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BNSF

BNSF Earmarks $130 million for Minnesota Upgrades

(BRK.A), (BRK.B)

BNSF Railway has budgeted $130 million for Minnesota in 2016. The money will be used for replacing and upgrading rail, rail ties and ballast. BNSF has already spent $550 million in Minnesota over the last three years.

In 2015, BNSF spent $326 million in Minnesota, which included 13 miles of new double tracks in the Staples area, new track in the Twin Cities, and upgrading a connection with another railroad in the Twin Cities.

With a slowdown in shipping revenues, last year’s record $6 billion in capital spending by BNSF will be cut 26% to $4.3 billion for 2016, which represents the first reduction in spending in six years.

Heavy spending in 2015 helped resolve shipping bottlenecks that outraged grain producers when their shipments experienced extensive delays in 2014. The investment included 82 miles of new double track on the northern tier.

“Each year, our capital plan works to balance our near term need to regularly maintain a vast network that is always in motion with the longer term demand outlook of our customers,”said Carl Ice, BNSF president and chief executive officer. “While our customers’ demand outlook has softened in a number of sectors, regular maintenance of our network continues to drive the majority of our annual investments and helps ensure we continuously operate a safe and reliable network.”

© 2016 David Mazor

Disclosure: David Mazor is a freelance writer focusing on Berkshire Hathaway. The author is long in Berkshire Hathaway, and this article is not a recommendation on whether to buy or sell the stock. The information contained in this article should not be construed as personalized or individualized investment advice. Past performance is no guarantee of future results.

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GEICO Insurance

GEICO Makes Ridesharing Coverage Available to South Carolina drivers

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South Carolina drivers that have been approved to drive for Uber (UberX and UberXL), Lyft, Sidecar and other on-demand services, now can get ridesharing coverage through GEICO.

GEICO first entered the ridesharing market in February of 2015 in Virginia, and has been selling a ridesharing product in Connecticut, Georgia, Maryland, Ohio, Pennsylvania, Texas, Virginia and Washington, D.C. The company is now expanding its ridesharing offering to drivers in South Carolina

“In a short time span, ridesharing has turned into a staple of everyday life,” said Othello Powell, director of GEICO commercial lines. “Whether you have that entrepreneurial spirit or are just making a few extra dollars, GEICO’s ridesharing product delivers a complete insurance solution to drivers in South Carolina at an affordable price.”

Powell noted that ridesharing comes with a unique set of insurance needs that go well beyond a traditional auto insurance policy. He points out that most personal auto policies exclude any commercial (driver for hire) use.

In addition, GEICO points out that having two policies for one vehicle can become confusing and costly.

GEICO’s hybrid ridesharing product replaces the driver’s personal auto policy and provides coverage for personal, ridesharing and other on-demand services whether the rideshare app is on or off, and with or without passengers in the vehicle or even if you’re working for multiple services.

GEICO offers the product through GEICO Commercial at a price significantly lower than taxi and traditional commercial rates.

© 2016 David Mazor

Disclosure: David Mazor is a freelance writer focusing on Berkshire Hathaway. The author is long in Berkshire Hathaway, and this article is not a recommendation on whether to buy or sell the stock. The information contained in this article should not be construed as personalized or individualized investment advice. Past performance is no guarantee of future results.

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Minority Stock Positions Stock Portfolio Todd Combs and Ted Weschler

Heavyweights Agree with Berkshire on Kinder Morgan

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

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

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

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

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

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

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

Apparently, now is the time to buy.

© 2016 David Mazor

Disclosure: David Mazor is a freelance writer focusing on Berkshire Hathaway. The author is long in Berkshire Hathaway, and this article is not a recommendation on whether to buy or sell the stock. The information contained in this article should not be construed as personalized or individualized investment advice. Past performance is no guarantee of future results.

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Marmon Group

Thorco Closes Plant as Online Retail Reduces Demand for Store Fixtures

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Berkshire Hathaway’s Thorco Industries, which the conglomerate owns as a part of its Marmon Group of manufacturers, is shuttering its Lamar, Missouri manufacturing plant and laying off 93 employees.

The closing will take place this spring.

The company designs and manufactures custom point-of-purchase merchandisers and store fixtures from wire, sheet metal and tubing for the retail industry.

General Manager Debra Probert noted that “retail industry changes, including the growth of e-commerce and the opening of fewer brick-and-mortar stores, has resulted in a continued decline in demand for store fixtures, such as the wire-based merchandising displays and accessories produced by Thorco.”

Thorco Industries has been in Lamar for almost 117 years, with its origins as a manufacturer of wire potato scoopers. The company was founded in 1899 by F.M. Thorpe.

© 2016 David Mazor

Disclosure: David Mazor is a freelance writer focusing on Berkshire Hathaway. The author is long in Berkshire Hathaway, and this article is not a recommendation on whether to buy or sell the stock. The information contained in this article should not be construed as personalized or individualized investment advice. Past performance is no guarantee of future results.

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Kraft Heinz Minority Stock Positions

Kraft Heinz Pushes for $55 Million in Infrastructure Improvements for NY Plant

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Village officials in Lowville, New York are hoping that their push for $55 million in state-funded infrastructure improvements will lead to 150 new jobs at an expanded Kraft Heinz string cheese plant in the town.

County and village officials are seeking $17.7 million to upgrade five main streets and make improvements to the water and sewer systems. They are also seeking $37 million for a new sewage treatment system featuring four anaerobic digesters.

Part of the funding will come from a $17.7 million 30-year, no-interest loan from the state Environmental Facilities Corporation.

If approved, Kraft Heinz will build a 67,756-square-foot string cheese addition in the rear of its Utica Boulevard manufacturing plant. It will also add a 5,923-square-foot receiving bay addition on the north side and a 2,169-square-foot two-pack addition on the front.

The daily milk usage at the plant will grow from 1 million to 3 million pounds, and the four new anaerobic digesters will be needed to handle increases in the whey waste byproduct.

Up to 150 additional employees could work at the expanded facility.

“We’re heading in the right direction,” said County Manager Elizabeth Swearingin, who was hired by Lewis County’s legislators in 2014. At a joint meeting to update county legislators and village trustees on the project, Swearingin emphasized the uniqueness of the opportunity. “We’re not going to have another opportunity like this in our lifetime.”

New York State Saves Kraft Heinz Plants

Under an agreement spearheaded by U.S. Senator Charles Schumer and Governor Andrew Cuomo, $20 million in state funds has been committed to keep open Kraft Heinz’s plants in Walton, Avon and Lowville.

Kraft-Heinz was initially planning to close the Avon facility and layoff all 405 employees, and the agreement also reversed the planned closure of the Walton facility.

An agreement was reached between New York State and Kraft-Heinz to save three of their facilities in Upstate New York, including the Walton facility in Delaware County that was initially slated for closure, as well as add additional jobs in Lowville.

© 2016 David Mazor

Disclosure: David Mazor is a freelance writer focusing on Berkshire Hathaway. The author is long in Berkshire Hathaway, and this article is not a recommendation on whether to buy or sell the stock. The information contained in this article should not be construed as personalized or individualized investment advice. Past performance is no guarantee of future results.

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NetJets

NetJets Becomes Private Aviation Partner for PowerShares Series Tennis

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In January, Berkshire Hathaway’s NetJets signed tennis superstar Maria Sharapova as a “brand ambassador.” Now, the leader in fractional jet ownership has signed on as the official private aviation partner of PowerShares Series Tennis for the 2016 season.

As part of the deal, NetJets will receive increased advertising throughout the series, branded features during broadcasts, and hospitality for select events.

Jon Venison, president of InsideOut Sports and Entertainment, the operator of the PowerShares Series, stated that the series is “thrilled and honored to be associated with such a prestigious company.”

The PowerShares Series is a competitive tennis circuit featuring legendary tennis icons and world-renowned champions Andre Agassi, Pete Sampras, Andy Roddick, John McEnroe, Jim Courier, Michael Chang, James Blake, Mark Philippoussis, and Mardy Fish. Each tournament features 4 Champions paired off in one set semi-finals and culminates with the winners meeting in a one-set championship match.

The series begins on April 8th in Chicago, the first of five events in April, before three more events in July and August, culminating with two events in each November and December.

In her role as a NetJets brand ambassador, Maria Sharapova will work with NetJets’ marketing, with a particular focus on social media. She will also provide exclusive experiences for NetJets owners throughout the partnership.

“I have been a long time owner of NetJets, since 2004, and now to become an Ambassador for this quintessential lifestyle company is very exciting,” said Sharapova.

Forbes ranks Sharapova as the highest paid female athlete for the past nine years.

© 2016 David Mazor

Disclosure: David Mazor is a freelance writer focusing on Berkshire Hathaway. The author is long in Berkshire Hathaway, and this article is not a recommendation on whether to buy or sell the stock. The information contained in this article should not be construed as personalized or individualized investment advice. Past performance is no guarantee of future results.

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BNSF

Idled Locomotives Tells the Tale of BNSF Shipping Woes

Some 150 BNSF Railway locomotives are sitting idle on tracks between Rozet and Gillette, Wyoming, as BNSF’s 2016 shipping slump continues to worsen.

The locomotives, which are lined up in an almost endless train, are just one physical manifestation of a dramatic drop in demand for coal, petroleum, and metals.

For the year to date, total carloads are down a whopping 15.6-percent.

Coal shipments, which last year at this time had reached 233,205 carloads, are only at 165,689 carloads through February 7, 2016. The change represents a 28.95% decrease.

BNSF spokesman Matt Rose noted that the drop in carloads was not just due to coal, but cut across a number of sectors.

As he noted, it’s not just coal shipments that are lagging, as shipments of metal ores are down 35%, and shipments of iron and steel scrap are down 25.65%

With global oil prices in the doldrums, shipments of petroleum are down a dramatic 24.63%.

BNSF is not waiting for further poor results to trim its costs, and has already announced a 26% cutback in capital spending.

So far, it’s a hard winter for BNSF.

© 2016 David Mazor

Disclosure: David Mazor is a freelance writer focusing on Berkshire Hathaway. The author is long in Berkshire Hathaway, and this article is not a recommendation on whether to buy or sell the stock. The information contained in this article should not be construed as personalized or individualized investment advice. Past performance is no guarantee of future results.

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Business Wire

NASDAQ Acquisition of Marketwired to Increase Pressure on Berkshire’s Business Wire

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Berkshire Hathaway’s press release service Business Wire has already been facing pressure from companies moving to Twitter and other social media to release financial information, now NASDAQ is moving to acquire competitor Marketwired LP in a move that could further erode their business.

NASDAQ says the acquisition will close in the first quarter of 2016, barring any regulatory hurdles.

No price for the acquisition has been announced, but Reuters reports that the company is valued in the range of $200 million. NASDAQ will be using both debt and cash for the acquisition.

Founded in 1983, Toronto-based Marketwired states that it provides news distribution and social communication solutions to public relations, investor relations and marketing professionals who represent companies of all sizes, from start-up to Fortune 500.

Acquired by Berkshire Hathaway in 2006, Business Wire currently has some 500 employees in 32 bureaus across the globe, and bills itself as the n the global leader in press release distribution and regulatory disclosure.

© 2016 David Mazor

Disclosure: David Mazor is a freelance writer focusing on Berkshire Hathaway. The author is long in Berkshire Hathaway, and this article is not a recommendation on whether to buy or sell the stock. The information contained in this article should not be construed as personalized or individualized investment advice. Past performance is no guarantee of future results.

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Forest River

Forest River has Recession in Rear View Mirror

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The Great Recession that began in 2008 had a crushing effect on RV manufacturers, as the recreational vehicle became something that many middle-class families and retirees could no longer afford. Sales plunged, and in some cases companies went belly up.

Fortunately, Forest River, a wholly-owned unit of Berkshire Hathaway, not only had Berkshire’s mountain of cash to weather the downturn, but was even able to pick up some key bolt-on acquisitions during the recession.

In 2008, Forest River acquired leading RV manufacturer Coachman RV for next to nothing when the company ran into severe cash flow problems.

Less than a decade later, Coachman RV is one of Forest River’s plum divisions that is helping it post the strongest sales numbers since before the recession.

Forest River’s sales have grown steadily since 2009, with six straight years of sales increases.

The great news is that Forest River’s sales have finally recovered to pre-recession levels.

Industry-wide, 2015’s recreational vehicle shipments reached 374,246 total units, and on a month-to-month comparison, November 2015 had a 3.9 percent increase above November 2014, and December 2015 achieved an even more impressive 4.8 percent growth as compared to December 2014.

The sales figures meant the strongest December total in ten years. Additionally, all months last year except May and July were up over the comparable months in 2014.

The increases are industry-wide, as manufacturers such as Thor Motor Coach and Fleetwood RV have seen similar increases, and the growth was across all classes of recreational vehicles.

Specifically, Class A motorhomes, which are the largest, most luxurious and expensive, grew modestly with a 0.2 percent increase over 2014. Class B RVs, which are camping van conversions or van campers, had a 9.8 percent increase, and Class C motorhomes, which are truck-chassis-mounted vehicles that are more modestly priced than Class A, achieved the biggest growth increase overall at 15.8 percent.

“We have erased the dip caused by the Great Recession with RV shipments nearing record levels,” said Frank Hugelmeyer. President of the RVIA – Recreation Vehicle Industry Association, at the industry’s National RV Trade Show. “Fueled by low interest rates, affordable gas and steady consumer confidence, RV shipments should reach 375,000 units next year. But beyond the strong short term outlook, we can all rejoice that RVs continue to gain popularity in the outdoor marketplace and are seen as ‘cool’ in traditional and social media.”

Total recreational vehicle sales industry-wide are projected to reach 375,000 units in 2016, according to the RVIA.

© 2016 David Mazor

Disclosure: David Mazor is a freelance writer focusing on Berkshire Hathaway. The author is long in Berkshire Hathaway, and this article is not a recommendation on whether to buy or sell the stock. The information contained in this article should not be construed as personalized or individualized investment advice. Past performance is no guarantee of future results.

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Dairy Queen

Dairy Queen Ups Digital Signage with Cineplex Digital Media

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Cineplex Digital Media, previously known as EK3, has been come an officially-endorsed signage provider to American Dairy Queen.

“We are honored to have been selected by American Dairy Queen Corp. as its provider of digital menu board solutions,” noted Cineplex Digital Media President Nick Prigioniero. “It is a privilege to collaborate with this internationally recognized, top-tier brand.”

Dairy Queen selected the company after its RFP brought thirty proposals from a variety of signage providers.

“Broadening our digital merchandising initiatives is a key strategic priority for us,” Janna Rider, Director of Digital Merchandising for American Dairy Queen, said. “It was imperative to our brand that we select a business partner that will address not only the present requirements but also provide innovative, integrated digital solutions that meet the expectations of our future ‘fans,’ while supporting the needs of our franchisee community.”

Cineplex Digital Media uses proprietary content management system software to manage its digital menu board networks, which enables franchisees to manage their in-store digital marketing programs from a single access point, giving them maximum flexibility and more control.

Some forty Dairy Queens so far have already installed  the digital signage across the United States.

For more information on Dairy Queen’s expanding business, read the Mazor’sEdge special report on Dairy Queen.

© 2016 David Mazor

Disclosure: David Mazor is a freelance writer focusing on Berkshire Hathaway. The author is long in Berkshire Hathaway, and this article is not a recommendation on whether to buy or sell the stock. The information contained in this article should not be construed as personalized or individualized investment advice. Past performance is no guarantee of future results.