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Lessons From Warren Buffett: Grab Opportunities When They Come Around

Warren Buffett has noted that the opportunities that he has missed are as significant as the opportunities that he has taken. Recognizing opportunities and then being willing to “put out the bucket, not the thimble” is the key to investing success.

“So opportunities come around,” Buffett said at the 2010 Berkshire Hathaway annual meeting. “You have to be prepared to grab them when they come.”

Hear Buffett’s full explanation

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© 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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Occidental

Occidental Makes $1.1 Billion Acquisition of Carbon Engineering Ltd.

(BRK.A), (BRK.B), (OXY)

Just days after Occidental Petroleum subsidiary 1PointFive was awarded a portion of a $1.2 billion grant from the Biden administration for its commercial-scale direct air capture facilities in Texas, the Berkshire Hathaway-backed company has announced that the wholly owned subsidiary has entered into a definitive purchase agreement to acquire all the outstanding equity of Carbon Engineering Ltd.

The acquisition is for total cash consideration of approximately $1.1 billion, to be made in three approximately equivalent annual payments, with the first at closing.

This transaction is expected to close before the end of 2023, subject to Canadian court reviews, Canadian and U.S. regulatory approvals and other customary closing conditions.

Occidental has been working with Carbon Engineering on direct air capture (DAC) deployment since 2019. Acquiring Carbon Engineering aligns with Occidental’s integrated net-zero strategy and provides Occidental, through its 1PointFive subsidiary, the opportunity to rapidly advance DAC technology breakthroughs and accelerate deployment of DAC as a large-scale, cost effective, global carbon removal solution. Carbon Engineering’s DAC-based climate solutions utilize standardized processes and proven industrial equipment.

“We expect the acquisition of Carbon Engineering to deliver our shareholders value through an improved drive for technology innovation and accelerated DAC cost reductions. The technology partnership also adds new revenue streams in the form of technology licensing and royalties. Importantly, the acquisition enables Occidental to catalyze broader development partnerships for DAC deployment in the most capital efficient and valuable way,” said Occidental President and CEO Vicki Hollub.

“We look forward to continuing our collaboration with the Carbon Engineering team, which has been a leader in pioneering and advancing DAC technology,” Hollub said. “Together, Occidental and Carbon Engineering can accelerate plans to globally deploy DAC technology at a climate-relevant scale and make DAC the preferred solution for businesses seeking to remove their hard-to-abate emissions.”

Upon closing, Carbon Engineering would become a wholly owned subsidiary of Oxy Low Carbon Ventures. Carbon Engineering’s personnel will continue to drive ongoing DAC technology development efforts and work closely with the Occidental and 1PointFive teams to bring DAC solutions to market. Carbon Engineering’s research and development activities and Innovation Center will remain in Squamish, British Columbia.

“We have always believed that global partnerships and cross-industry collaboration would be required to deploy DAC infrastructure at the scale required to make a climate-relevant impact. Carbon Engineering and Occidental have been working increasingly close together for the past five years to address the CO2 problem, making Occidental a trusted and committed partner for this next chapter in Carbon Engineering’s journey,” said Carbon Engineering CEO Daniel Friedmann. “At the core of this deeper relationship is the commitment to invest in the development of our technology here in Canada, and the global reach to accelerate implementation of DAC-based climate solutions in the U.S. and around the world.”

1PointFive is building Stratos, the world’s largest DAC plant, which is expected to be commercially operational in mid-2025, in Ector County, Texas. Occidental and Carbon Engineering are also adapting Stratos’ front-end engineering and design study for a DAC plant to be built at King Ranch in Kleberg County, which is part of the South Texas DAC Hub that was selected to receive a grant from the U.S. Department of Energy’s Office of Clean Energy Demonstrations.

© 2023 David Mazor

Disclosure: David Mazor is a freelance writer focusing on Berkshire Hathaway. The author is long in Berkshire Hathaway and Occidental, 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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Kraft Heinz

Kraft Heinz Changing CEOs

The Kraft Heinz Company has announced that the Company’s Board of Directors has appointed Carlos Abrams-Rivera as Chief Executive Officer and a member of the Board, effective January 1, 2024. Until then, Abrams-Rivera will continue in his role as President of the North America Zone with the added responsibilities of becoming President of Kraft Heinz, effective immediately. Abrams-Rivera will take over as CEO from Miguel Patricio, who has served as the Company’s CEO since 2019 and Chair of the Board since 2022. Patricio will transition to the role of Non-Executive Chair of the Board on January 1, 2024.

In his role as EVP and President of the North America Zone, Abrams-Rivera has successfully overseen the Company’s U.S. and Canadian operations. “Carlos is the best person to lead the next phase of the Company’s transformation,” said Miguel Patricio, CEO and Chair of the Board. “His strategic and innovative mindset is ideal to continue to propel Kraft Heinz forward on our path to greatness. Since joining Kraft Heinz in 2020, he has consistently delivered strong results in the North American retail and Away From Home businesses. Carlos’ experience in both developed and emerging markets complements our ambition for growth. I feel privileged to entrust Carlos with the leadership of this great company, and I am confident that Kraft Heinz is poised for more growth in the years to come.”

Patricio will transition to a new role as Non-Executive Chair of the Board. Since 2019, when Patricio joined the Company, he has led Kraft Heinz through a period of fundamental change in consumer trends, unprecedented business and global challenges, and consistent periods of top and bottom-line growth.

“We are extremely grateful for Miguel’s leadership over the past four years. He has a deep understanding of marketing and consumers, which was instrumental to the Company’s turnaround,” said Jack Pope, Lead Director of the Board. “The transition from Miguel to Carlos reflects the Board’s thoughtful succession planning and we are confident that the Company will continue to accelerate growth with Carlos assuming the role of CEO. He is an experienced leader with a long tenure in the food and beverage industry who has shown consistency and excellence in execution. Carlos’ leadership in transforming North America with innovative partnerships, tech-enabled solutions and developing and attracting world class talent will serve the Company well into the future. We look forward to continuing to work with him.”

“I am humbled and honored to be appointed as the new CEO of Kraft Heinz. I would like to thank Miguel for his mentorship, all he has done to rekindle the spirit of Kraft Heinz and our culture, and for his partnership, now and in the future,” stated Abrams-Rivera. “I would also like to thank the Board of Directors for placing its trust in me. Finally, to the thousands of colleagues across Kraft Heinz that have welcomed and trusted me, I am excited to go into a bright future together.”

Disclosure: David Mazor is a freelance writer focusing on Berkshire Hathaway. The author is long in Berkshire Hathaway and Kraft Heinz, 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

BYD Beats Tesla to 5 Million Vehicles

Tesla make get the lion’s share of the attention, but it is Berkshire Hathaway-backed BYD that is first to pass the five million new energy vehicles produced mark. BYD produced its 5 millionth new energy vehicle (NEV), a DENZA N7, on August 9th, making it the first automaker in the world to achieve this milestone.

“Today marks a historic moment for BYD as we witness our 5 millionth new energy vehicle rolls off the production line”, said Wang Chuanfu, Chairman and President of the company, at the ceremony held at BYD’s global headquarters to celebrate this momentous achievement. “On this special occasion, we would like to extend our sincere gratitude to our customers across the globe for their trust in our products, our partners in the industry for this journey shared together, and every one of our employees whose hard work and dedication have made this landmark possible.”

BYD spent 13 years for the first million new energy vehicles, another 18 months to reach three million, and today astoundingly, just 9 more months to hit the five million mark. In 2022, BYD’s new energy vehicles saw remarkable growth, with total sales surpassing 1.86 million. The momentum continued in 2023, as the company reached an impressive cumulative sales volume of 1.5 million units from January to July, including a notable 92,469 units sold overseas which exceeded the total overseas sales for the entire year of 2022. As of July 2023, BYD’s global new energy vehicle sales have soared beyond 4.8 million units accumulatively, another testament to the company’s commitment to sustainable transportation solutions.

BYD has been actively expanding its global presence since 2010, strategically introducing new energy buses and taxis for public transit electrification. With a decade of dedicated efforts, BYD’s electric public transport solutions are now operational in over 400 cities across more than 70 countries.

Meanwhile, BYD’s new energy vehicles have now made a mark in over 54 countries, with the BYD ATTO 3, one of its standout models, leading NEV sales in Thailand, Israel, and Singapore for several months.

In a significant move in July 2023, BYD announced plans for three new factories in Brazil, reinforcing its role as a driving force in the industry.

© 2023 David Mazor

Disclosure: David Mazor is a freelance writer focusing on Berkshire Hathaway. The author is long in Berkshire Hathaway and BYD, 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: The Best Protection from Inflation

One of the best safeguards against the erosive tides of inflation extends beyond the mere amalgamation of assets within one’s investment portfolio, notes Warren Buffett. Equally if not surpassingly pivotal, lies the endeavor to enhance one’s own intrinsic value to the utmost degree conceivable.

“The best thing you can do is to be exceptionally good at something. If you’re the best doctor in town, if you’re the best lawyer in town, if you’re the best whatever it may be, no matter whether people are paying you with a zillion dollars, they’re going to give you some of what they produce in exchange for what you deliver,” Warren Buffett said at the 2022 Berkshire Hathaway Annual Meeting. “And if you’re the one they pick out to do any particular activity, sing, or play baseball, or be their lawyer, whatever it may be, whatever abilities you have can’t be taken away from you, they can’t actually be inflated away from you.”

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 Competitor Struggles to Stay in Business

(BRK.A), (BRK.B)

Berkshire Hathaway’s NetJets, the world’s largest private jet operator, may end up with one less competitor as Wheels Up, a membership model private aviation provider, struggles to stay in business.

Wheels Up has given notice to the Securities and Exchange Commission that “there is substantial doubt about its ability to continue as a going concern for any meaningful period of time.”

Wheels Up recently received a cash infusion from its 20% equity partner Delta Air Lines, but that looks to be insufficient to sustain the company long term.

Wheels Up is third behind NetJets and Flexjet in the private aviation market.

Wheels Up also signed a non-binding letter of intent sell its aircraft management business to Airshare, which is currently ninth in the private aviation market.

© 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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Berkshire Hathaway Specialty Insurance

Berkshire Hathaway Specialty Insurance Adds Louis Bidmead as Head of Transactional Liability Insurance for Asia and the Middle East

(BRK.A), (BRK.B)

Berkshire Hathaway Specialty Insurance has named Louis Bidmead as Head of Transactional Liability Insurance for Asia and the Middle East. In this role he will work with BHSI’s global transactional liability team to provide BHSI’s comprehensive line of coverages to manage the risks of mergers, acquisitions, and other corporate transactions. He will report to Scotland Walsh-Riddle, Head of Executive & Professional Liability for Asia, BHSI.

“BHSI continues to expand our transactional liability portfolio in Singapore and throughout Asia and the Middle East,” said Scotland. “Louis has extensive knowledge of the intricacies of M&A transactions, and I am excited to have him leading our team as we deliver tailored and timely solutions for customers.”

Louis comes to BHSI with 14 years of experience as both a lawyer specializing in M&A transactions and corporate advisory at major law firms and as a senior underwriter, providing warranty & indemnity insurance solutions at a global insurer. He is based in Singapore.

© 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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Berkshire Hathaway Energy

Berkshire Hathaway Energy Gets Big Benefits From Western Energy Imbalance Market

(BRK.A), (BRK.B)

Berkshire Hathaway Energy’s PacifiCorp and NV Energy received combined benefits of $83.65 million from their participation in the Western Energy Imbalance Market (WEIM) during the second quarter of 2023.

In total, the WEIM has generated $798.7 million in benefits in the first half of 2023, and the real-time energy market’s $379.91 million in second-quarter results is attributed to the growing number of participants providing diversity and economical energy transfers replacing more expensive generation.

The WEIM is designed to enable participating entities to buy and sell power close to the time electricity is consumed. With state-of-the art technology, the market finds and delivers lowest-cost resources to meet immediate power needs and manages congestion on transmission lines to maintain grid reliability. It has set a new record of $4.2 billion in cumulative benefits since the market was launched in late 2014.

The WEIM also provides system operators real-time visibility across neighboring grids, resulting in more efficient balancing of supply and demand.

Since 2020, the number of Western EIM participants has doubled to 22, further diversifying energy resources while improving transmission efficiencies and reducing greenhouse gas emissions. The Western Area Power Administration Desert Southwest region, El Paso Electric and AVANGRID Renewables are the WEIM’s newest entities, joining in April 2023. The WEIM now includes portions of Arizona, California, Idaho, Montana, Nevada, New Mexico, Oregon, Utah, Washington, Wyoming, Texas and extends to the border with Canada.

The environmental benefits of the market are also noteworthy. With more variable resources such as solar and wind on the grid, excess clean power would typically tend to be curtailed and go unused to keep the grid from becoming overloaded. With greater regional coordination enabled by the WEIM, that clean power can be moved across a large geographic area to displace other resources.

Since 2014, greenhouse gas emissions have been reduced by more than 878,000 metric tons, or the equivalent of taking almost 184,000 passenger cars off the road for one year.

Additionally, grid operators have more resource options for balancing supply and demand, which is particularly helpful during summer evenings when electricity use remains high but solar generation is declining.

© 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 Earnings Strong, as Buybacks Continue

(BRK.A), (BRK.B)

Berkshire Hathaway’s overall operating earnings for Q2 2023 were a strong $10.043 billion, representing a solid increase from the second quarter of 2022, which recorded operating earnings of $9.417 billion. The 6.6 percent rise in earnings came as the conglomerate’s cash position grew to just over $147 billion, which is up from 130.6 billion in Q1 2023.

Insurance-underwriting was particularly strong with earnings 1,247 billion in Q2 2023, as compared to $715 million in Q2 2022.
At June 30, 2023, insurance float was approximately $166 billion, an increase of approximately $2 billion from yearend 2022.

Berkshire Hathaway continued its stock buybacks with approximately $1.4 billion used to repurchase Berkshire shares during the second quarter of 2023. This brings the six-month total share repurchases to $5.8 billion.

© 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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Berkadia

Berkadia Appoints Andy Wimsatt Senior Managing Director and Head of Berkadia Hotels & Hospitality

(BRK.A), (BRK.B)

Berkadia, Berkshire Hathaway’s joint venture with Jefferies Financial Group, named Andy Wimsatt Senior Managing Director and Head of Berkadia Hotels & Hospitality.

Wimsatt will be based in the DC Metro office and will report to EVP – Head of Capital Markets and Production Hilary Provinse. Wimsatt joined Berkadia on July 17.

“We’re thrilled to have Andy join Berkadia and lead the Hotels & Hospitality team. Andy brings decades of expertise and leadership experience in the hospitality sector, which will augment and complement Berkadia’s national platform of institutional, client-driven investment advisors, and mortgage bankers,” Provinse said. “Over the last three years, the team has strategically grown through the addition of senior hotel talent from other leading capital markets platforms.”

Prior to joining Berkadia, Wimsatt served as Managing Director at Eastdil Secured, where he focused on hotel equity and debt placement services. Over the course of his 30-year career, he has been involved in over $15 billion in transaction volume.

“Berkadia is well known for its unrivaled culture, and I am incredibly excited to be a part of the team,” Wimsatt said. “I’m joining an outstanding group of professionals who share a commitment to delivering exceptional client service while continuously expanding our footprint.”

Berkadia Hotels & Hospitality combines best-in-industry innovation, knowledge, and experience with the most comprehensive suite of products and services, backed by relentless customer service and support to empower clients to capitalize on the right opportunities at the greatest value. The group serves clients across the country, offering a full set of advisory, investment sales, underwriting and loan origination services and products including Life Company, Proprietary Bridge Lending and Capital Markets Advisory Services.

About Berkadia

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

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.

© 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.