous day to earn one of 100 tickets for free Chicken Strip Baskets for one year with the purchase of a DQ cake on opening day.

Even before the July 13 opening, the central Arkansas store had been actively building its social media presence, encouraging DQ fans to sign up for text alerts and getting back an image for them to “post and tag” the new Cabot store.

For more information on Dairy Queen’s world-wide plans, read a Mazor’sEdge special report on Dairy Queen.

© 2018 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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Nebraska Furniture Mart

Nebraska Furniture Mart to Move Des Moines Store to Larger Location

(BRK.A), (BRK.B)

Nebraska Furniture Mart will move its Des Moines, Iowa store.

The current 44,000-square-foot-store, which is actually in the town of Clive, will close and the furniture and appliance retailer will move to a site currently occupied by an empty former Dahl’s Food grocery store.

The new location is also in Clive, and will enable Nebraska Furniture Mart to feature more merchandise in the renovated 65,000-square-foot-building. The current location opened in 1993.

The new 65,000-square-foot location will still be small when compared to the company’s mega-store outside of Dallas, Texas, which clocks in at a massive 560,000-square-feet and is the largest store in the state.

Ryan Blumkin, vice president of Nebraska Furniture Mart, told the Des Moines Register that the new location will enable the retailer to increase its focus on retail customers. The Des Moines location has had a heavy emphasis on selling to contractors.

The opening is scheduled for spring 2019.

© 2018 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 Rolling on Martha’s Vineyard

(BRK.A), (BRK.B)

China’s BYD is the Vineyard Transit Authority’s (VTA) answer to soot emitting diesel buses on the island of Martha’s Vineyard off the coast of Massachusetts.

VTA is putting BYD battery-electric buses on the island’s routes right in time for the heart of tourist season.

BYD has delivered five buses and a sixth will be in service by the end of July.

The six-bus order includes four BYD K9S 35-foot models and two K7 30-foot models.

VTA’s plan to convert its entire fleet to pure electric. The VTA has announced it will purchase an additional four BYD buses.

“We are excited to begin transforming our fleet with these six BYD electric buses,” said Angie Grant, Administrator of Vineyard Transit Authority. “VTA is the first transit agency in Massachusetts to commit to going all-electric. This delivery is a milestone for both VTA and our state to begin the shift of electrification.”

According to VTA, it selected BYD for irs first set of electric buses based on BYD’s battery warranty, mile range and selection of sizes and models, which accommodate Martha’s Vineyard’s road network.

“We are thrilled to partner with VTA in helping to create a more sustainable world. Many agencies look to VTA for its industry-leading practices and consciousness. They service an area that is in high demand year after year and they set the bar for forward thinking,” stated Bobby Hill, senior vice president of BYD.

The proprietary BYD Iron-Phosphate batteries that power the K7 and K9S are manufactured in Lancaster, California.

The company’s revolutionary battery is nontoxic, 100% recyclable, fire-safe and incredibly long-cycled. BYD is the first and only electric bus manufacturer in the world to offer a 12-year warranty on its batteries.

The K7 electric bus has a capacity of 22 passengers, while the K9S features a capacity of up to 32 passengers, depending on the precise configuration. The new buses will produce no emissions, make oil changes a thing of the past and offer dramatically lower maintenance costs.

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.

© 2018 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
HomeServices of America

ReeceNichols President Becomes CEO

(BRK.A), (BRK.B)

Mike Frazier, ReeceNichols president and chief financial officer, has assumed the role of chief executive officer and president. Linda Vaughan, former CEO, will serve as Chairman Emeritus through the remainder of 2018.

ReeceNichols is a wholly-owned subsidiary of Berkshire Hathaway’s HomeServices of America.

“Having worked closely with Mike over the last 11 years, I know he has the skill and drive to lead ReeceNichols to new levels of success,” Vaughan said. “He has a passion for our team, and I am excited to see the bright future that lies ahead for ReeceNichols under Mike’s leadership.”

Frazier joined ReeceNichols in 2007 as CFO and chief operating officer. In January 2018, he was named president of the organization. During Mike’s tenure, ReeceNichols has expanded geographically in Kansas City and southern Missouri and has grown in market share.

In 2017, ReeceNichols guided over 20,000 families and individuals through the home buying and selling process.

“Linda and I have worked together for many years, and her strategic insight and vision have been at the center of ReeceNichols’ continued success,” Frazier said. “I look forward to leading ReeceNichols to its next stage of growth and performance, supported by our talented agents and world-class management team.”

“Linda’s leadership helped guide ReeceNichols to become a leading real estate company. On behalf of HomeServices, we thank her for her many contributions, and we wish her well as she enters this new chapter of her life,” said Greg Mason, president, Midwest Region. “Mike brings exceptional leadership qualities to ReeceNichols and the HomeServices executive team, and we look forward to continuing to work with him in the months and years to come.”

© 2018 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
Warren Buffett

Revised Berkshire Hathaway Stock Repurchase Program Makes Stock Buyback More Likely

(BRK.A), (BRK.B)

In a move that makes a Berkshire Hathaway stock buyback much more likely, the Board of Directors of Berkshire Hathaway has authorized an amendment to Berkshire’s share repurchase program.

The earlier share repurchase program provided that the price paid for repurchases would not exceed a 20% premium over the then-current book value of such shares.

Under the amendment adopted by the Board of Directors, share repurchases can be made at any time that both Warren Buffett, Berkshire’s Chairman and CEO, and Charlie Munger, a Berkshire Vice Chairman, believe that the repurchase price is below Berkshire’s intrinsic value, conservatively determined.

The current policy whereby share repurchases will not be made if they would reduce the value of Berkshire’s consolidated cash, cash equivalents and U.S. Treasury Bills holdings below $20 billion will continue. Berkshire will not initiate any share repurchases under the amended program until it publicly releases its second quarter earnings, currently scheduled after the close of the markets on Friday, August 3, 2018.

© 2018 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
Warren Buffett

Buffett Converts Shares, Makes Multi-Billion Charitable Donations

(BRK.A), (BRK.B)

Warren Buffett is a generous guy. He’s made a massive fortune and now he’s giving much of it away. Buffett has converted 11,867 of his Class A shares into 17,800,500 Class B shares.

Of these Class B shares, 17,696,780 have been donated to five foundations: Bill & Melinda Gates Foundation, Susan Thompson Buffett Foundation, Sherwood Foundation, Howard G. Buffett Foundation and NoVo Foundation. These shares have a current value of $3.4 billion.

Buffett has never sold any shares of Berkshire. With the current gift, however, about 43% of his 2006 holdings have been given to the five foundations.

Their value at the time of the gifts, including the 2018 gift, totals about $31 billion.

Buffett is following his plan to have all of his Berkshire shares given to philanthropy through annual gifts that will be completed ten years after his estate is settled. In all cases, his A shares will first be converted into B shares immediately prior to the gift.

© 2018 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

Despite PTC Implementation, BNSF Files Extension

(BRK.A), (BRK.B)

BNSF Railway has announced that as of December 2017 it had fully installed and was operating under Positive Train Control (PTC) on all mandated subdivisions in advance of the December 31, 2018 deadline.

It has now announced that it nonetheless submitted a request to the Department of Transportation (DOT) for a two-year extension of the PTC deadline. The extension is required due to the Federal Railroad Administration’s (FRA) current interpretation of the law that full implementation status cannot be achieved until all non-BNSF trains and/or equipment operating on its PTC-equipped lines are also PTC-compliant.

“BNSF has succeeded in the adoption of this key safety technology. Even with this request for a deadline extension, BNSF’s PTC network is installed and we are currently running, and will continue to run, more than a thousand trains daily with PTC as we continue to refine the system and resolve technological challenges,” said Chris Matthews, BNSF assistant vice president, Network Control Systems.

As reported, BNSF completed the installation of all mandated PTC infrastructure at the end of 2017, including 88 required subdivisions covering more than 11,500 route miles on its network. However, to be considered fully implemented requires that all other railroads operating across any of BNSF’s PTC-equipped lines must be capable of operating with BNSF’s PTC system. This interoperability of PTC systems between Class I, commuter and short line rail carriers remains a challenge.

BNSF has successfully demonstrated interoperability with several railroads that operate on its network, including commuter railroads and Amtrak. However, not all railroads that operate on BNSF will have completed their PTC installation by the end of 2018.

© 2018 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
Forest River

Forest River’s Booming Business Means 325 New Jobs in Elkhart, Indiana

(BRK.A), (BRK.B)

Forest River, Berkshire Hathaway’s RV manufacturer, is riding high these days. With business booming, it’s proposing spending roughly $6 million on real estate and create 325 new full-time jobs with annual salaries totaling approximately $16.9 million in Elkhart, Indiana.

The Elkhart County Council has approved a resolution for a 5-year tax phase-in agreement that would include Forest River’s guarantee of the 325 new full-time jobs.

Forest River has already begun construction on two buildings and is in the planning stage for two more.

Surprising analysts, millennials have embraced the RV lifestyle, which has helped spur robust annual growth averaging 15 percent the last few years.

Then again, perhaps it shouldn’t be such a surprise. With millennials touted as focused on experiences, the RV is the perfect vehicle to bring you to those experiences in comfort.

© 2018 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
Lubrizol

Lubrizol Touts Breakthrough Material for Footwear Market

(BRK.A), (BRK.B)

The U.S. Department of the Interior reports that Americans throw away at least 300 million pairs of shoes each year. Unfortunately, the traditional rubber sole is not easily recyclable and need 30-40 years to breakdown in a landfill.

Berkshire Hathaway’s Lubrizol may have solved that problem with an innovative new material.

The company has debuted its new polymer-based material solutions for the footwear market, Estane TRX TPU and BounCell-X.

First displayed at Chinaplas 2018, the plastics and rubber trade fair in Shanghai,Estane TRX TPU is billed as an innovative rubber replacement for outdoor, athletic and work shoe outsoles. Outsoles made from Estane TRX TPU provide outstanding benefits for both consumers and footwear designers. Among its its features:

Automation
• Reduced labor costs via thermoplastic injection molding
• Automated production possibilities versus traditional rubber outsole molding

Sustainability
• Recycling* possibilities at outsole manufacturing and post with TPU (not available with thermoset rubbers)

Applications
• Exceptional slip resistance with wet ground conditions
• Excellent wear resistance against heat friction on the shoe outsole at room/high temperatures
• Transparent outsole allows color freedom for novel design
• Thinner TPU outsole improves flexible feeling and improves weight reduction

© 2018 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.