Categories
Duracell

Duracell Sues Wholesaler Over Grey Market Batteries

(BRK.A), (BRK.B)

Berkshire Hathaway’s battery-maker Duracell has sued a St. Louis-based battery wholesaler that is selling grey market Duracell batteries in the U.S. market.

The wholesaler, JRS Ventures Inc., has been sued for trademark infringement by Duracell in The United States District Court for the Northern District of Illinois.

According to Duracell the batteries were never intended for direct purchase by consumers.

In its lawsuit, Duracell noted:

“Although the batteries appear to be authentic Duracell products, many of them were manufactured in China, for the sole purpose of being distributed to [original equipment manufacturers] only, and not for the importation and direct sale to consumers in the United States,” Duracell states in its filing.

While Duracell admits that the batteries are genuine, it notes that the batteries that JRS Ventures are selling lack Duracell’s consumer information and its 10-year guarantee.

Duracell asserts that purchasers of the batteries “are likely to be confused and indeed disappointed.”

“Further, such sales of infringing products cause great damage to Duracell and greatly damage the goodwill in Duracell’s valuable trademarks.”

Duracell is asking for the court to halt the sale of the batteries and award unspecified punitive and triple damages.

© 2017 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 Energy

Data Centers Offer Growth Opportunity for NV Energy

(BRK.A), (BRK.B)

Berkshire Hathaway’s NV Energy is looking towards an expanding number of Nevada-based data centers to fuel its growth.

The key is so called green tariffs, where corporations negotiate that all the power will come from renewable sources.

In January 2017, NV Energy and Apple reached an agreement to build 200 megawatts of additional solar energy in Nevada by early 2019. The project will support Apple’s renewable energy needs for its Reno data center. And in May, Apple announced that it had committed $1 billion too expand its data center at the Reno Technology Park.

Reno has become a hub for giant data centers powered by renewable energy, and in addition to Apple, Google has a data center there as well.

NV Energy has filed an application with the Public Utilities Commission of Nevada (PUCN) to enter into a power purchase agreement (PPA) for the solar power plant.

The project will bring NV Energy’s total to more than 529 megawatts of new solar resources in construction in Nevada or under review for approval.

Why Nevada for Data Centers?

Key to data centers is reliability, and Nevada offers several important benefits weather-wise in that area. In addition to having lots of sunshine for solar power, the state doesn’t suffer from floods, hurricanes or tornados.

There already are 491 megawatts of universal solar resources in Nevada currently serving NV Energy customers. Apple will also dedicate up to 5 megawatts of power to NV Energy’s future subscription solar program for residential and commercial customers.

© 2017 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
Dairy Queen

Vietnam Key to Dairy Queen’s Asia Expansion

(BRK.A), (BRK.B)

While Berkshire Hathaway’s Dairy Queen already has over 700 stores in China, it’s Vietnam that the company is focusing on to grow its Asia strategy.

In China, Dairy Queen is a frozen treats only business, and it’s one of the country’s leaders in that category, but in Vietnam, DQ is looking to build stores that feature its food line up as well.

“Vietnam is very important market for us,” DQ CEO John Gainor says. “Vietnam is where we can show that we will do a great job on food as well as frozen treats.”

Unlike some American quick service franchisors that have struggled internationally because their foods are unfamiliar to local tastes and customs, DQ is listening closely to its franchisee to adapt to the Vietnam market.

They key is adapting menu items and offering new items that best suit the Vietnamese consumer. Unlike in the U.S., DQ’s Vietnam stores will serve bone-in chicken.

And since eating a hamburger is a new experience, and people don’t tend to directly touch their food while consuming it in the way American diners do, they are providing an added wrap around the hamburgers.

“They don’t want to pick up their food with their hands and we are adapting to that,” Gainor says.

Also, since hamburgers are a less familiar food in Vietnam, DQ is focusing much of its food promotion on its chicken menu items.

DQ is also adapting its frozen treats to Asian tastes, offering flavors such as green tea with red bean, almond and extra green tea.

There are already several locations open in Ho Chi Minh City and Hanoi, and DQ is aiming for five of its Grill & Chill locations and fifteen treats only locations.

Our slogan is “Fan Food not Fast Food,” notes Gainor. “We are looking to make fans of our food the way people are in the U.S.,” where the brand has very high customer loyalty built on its 77-year history.

There are currently over DQ 6,000 restaurants in the United States, Canada and 18 other countries.

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

© 2017 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
Charlie Munger Warren Buffett

Buffett Reveals Terms of Failed Unilever Bid

(BRK.A), (BRK.B)

Berkshire Hathaway and 3G Capital Partners’ recent unsolicited offer for Unilever may have flopped, but it hasn’t soured Warren Buffett on working with 3G on more acquisitions.

The two entities have worked together on the takeover of Kraft to form Kraft Heinz, and Berkshire provided financing for 3G’s merger of Burger King and Tim Hortons that became Restaurant Brands International. The merger made Berkshire a minority owner of the combined company.

At the annual shareholder’s meeting, Buffett detailed that both Berkshire and 3G were prepared to each put $15 billion into the Unilever transaction.

Some in the press have questioned whether 3G’s extreme cost-cutting made the deal unpalatable for Unilever.

While a shareholder questioned whether 3G’s emphasis on layoffs as part of its cost-cutting strategy was in line with Berkshire’s corporate culture, both Buffett and Charlie Munger noted that improvements in productivity have often lead to layoffs.

Munger noted that he doesn’t long for the days of elevator operators, and “We don’t want to go back to the days of subsistence farming.”

While Munger didn’t see a particular “moral fault” in 3G’s strategy, Buffett was clearly sensitive to the impact on displaced workers.

“If you look at any industry, they are trying to get more productive,” Buffett said. Still he noted that society’s improved living standard as a whole can be of little comfort to an individual that has lost their job, and he wishes there could be another way.

Buffett did term 3G’s severance packages at Kraft Heinz “more than fair.”

© 2017 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
Minority Stock Positions Stock Portfolio Warren Buffett

Buffett Says Wells Fargo “Incentivized the Wrong Type of Behavior”

(BRK.A), (BRK.B)

Warren Buffett continued to take aim at Wells Fargo during his answers to shareholders’ questions at Berkshire Hathaway’s annual meeting.

He noted that Wells Fargo “incentivized the wrong type of behavior,” and felt that its CEO John Stumpf, was slow in responding to the scandal.

Berkshire Hathaway is Wells Fargo’s largest shareholder at just under ten percent of the company.

The stock has been one of Berkshire’s long term core holdings, and so far it has shown no sign of selling its position.

Still, Buffett emphasized that he was not pleased with the actions Stumpf took.

“If there’s a major problem, the CEO will get wind of it. At that moment, that’s the key to everything. The CEO has to act,” Buffett said. “The main problem was they didn’t act when they learned about it.”

Some 5,300 employees were eventually fired for creating over 2 million phony accounts tied to existing customers in order to meet sales goals, and Stumpf ended up resigning.

“An ounce of prevention is worth a pound of cure” Buffett said, noting the old adage. “A pound of cure is worth a ton of cure delayed,” he added.

© 2017 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 Unperturbed by Berkshire’s Q1 Earnings

(BRK.A), (BRK.B)

While much of the media focused on Berkshire Hathaway’s lower first quarter earnings, which fell 27 percent, Warren Buffett reminded shareholders at the conglomerate’s annual meeting that Berkshire has over $90 billion in unrealized capital gains.

Berkshire reported that its net income was $4.06 billion, which translates to $2,469 per Class A share. This was down from $5.59 billion, or $3,401, for the first quarter of 2016.

As of March 31, 2017, Berkshire’s book value had increased by 3.5% since yearend 2016 to $178,073 per Class A equivalent share.

Weather related losses in its insurance businesses were one of the reasons for the earnings shortfall.

Buffett noted that taking some of those capital gains at any time would change the company’s quarterly earnings, and Buffett has always emphasized Berkshire’s intrinsic value, which is harder to quantify.

Buffett did note that Berkshire’s float, which comes from its numerous insurance operations, is up $14 billion.

There’s no doubt that the company is swimming in cash, which is now at a company record $90 billion, and Buffett appeared itchy to put some of that cash to work while keeping Berkshire safe in case of unforeseen hard times.

He noted that the $20 billion he often mentions as held as reserves is in his mind a bare minimum, and that he’s more likely to maintain a reserve closer to $24 billion.

© 2017 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
Minority Stock Positions Stock Portfolio

Commentary: Berkshire Made the Right Bet on BYD

(BRK.A), (BRK.B)

While investors cross their fingers and hope that Tesla’s anticipated Model 3 profits will come in time to bail out the company’s cash burn rate, another electric car and battery maker, China’s BYD, is celebrating its record profits in 2016.

Wondering which company Berkshire Hathaway invested in? If you said BYD, you are right.

The good news for Berkshire, which owns just under ten percent of BYD, is that BYD achieved a record five billion RMB profit in 2016, as the company continues to debut its pure electric buses and cars in markets around the world.

BYD recently unveiled the ‘Dynasty’ prototype vehicle created by its new Design Director Wolfgang Egger.

BYD is preparing to make an even greater push internationally by investing in world class technology and expertise that advances its vision of creating an eco-system of quality new energy products. The five billion RMB SkyRail monorail that was launched last October, the appointment of actor Leonardo DiCaprio as brand ambassador in China for new energy vehicles, along with the recent hiring of two European automobile heavyweights underscores the company’s strategic global expansion.

“Joining BYD provides an opportunity to help a young brand develop its design DNA as it looks to expand its global footprint,” said BYD Design Director Wolfgang Egger. “This concept vehicle will take BYD’s consumer vehicles in an exciting new direction, with design cues like its dragon-inspired exterior drawing inspiration from China’s rich cultural heritage.”

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 is now worth roughly $1.77 billion.

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

© 2017 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
Brooks

Brooks Running Company Heads to China and Brazil

(BRK.A), (BRK.B)

Berkshire Hathaway’s Brooks Running Company is expanding its global footprint in July 2017 with entry into China and Brazil, two of the largest running markets in the world. Entry into China and Brazil is a significant opportunity for Brooks to introduce its innovative products and run happy spirit to the many people who run in the two countries.

“Brooks is 100% focused on the run, and it’s important that our brand is part of the running community across the globe,” said Brooks CEO Jim Weber. “Following success in Europe, Japan and Canada, entry into China and Brazil represents the next step in our global expansion strategy. I’m excited about the opportunity to inspire more people around the world to run and be active.”

Brooks will enter China on July 1 via online and brick-and-mortar distribution. At launch, Brooks’ products will be available online through T-Mall and Amazon as well as in-store at key sporting goods retailers in major markets such as Beijing, Shanghai and Guangzhou. In addition to the company’s industry-leading footwear and accessories, runners in China will be able to experience Brooks Run Signature at select retail locations.

Brooks Run Signature is an innovative fitting method that utilizes cutting-edge technology to assess the way a runner’s body wants to run and recommends the right shoe to fit their run.

In 2018, Brooks will continue to expand its presence in China, adding apparel and sports bras to its product assortment.

In partnership with Centauro, the premier sporting goods retailer in Brazil, Brooks will enter the Brazilian market this July. With Brazil home to the largest running population in Latin America, presence in the country will help Brooks create a brand foothold in the region. Runners in Brazil will be able to experience the company’s entire footwear line including the all-new Glycerin 15, an award-winning shoe in the company’s Cushion category.

Global expansion remains a key priority for Brooks. In the near term, the company plans to strengthen its existing presence in Germany, Italy, France and the United Kingdom. In 2018 and beyond, Brooks will explore opportunities to enter new countries with dedicated runner populations.

© 2017 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
Minority Stock Positions Stock Portfolio

BYD’s Electric EcoTaxis Hit the Streets in Ecuador

(BRK.A), (BRK.B)

Thirty BYD pure electric e5 taxis are now in service in Loja, Ecuador. The project was initiated by the local community and backed by the Ecuadorian government with a tax free incentive.

“The strong support from the government and the development bank Corporación Financiera Nacional shows united effort to create a sustainable living environment,” said Jorge Burbano, Business Manager of BYD E-Motors Ecuador. “We are impressed by their conviction and perseverance to make EcoTaxis a reality.”

Introducing electric taxis into Loja’s public transport system is just one of many steps Ecuador is taking to mitigate climate change. It – along with every Latin American country – is one of the signatories to the Paris Agreement on Climate Change. At 43.6 percent renewable energy also plays a growing role in Ecuador’s energy mix.

The Mayor of Loja, Bolivar Castillo, expressed his gratitude to the locals who first approached City Hall with a business case for the EcoTaxi. “This demonstrates that the people of Loja are not afraid to try new things. Cities like ours will pave the way for others to follow.”

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 is now worth roughly $1.77 billion.

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

© 2017 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
Insurance

Berkshire Hathaway Travel Protection Innovates With New Products

(BRK.A), (BRK.B)

Berkshire Hathaway Travel Protection (BHTP), a leading provider of innovative travel insurance, has launched a new lineup of travel insurance products for the U.S. market.

Known for its market-leading innovation in U.S. travel insurance, BHTP is launching more comprehensive coverage than before with the debut of ExactCare® Value™ and ExactCare® Extra™, and enhancements to its existing ExactCare® product.

“BHTP is launching a good, better and different suite of plans in the U.S. market,” said Dean Sivley, president of Berkshire Hathaway Travel Protection. “Our top-tier offering is ‘different’ in that it not only provides the highest coverage limits from BHTP, it also integrates our innovative fixed benefits, making it the broadest travel insurance option in the U.S.”

ExactCare® Extra™: BHTP is the first travel insurance company to launch a revolutionary concept that combines the innovative and immediate fixed-benefit payments featured in its existing AirCare® product with traditional coverage, giving travelers the broadest travel and simplest protection possible.

ExactCare® Value™: Full-featured product offering savvy travelers what they want most from travel insurance.

ExactCare®: BHTP’s most popular product is now more hassle-free – particularly for families, with the addition of family-friendly pricing.

“Travel agents now have something different to offer their clients – something that includes what we’re calling ‘no receipts needed’ fixed benefits for several coverages in BHTP’s new ExactCare Extra® plan,” Sivley added. “Following the 2014 debut of AirCare® – the world’s first flight-protection product to feature claims that are automatically filed and paid as flight or baggage mishaps happen – BHTP has now combined these popular fixed benefits for travel disruption and baggage with traditional, comprehensive travel insurance.”

As travelers enter the busy and often weather-disrupted summer travel season, the new and enhanced ExactCare products will not only make quick travel assistance more accessible for any travel problem or disruption, but now travelers can receive “as it happens” claims payments for covered flight cancellations, tarmac delays or delayed and lost baggage.

Designed to dramatically reduce or eliminate claim filing and processing, all new BHTP ExactCare products include expedited claims reimbursement via BHTP Burst® – including direct e-payments to a PayPal account, or payment via debit card into a specified account. Plus, the new, innovative ExactCare Extra plan includes real-time flight tracking, the popular high-tech feature that was first introduced in 2014 with BHTP’s AirCare product.

All BHTP insureds have access to on-demand attention and responses through MyAssist, and BHTP’s 24/7/365 global concierge service.

© 2017 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.