Categories
Marmon Group

Berkshire Wants to Change How You Drink Beer

(BRK.A), (BRK.B)

First Berkshire Hathaway wanted to change the way you drink milk, now they want to change the way you drink beer.

In August 2015, Berkshire’s subsidiary Cornelius, Inc. signed a strategic partnership agreement with Dairyvative that made Cornelius the exclusive provider of equipment to hold and dispense concentrated milk using Dairyvative’s patented SEVENx technology.

Now, Cornelius and Sustainable Beverage Technologies (“SBT”), a Colorado-based developer of concentrated beer technologies, are launching a strategic partnership to market concentrated beer dispensing solutions to beverage brand owners and foodservice retailers across the globe.

According to SBT, using only traditional brewing ingredients (water, malt, hops, and yeast), SBT’s patented BrewVo technology utilizes a unique process called “Nested Fermentation”, in which brewers manage the fermentation environment where a highly concentrated beer is produced. When the beer concentrate is later mixed with carbonated water, the result says SBT compares to any premium beer on the market.

Under the terms of the agreement, Cornelius will be the exclusive provider of equipment to dispense the concentrated beer provided by SBT. Using Cornelius’ technology, the dispenser will utilize a state-of-the-art water filtration system that will mix carbonated water with the beer concentrate to provide the end user with a premium beverage. This solution will significantly reduce beer related space requirements within bars and restaurants creating an easy install for owners.

Cornelius, Inc., the world-leader in beverage dispensing equipment, was acquired by Berkshire Hathaway’s Marmon Group in January 2014.

© 2015 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
Acquisitions Marmon Group UTLX

Berkshire Reveals Price it Paid for GE Railcar Services’ Fleet

(BRK.A), (BRK.B)

The price for Berkshire Hathaway’s acquisition of substantially all of GE Railcar Services’ owned fleet of railroad tank cars has just been revealed.

Berkshire’s Marmon Holdings, Inc. acquired the assets on September 30, 2015, but at the time no price was announced.

In a filing on Friday, November 6, Berkshire revealed that the price was $1 billion.

Approximately 25,000 full-service and net-leased tank cars were acquired in the transaction, and Marmon also will take over certain GE Railcar Repair Services’ repair and maintenance facilities by the end of 2015.

Marmon already owns tank car manufacturer UTLX, which manufactures tank cars and engages in full-service leasing. UTLX furnishes all the services that are normally the responsibility of an owner and backs those services with the necessary specialists to keep fleet records of maintenance, repairs, and other administrative details.

GE is selling its remaining railcar leasing business, General Electric Railcar Services LLC, to Wells Fargo & Co.

© 2015 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

Keystone Pipeline Decision Benefits BNSF

(BRK.A), (BRK.B)

The Obama Administration’s decision to reject the Keystone XL pipeline’s fourth phase will have a positive impact on BNSF Railway. BNSF, which since the oil boom in the Bakken Formation has become a mobile oil pipeline, is facing increased competition from a variety pipelines.

Keystone Was a Major Threat

Keystone XL, the fourth phase of the Keystone pipeline, would have moved crude oil from Alberta’s tar sands to refineries in Texas and Illinois, and most importantly in relation to BNSF, would have also carried about 100,000 barrels a day from the Bakken Formation in North Dakota and Montana.

Roughly twelve percent of Keystone XL’s capacity would have been used to carry Bakken crude through a lateral addition called the Bakken Marketlink.

While BNSF offers an advantage to crude of oil producers of being able to route shipments to different refineries depending on demand, it has about a $2 per barrel cost disadvantage versus pipeline transport.

Pipelines Keep Coming

BNSF will not be able to avoid pipeline competition forever, in fact, some of it has already started.

The Keystone XL’s Bakken Marketlink is not the only threat to BNSF’s mobile pipeline business. In August, Kinder Morgan’s 485-mile Double H pipeline began carrying crude from the Powder River Basin by way of a new connection in Douglas, Wyoming.

The Double H pipeline originates in the Bakken oil production areas near Dore, North Dakota and Sidney, Montana, and terminates near Guernsey, Wyoming. Double H interconnects with the Pony Express pipeline for further transportation to the Phillips 66 Refinery in Ponca City, Oklahoma, or the Deeprock Terminal in Cushing, Oklahoma.

The Double H pipeline has a capacity of 99,000 barrels per day and is expandable.

Kinder Morgan acquired the pipeline from Hiland Partners in January 2015.

© 2015 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
Acquisitions Clayton Homes

Clayton Homes in $50 million Deal to Acquire Chafin Communities

(BRK.A), (BRK.B)

Berkshire Hathaway’s Clayton Homes is acquiring Chafin Communities, a Georgia home builder that builds extensively in northeast Atlanta.

The roughly $50 million acquisition will give Clayton Homes 1,100 building lots.

Chafin Communities’ principals, brothers Eric and Daryl Chafin, are staying on board to head up the new division. The two began working in construction as teenagers and founded their first construction company in 1966. The company’s 25 employees will all become Clayton employees.

Chafin Communities has constructed over 4,500 homes to date, and in 2014 Chafin Builders LLC/Chafin Communities ranked #13 in the Atlanta’s TOP 20 Home Builders List, based on Homes closed in 2013.

© 2015 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
Kraft Heinz

Kraft Heinz Axes 7 Factories and Moves Oscar Mayer Headquarters

(BRK.A), (BRK.B)

As part of its ongoing belt-tightening aimed at wringing out $1.5 billion in annual savings, Kraft Heinz has announced that it will close seven factories in the U.S. and Canada.

The factories are in Fullerton, California; San Leandro, California; Federalsburg, Maryland; St. Marys, Ontario, Canada; Campbell, New York; Lehigh Valley, Pennsylvania; and Madison, Wisconsin.

The factories will close in 12-24 months with the product lines being moved to existing factories.

Kraft Heinz will also shutter its Davenport, Iowa, meat processing plant with its production to be taken over by a nearby facility that is under construction, and move some of its cheese-making operations away from  Champaign, Illinois.  Where they will be moved to has not been announced.

In total, 2,600 jobs will be eliminated.

In addition, the company will relocate Oscar Mayer and its U. S. meats from Madison, Wisconsin, to Chicago. The move caught local union officials by surprise.

Michael Mullen, Senior Vice President of Corporate & Government Affairs at The Kraft Heinz Company, released a statement about the plant closings:

”Our decision to consolidate manufacturing across the Kraft Heinz North American network is a critical step in our plan to eliminate excess capacity and reduce operational redundancies for the new combined company.”

“This will make Kraft Heinz more globally competitive and accelerate the company’s future growth,” he added. “We have reached this difficult but necessary decision after thoroughly exploring extensive alternatives and options.”

© 2015 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

BHSI Offers Directors & Officers Liability Insurance to Asia

(BRK.A), (BRK.B)

Berkshire Hathaway Specialty Insurance Company (BHSI) has begun selling Executive First™ Directors & Officers (D&O) Liability and Professional First™ Professional Indemnity Insurance policies in Asia.

Designed for commercial and financial firms, Executive First D&O Liability Insurance provides coverage for companies, directors, officers and executives facing securities litigation and regulatory investigations. Additional Side A protection is available for individual directors and officers.

Professional First Professional Indemnity Insurance provides professional services firms with comprehensive protection. The policy also has options to extend coverage to independent contractors and consultants and to automatically reinstate exhausted limits.

“With the launch of these two primary policies, we look forward to bringing BHSI’s exceptional local executive and professional lines expertise and customer-centric underwriting across Asia,” said Marc Breuil, President of Asia, BHSI. “Our customers and brokers can look forward to new products coming soon — all backed by BHSI’s financial strength.”

© 2015 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
Berkadia

Berkadia Arranges $5.1 Billion for Acquisition of Multifamily Portfolio

(BRK.A), (BRK.B)

Berkadia has secured $5.121 billion for a portfolio of 107 multifamily properties located across nine states.

Berkadia’s Managing Director Anthony Cinquini of the Los Angeles office worked with the borrower, Lone Star Real Estate Fund IV (Lone Star), to originate the seven-year loan through Berkadia’s Freddie Mac Program.

“This is the largest multifamily transaction Berkadia has executed with Freddie Mac to date, representing an outstanding team effort by everyone involved,” said Cinquini.
According to Berkadia, Lone Star used the mortgage financing to assist in its acquisition of Home Properties, Inc., which previously owned more than 36,500 total units in Florida, Illinois, Massachusetts, Maryland, Maine, New York, New Jersey, Pennsylvania and Virginia.

About Berkadia

Founded in 2009 as a 50/50 joint venture between Berkshire Hathaway and Leucadia National Corporation, Berkadia is a third-party commercial mortgage servicer, as well as an approved lender for Fannie Mae, Freddie Mac, and HUD/FHA. The company was among the top Freddie Mac and Fannie Mae multifamily lenders for 2013.

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.

© 2015 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

BYD Number One in Electric Vehicles in August

(BRK.A), (BRK.B)

While everyone watches Tesla and Nissan to get the pulse of EV car sales, Chinese car-maker BYD is quietly topping their world-wide sales figures month after month.

BYD Co Ltd, which Berkshire Hathaway holds a minority stake in of nearly 10%, sold 5,307 pure electric cars in August 2015. The sales substantially topped both Tesla and Nissan, which had sales of 2,805 and 3,405 respectively.

The August win meant that the company beat Tesla’s and Nissan’s sales figures for the top EV manufacturer for the fourth month in a row.

For the year to date, BYD is in second place behind Nissan and ahead of Tesla.

Multiple Models

BYD’s Qin and Tang models make the company the only automaker to have two models in the top ten. The Qin ranks number one and the Tang is number eight, and  BYD will be adding two SUV models, the Song and Yuan, to the product lineup as well.

BYD’s marketing strategy has seen it make inroads across the globe, and it currently has buses and taxis running in over 160 cities in 36 countries.

BYD, which is the world-leader in rechargeable batteries, has yet to enter the U.S. car market with either its all-electric or hybrid vehicles. In the U.S., the company has focused on the battery-powered zero emission bus market, winning contracts in San Diego and Long Beach, California, and in Colorado, Oregon and Washington. The company has built a factory to assemble the buses in Long Beach.

However, BYD is inching toward U.S. car sales. In the spring of 2015 it began a pilot program with Uber in Chicago that used BYDs E6 sedan. The car is a cross between a sedan and SUV, and currently gets roughly 186 miles (300 km) of driving range per charge. The 2016 E6 will reportedly get a range increase to 250 miles (400 km).

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

© 2015 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

NV Energy’s Entry into Energy Imbalance Market Delayed

(BRK.A), (BRK.B)

Berkshire Hathaway’s utility NV Energy will not be entering the western Energy Imbalance Market (EIM) on November 1, as originally planned.

The California Independent System Operator Corporation (ISO) and NV Energy are delaying the date for the Nevada-based utility to begin financially binding participation in the western Energy Imbalance Market (EIM).

The two companies are ready to proceed with full EIM participation and are awaiting the final authorization to proceed from the Federal Energy Regulatory Commission (FERC).

The ISO will implement the entry of NV Energy as an EIM entity only on the first of the month. The ISO and NV Energy said that they will announce the date of NV Energy’s EIM implementation promptly upon authorization by FERC.

Millions in Projected Savings

NV Energy will save millions annually, with its attributed share of gross benefits estimated to range from $6 million to $10 million in 2017, and from $8 million to $12 million by 2022.

Savings Are Already Happening for Berkshire

In 2014, when Berkshire Hathaway Energy’s PacifiCorp agreed to become the first participant in the new Energy Imbalance Market (EIM), it was touted as a way to balance electricity in-flows and out-flows on a regional basis that would bring millions of dollars in benefits to participating utilities.

The predicted benefits for PacifiCorp have proven to be true, and the California Independent Service Operator (CAISO) has been able to quantify the benefits for the year so far were over $33 million.

About the Energy Imbalance Market

The EIM improves the integration of renewable resources and increases reliability by sharing information between balancing authorities on electricity delivery conditions across the entire EIM region. The only real-time energy market in the Western U.S., advanced ISO market systems automatically balance supply and demand for electricity every fifteen minutes, dispatching the least-cost resources every five minutes.

© 2015 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

PacificCorp Saved $33 Million This Year Through EIM

(BRK.A), (BRK.B)

Berkshire Hathaway’s utility PacifiCorp has saved over $33 million so far this year through the new the western Energy Imbalance Market.

California Independent System Operator (ISO) reports that the gross benefits realized in the 2015 third quarter have totaled $12 million, bringing the total benefits since the market’s launch in November 2014 to $33.41 million.

In 2014, Berkshire Hathaway Energy’s PacifiCorp agreed to become the first participant in a new Energy Imbalance Market (EIM) as a way to balance electricity in-flows and out-flows on a regional basis and bring millions of dollars in benefits to participating utilities.

The EIM began financially-binding operation on November 1, 2014, by optimizing resources across the ISO and PacifiCorp’s balancing authority areas (BAAs), which includes California, Oregon, Washington, Utah, Idaho and Wyoming.

The EIM improves the integration of renewable resources and increases reliability by sharing information between balancing authorities on electricity delivery conditions across the entire EIM region.

Summer Brought Greater Economic Benefits

According to California Independent System Operator, the 3rd quarter saw greater economic values from the EIM five-minute market transfers made during the hot summer months. July saw the greatest amount of benefits, $5.69 million, followed by $3.32 million and $2.99 million for August and September, respectively. Interregional transfers lowered supply costs in one EIM balancing area to meet demand in another. The Q3 benefit of $12 million was 18 percent higher than the previous quarter and reflects the seasonal variation in system and market conditions.

Environmental Benefits Too

In addition to the economic benefits produced by interregional transfers, environmental benefits were also achieved through avoiding curtailment of renewable resources in the ISO balancing area. The total avoided curtailment for Q3 was 828 megawatt-hours, which is less than last quarter as there were fewer transfers from the ISO to PacifiCorp, the EIM’s current participant, because of high prices in the ISO area. Avoiding curtailment in Q3 displaced an estimated 354 metric tons of carbon dioxide that would have been produced if the renewable resources had been forced to reduce generation output.

© 2015 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.