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Berkshire Hathaway Specialty Insurance

Berkshire Hathaway Specialty Insurance Promotes Hilary Browne & Cameron Holmes to Global Underwriting Leadership Posts

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Berkshire Hathaway Specialty Insurance (BHSI) has made two key leadership promotions, according to a recent announcement.

Hilary Browne, a 25-year veteran of the global insurance industry, has been promoted to the role of Deputy Global Chief Underwriting Officer. She joined BHSI in 2019 as Country Manager, Ireland, and Head of Casualty for Europe, and most recently served as Global Chief Underwriting Officer, Casualty and Healthcare, and Deputy Head of Europe. Her new role will see her assume executive oversight for BHSI’s global accident and health (A&H) underwriting, multinational underwriting and support, and underwriting affairs, while retaining responsibility for global casualty and healthcare underwriting.

Cameron Holmes, who has more than 20 years of experience in engineering and technical lines property insurance, has been promoted to Global Underwriting Officer, Property for Energy and Construction. He joined BHSI in 2015 as Property Energy and Construction Manager and has been Head of Property Technical Lines in Australia since 2018. In his new role, Cameron will continue to be based in Sydney and will report to Dean LaPierre, BHSI’s Global Chief Underwriting Officer, Property and Marine.

These leadership promotions come at a time of growth for BHSI’s global underwriting portfolio. The company’s executives have praised Hilary and Cameron for their contributions to BHSI and the wider industry, saying that they are ideal candidates for these new roles. Hilary’s transition to her new position will see her Europe region responsibilities move to Alessandro Cerase, the newly named Head of BHSI Europe Region.

© 2023 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 a 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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Precision Castparts

Precision Castparts Rebounds With Strong Aerospace Revenues

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Berkshire Hathaway’s Precision Castparts (PCC) has reported robust revenue growth in the first quarter of 2023, buoyed by a recovery in its aerospace business.

PCC’s revenues were $2.25 billion, representing a notable 28.1% surge from the previous year. The company is a leading player in the aerospace industry, and its earnings are heavily dependent on sales of aerospace products. The increase in revenue was primarily driven by a rise in demand for aerospace products, although the power/energy and general and industrial products also contributed to the overall revenue growth.

The long-term industry forecasts suggest that there will be strong demand for air travel and aerospace products, which bodes well for PCC’s future prospects. The company’s pre-tax earnings increased by 23.0% in the first quarter of 2023, reflecting an improvement in manufacturing and operating efficiencies.

PCC is a part of Berkshire’s industrial products group, which comprises The Lubrizol Corporation, metal cutting tools/systems IMC International Metalworking Companies, and Marmon Holdings. Marmon is an umbrella group that comprises over 100 autonomous manufacturing and service businesses. It includes leasing for the rail, intermodal tank container, and mobile crane industries, equipment and systems for the livestock and agricultural industries (CTB International), and a variety of industrial products for diverse markets (Scott Fetzer and LiquidPower Specialty Products).

Starting from October 19, 2022, Marmon also includes businesses acquired in connection with Alleghany, such as the structural steel fabrication products business conducted through W&W|AFCO Steel, as well as other businesses that became part of Marmon.

The combined revenues of Berkshire Hathaway’s industrial products group increased by $1.4 billion (18.6%) in the first quarter of 2023 compared to 2022, and pre-tax earnings grew by $225 million (18.5%). The pre-tax earnings as a percentage of revenues for the group were 16.3% for both the first quarters of 2023 and 2022. The operating results of the group in the first quarter of 2023 were impacted by business acquisitions and overall improved operating results at the pre-existing businesses.

Berkshire Hathaway’s overall operating earnings for Q1 2023 were a remarkable $8.065 billion, representing a significant increase from the first quarter of 2022, which recorded earnings of $7.160 billion. The conglomerate’s performance has been commendable, considering the challenges posed by the pandemic and the changing economic landscape.

© 2023 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 a 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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Lessons From Warren Buffett

Lessons From Warren Buffett: Don’t Let Investment Bankers Tell You What Company to Acquire

Warren Buffett’s approach to acquiring companies involves relying on his own research and analysis rather than depending on the opinion of investment bankers. He believes that investment bankers may not always provide trustworthy advice, as they may be incentivized to prioritize their own interests over those of the acquiring company.

“The idea of asking investment bankers or somebody to evaluate the businesses you’re going to buy, I mean, that strikes us as idiocy,” Buffett said at the 2000 Berkshire Hathaway annual meeting. “If you don’t know enough about a business to decide whether to buy it yourself, you’d better forget it. It does not make sense. You bring in somebody who’s going to get a very large check if you buy it, and a very small check if you don’t, that displays a faith in human nature that would strain Charlie and me.”

Hear Buffett’s full explanation

See the complete Lessons From Warren Buffett series

© 2023 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 to Add Fleet of Embraer Praetor 500s

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Berkshire Hathaway’s NetJets, the world’s largest private jet operator, has signed a new deal with Embraer for up to 250 Praetor 500 jet options. This partnership also includes a comprehensive services and support agreement, making the deal valued at over US $5 billion. The deliveries for this aircraft are expected to begin in 2025.

The Praetor 500 jet will be a new addition to NetJets’ fleet, which for over a decade has operated Embraer’s Phenom 300 series, one of the company’s most requested aircraft. This partnership between Embraer and NetJets began in 2010 when NetJets signed a purchase agreement for 50 Phenom 300 aircraft, with up to 75 additional options. In 2021, the companies signed a continuing deal for up to 100 additional Phenom 300/E jets, valued at over $1.2 billion, after Embraer successfully delivered over 100 aircraft.

NetJets’ commitment to creating an enhanced customer experience and its trust in Embraer’s industry-leading portfolio and top-ranked support has made this deal possible. NetJets is averaging over 1,200 worldwide flights per day.

“We are eager to add the Embraer Praetor 500, one of today’s most state-of-the-art business jets, to our midsize fleet,” said Doug Henneberry, Executive Vice President of NetJets Aircraft Asset Management. “This historic fleet agreement is another way that we are growing our fleet for the benefit of our loyal customers. By adding up to 250 aircraft to our fleet, we will continue providing NetJets Owners with exceptional service and seamless access to all corners of the globe.”

The Praetor 500 is the world’s most disruptive and technologically advanced midsize business jet. It has an impressive best-in-class range, enabling U.S. coast-to-coast capability, industry-leading speed, and unparalleled runway performance. It’s the only aircraft in its category with full fly-by-wire flight controls.

The Praetor 500 also offers exceptional comfort in its cabin. It features the lowest cabin altitude in its class, as well as the tallest and widest cross-section in the segment. Additionally, it offers a flat-floor cabin, stone flooring, a vacuum lavatory, and ample baggage space, including a fully enclosed internal baggage compartment.

“Since 2010, Embraer has enjoyed NetJets’ ongoing commitment to our industry-leading aircraft, which is a true testament to the value of our brand and our ability to deliver the ultimate experience in business aviation,” said Michael Amalfitano, President and CEO of Embraer Executive Jets. “Our strategic partnership has been an integral part of our business growth, with NetJets taking all aircraft delivery options that have been ordered with Embraer since inception. After building this successful foundation with the Phenom 300 series, it’s our pleasure to have now signed this monumental deal for the Praetor 500 midsize jet, and we look forward to an even more exciting future ahead.”

© 2023 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 Revenues Soaring

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Berkshire Hathaway’s Aviation businesses, NetJets and FlightSafety, have taken off. In the first quarter of 2023, their revenues saw an impressive 18.8 percent year-over-year growth. This is a testament to the strong performance and demand for these aviation services.

Berkshire Hathaway’s overall operating earnings for Q1 2023 hit a remarkable $8.065 billion. This is a significant increase from the first quarter of 2022, which recorded earnings of $7.160 billion.

“The revenue increase was primarily due to increases in the number of aircraft in shared aircraft ownership programs and in flight hours across NetJets’ various programs, as well as higher average rates,” the company stated in its Form 10-Q.

© 2023 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 a 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 Looking for International Expansion

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In the aftermath of the Covid-19 pandemic, Berkshire Hathaway’s Dairy Queen is once again on the lookout for opportunities to expand its international reach.

Troy Bader, Dairy Queen’s President & CEO, is bullish on China’s prospects, citing it as the strongest international market for the popular fast-food chain, where it has over 1,200 locations. Additionally, he notes that the existing supply chain has Dairy Queen well-positioned to open its first locations in Hong Kong, making it a top priority for the company.

While China remains at the forefront of Dairy Queen’s expansion plans, the chain is also exploring opportunities in other regions. Bader points to Europe, India, and Australia as markets that are on the company’s radar. With a presence in 20 countries, Dairy Queen boasts over 7,000 restaurants globally, and its total sales for 2022 were an impressive $5.7 billion.

Founded in 1940, Dairy Queen got its start in Joliet, Illinois. Over the years, the chain has evolved to become a beloved American institution, famous for its soft-serve ice cream and tasty burgers. In 1998, Berkshire Hathaway acquired Dairy Queen, bringing the iconic brand under the wing of the legendary Warren Buffett’s conglomerate.

Looking ahead, Dairy Queen is poised to continue its growth trajectory as it expands its international footprint. With a strong supply chain in place and a proven track record of success, the chain is well-positioned to capture new markets and delight customers around the world with its signature menu items. For fans of Dairy Queen, this means that they can look forward to enjoying their favorite treats in more places than ever before.

© 2023 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 a 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

No OXY Takeover in Berkshire’s Future, Says Buffett

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Rumors have been circulating that Berkshire Hathaway, the conglomerate headed by legendary investor Warren Buffett, is seeking to take over Occidental Petroleum. However, Buffett himself has dismissed these speculations, stating that his company is not looking to buy control of the oil producer.

At this year’s Berkshire annual meeting, Buffett made it clear that the rumors were unfounded. “There’s speculation about us buying control, we’re not going to buy control,” he said. “We wouldn’t know what to do with it.”

Despite this, Berkshire Hathaway has already purchased a significant stake in Occidental, after receiving regulatory approval to buy as much as 50% of the company. While Buffett has ruled out seeking control of the company, he has hinted that his company may add to their current 23.5% stake in the future.

In addition, Berkshire holds warrants that are exercisable for 83.9 million common shares for $5 billion. These warrants give the company the option to purchase more shares at a later date, potentially increasing their stake in Occidental even further.

“We may or may not own more in the future but we certainly have warrants on what we got on the original deal on a very substantial amount of stock around $59 a share, and warrants last a long time, and I’m glad we have them,” Buffett explained.

It’s worth noting that Buffett has a history of making strategic investments in companies without necessarily seeking control. His approach is to invest in strong companies with a long-term outlook, and then let their management teams run the business.

This seems to be the case with Occidental Petroleum. While Berkshire Hathaway has a significant stake in the company, they are not looking to take over or interfere with the management team’s decisions. Instead, they are content to hold on to their shares and potentially increase their stake in the future.

© 2023 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 a 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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Financials

Berkshire Hathaway Ups Stock Buybacks in First Quarter

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Berkshire Hathaway, the multinational conglomerate headed by the legendary investor Warren Buffett, has continued its trend of buying back its own stock in the first quarter of 2023. The company committed $4.4 billion to the repurchase of shares of both Class A and Class B common stock. This represents an increase from the $2.6 billion that was spent on stock buybacks in the fourth quarter of 2022.

This move by Berkshire is a continuation of the company’s buyback program that started in 2011. In 2022, Berkshire Hathaway bought back a total of $7.9 billion of its stock. The recent purchase of $4.4 billion shows the company’s continued confidence in its own business prospects.

Warren Buffett has long been a proponent of share buybacks, and he defended Berkshire’s buybacks in his recent Chairman’s Letter. He wrote, “The math isn’t complicated: When the share count goes down, your interest in our many businesses goes up. Every small bit helps if repurchases are made at value-accretive prices.”

Buffett has also been critical of those who oppose share buybacks. He has referred to them as “economic illiterates” or “silver-tongued demagogues” who do not understand the benefits of the practice. He believes that buybacks can be a useful tool in returning value to shareholders and that they should be conducted when the company’s shares are undervalued.

Berkshire Hathaway’s commitment to share buybacks reflects its confidence in its own business prospects and its belief that the company’s shares are undervalued. For investors, this move may signal a positive outlook for Berkshire Hathaway’s future performance.

© 2023 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 a 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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Brooks

Brooks Running Q1 Revenue Growth Up 20%

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Berkshire Hathaway’s Brooks Running is continuing its success from 2022 into the first quarter of 2023 with an impressive 20% year-over-year global revenue growth, highlighted by a record 32% increase in the Europe, Middle East, and Africa (EMEA) region.

Despite pandemic-related supply chain and inventory issues, Brooks overcame these challenges and brought innovation to the market through new products and experiences. The brand demand was strong across all retail channels. Brooks maintained its position as the top brand at U.S. retail in adult performance running footwear, with a market share of 23%. The Ghost and Adrenaline GTS were the two franchise lines that had the highest sales, with a combined share of over 13% in adult performance run.

Brooks also showed strong momentum in the U.S. specialty run channel, with a year-over-year revenue increase of 42% in the first quarter. The direct e-commerce sales for Brooks grew by an impressive 33% year over year in Q1.

Jim Weber, the CEO, expressed optimism about the future of the premium running category, even in the face of global consumer market uncertainty. “Every runner and walker deserves performance product,” Weber said. “With participation rates healthy and the demand for quality, premium product as strong as ever, Brooks is executing uniquely and earning the trust of retailers and runners.”

Overall, Brooks Running is continuing to thrive in the performance running industry, with strong brand demand, innovative products, and a loyal customer base.

© 2023 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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Appointments

Berkshire Hathaway Specialty Insurance Ups Two Execs to Regional Leaders for Europe and the Middle East

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Berkshire Hathaway Specialty Insurance (BHSI) has announced two key appointments to its leadership team. Alessandro Cerase has been appointed as President & Head of Europe Region, while Neeraj Yadvendu has been named Head of Middle East.

Alessandro joined BHSI in 2018 as Senior Executive Officer for BHSI Middle East and has more than 25 years of experience in the global insurance industry. He led the launch of BHSI’s business in the region and was subsequently named Global Property Underwriter Officer for Construction & Energy in 2020. Alessandro will continue to be based in Dubai and report to Peter Eastwood, BHSI’s President and CEO.

Neeraj, who has over 26 years of global insurance industry experience, joined BHSI in 2018 as Deputy Senior Executive Officer and Head of Third Party Lines in the Middle East. He has been instrumental in BHSI’s growth in the region and will now also take on the role of Senior Executive Officer of the Dubai International Financial Centre Branch, subject to regulatory approval. Neeraj will continue to be based in Dubai and report to Marc Breuil, Head of Asia Middle East, BHSI.

BHSI has been steadily expanding its operations around the world and has experienced accelerated growth in its Europe and Middle East regions. The company’s President and CEO, Peter Eastwood, expressed confidence in the new appointments, saying, “We are excited to have Alessandro and Neeraj in these key leadership roles as we continue to strategically expand our presence in these important regions.”

© 2023 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 a 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.