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Warren Buffett

Warren Buffett Continues Stock Donations to Charities

(BRK.A), (BRK.B)

Warren Buffett has made a significant donation by converting a substantial number of his shares in Berkshire Hathaway. In a move aimed at contributing to the greater good, Buffett has converted 9,129 A shares into 13,693,500 B shares. The purpose behind this conversion is to donate 13,693,432 shares of Berkshire Hathaway’s “B” stock to five different foundations.

Among the beneficiaries, the Bill & Melinda Gates Foundation Trust will receive 10,453,008 shares, while the Susan Thompson Buffett Foundation will receive 1,045,300 shares. The Sherwood Foundation, Howard G. Buffett Foundation, and NoVo Foundation will each receive 731,708 shares. These generous donations were finalized and delivered June 21.

This significant act of philanthropy has altered the composition of Mr. Buffett’s ownership in Berkshire Hathaway. His holdings now consist of 218,287 A shares and 344 B shares. Upon making these donations, Mr. Buffett provided insightful comments regarding the mathematics behind his lifetime commitments to these five foundations.

He highlighted that the original schedule for annual grants was established on June 26, 2006, and has since been supplemented by significant additional grants to four of the five recipients. At the time the commitments were made, Mr. Buffett owned 474,998 Berkshire A shares, which were valued at approximately $43 billion. These shares represented over 98% of his net worth. It’s worth noting that he has converted A shares into B shares on previous occasions prior to making philanthropic contributions.

Over the course of the following 17 years, Mr. Buffett has refrained from buying or selling any A or B shares, and he has no intentions of doing so in the future. The five foundations have received Berkshire B shares, with an initial value of around $50 billion, surpassing Mr. Buffett’s entire net worth in 2006. It is important to mention that he holds no debts, and his remaining A shares are currently valued at approximately $112 billion, accounting for well over 99% of his net worth.

Mr. Buffett emphasized that there is nothing extraordinary behind Berkshire Hathaway’s success. It is the result of a combination of factors such as a long runway for growth, sound and straightforward decision-making, the favorable economic conditions in the United States, and the compounding effects of investments. This wealth has enabled him to make substantial contributions to philanthropic causes, as stated in his will, where he has designated that over 99% of his estate will be directed towards philanthropic endeavors.

© 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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Lubrizol

Lubrizol Touts Largest India-Based Investment in Company’s 50+ Year History

(BRK.A), (BRK.B)

Berkshire Hathaway’s Lubrizol Corporation, a global leader in specialty chemicals, is reinforcing its commitment to growth in India with a series of noteworthy projects spanning its portfolio. With an investment exceeding $150 million, Lubrizol is embarking on groundbreaking initiatives that include the construction of India’s largest CPVC resin plant in Vilayat, Gujarat, doubling the capacity of its site in Dahej, Gujarat, establishing a grease lab in Navi Mumbai, and facilitating substantial job growth and innovation within the country.

Lubrizol takes immense pride in announcing its continued dedication to India. Through a multi-year plan, the company will make substantial investments that contribute to clean drinking water, enhanced transportation accessibility, job creation, and sustainable innovation for India’s growing population.

Lubrizol’s involvement in India dates back to 1966 when it began local manufacturing of chemical additives supporting transportation and industrial markets. Over the years, the company’s presence and contributions in India have significantly expanded, offering tailor-made products and solutions for a wide range of industries.

The company’s employee base in India has consistently grown to meet both regional and global requirements. It anticipates generating 4,000 direct and indirect jobs through various new investment ventures:

1. Enabling the World’s Largest CPVC Resin Production with Grasim Industries Limited: Lubrizol introduced CPVC to the Indian market in 2001, presenting a significant economic opportunity for the region. Today, India stands as one of the largest consumers of CPVC, primarily in the form of plumbing pipe and fittings. The growing demand for clean water in residential and commercial buildings is poised to drive further expansion. Lubrizol, in partnership with Grasim Industries Limited, a flagship company of the Aditya Birla Group, will commence the first phase of a state-of-the-art CPVC resin plant with a capacity of 100,000 metric tons in Vilayat. This groundbreaking project will establish the largest single-site CPVC resin production globally, supplying Lubrizol’s renowned brands like FlowGuard® Plus, Corzan®, and BlazeMaster®.

2. Providing Access to Clean Drinking Water by Doubling CPVC Capacity and Establishing R&D Capabilities in Dahej, Gujarat: Lubrizol plans to double its existing CPVC compound capacity at Dahej, Gujarat, from 70,000 to 140,000 metric tons. Additionally, the company intends to establish a local R&D center, marking its second global research facility after North America. With this investment, Lubrizol becomes the sole company in India with end-to-end CPVC capabilities, well-positioned to serve the needs of local Indian customers. The expanded capacity will also cater to neighboring high-growth markets such as Nepal, Bangladesh, and Indonesia.

3. Supporting Transportation and Industrial Customers Worldwide with the Mumbai India Grease Lab and Turbhe Expansion: Lubrizol is firmly committed to supplying high-performance, cost-effective industrial grease-thickening solutions to grease manufacturers globally. Earlier this year, the company unveiled a new grease lab in Navi Mumbai, India, dedicated to testing and developing calcium sulfonate greases with significant potential in the industrial grease market. Since 2020, Lubrizol’s Additives business has introduced over 35 new blends for transportation and industrial applications localized in India. The company has also expanded its production site in Turbhe, incorporating a new storage facility and filtration capabilities.

4. Meeting the Personal Care and Home Care Needs of a Growing Middle Class, with a Focus on Sustainability: As the middle class in India continues to expand, there is an increasing demand for beauty and home care products within the region. As a leading provider of solutions for the beauty and home care industries, Lubrizol is committed to innovative, sustainable solutions that unlock opportunities for its partners in India. For instance, the use of detergent bars for cleaning dishes and laundry is a common practice in India. However, these bars can become soft and ineffective if they remain wet for too long, resulting in inconsistent cleaning and significant waste. To address this, Lubrizol’s Home Care team established a Center of Excellence for laundry bars in Mumbai. This initiative helped a global home care leader achieve its sustainability goals while streamlining processes, earning Lubrizol a sustainability award from the customer earlier this year.

In addition to these significant projects, Lubrizol plans to continue investing in Centers of Excellence capabilities to capitalize on the growth opportunities within the region. These initiatives reflect Lubrizol’s steadfast commitment to India’s development and its unwavering dedication to driving innovation, sustainability, and economic progress.

© 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

Berkshire Boosts Stakes in Japanese Trading Houses

(BRK.A), (BRK.B)

Berkshire Hathaway’s subsidiary, National Indemnity Company, has announced an increase in its ownership stake in five prominent Japanese trading companies. The companies in question – Itochu, Marubeni, Mitsubishi, Mitsui, and Sumitomo – hold significant positions in Japan’s economic landscape. Berkshire Hathaway’s investments in these companies are currently the only publicly traded holdings it possesses in Japan, and their combined value surpasses that of any other publicly traded stocks owned by the company outside of the United States.

Berkshire Hathaway’s ownership interest in each of the five companies now averages more than 8.5%, excluding treasury stock shares. This disclosure aligns with how Berkshire Hathaway reports its ownership in publicly traded U.S. companies. The conglomerate intends to maintain its Japanese investments for the long term. While the company might consider increasing its holdings in these companies, it has set a self-imposed limit of 9.9% ownership. Warren Buffett, the CEO of Berkshire Hathaway, has assured that any additional purchases beyond this threshold will only occur with the explicit approval of the investee’s board of directors.

Earlier this year, Mr. Buffett, accompanied by Gregory E. Abel, Berkshire’s Vice Chairman for Non-Insurance Operations, visited Japan to meet with the CEOs of the five companies. The discussions were fruitful, leaving both Mr. Buffett and Mr. Abel extremely pleased with the progress made. Their vision for the future may involve gradually increasing Berkshire Hathaway’s stake in each of these companies to 9.9% ownership, if prices warrant it.

Berkshire Hathaway continues to demonstrate its long-term commitment to the Japanese market and its confidence in the potential of these esteemed trading companies.

© 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: Three to Five Years Is Not a Long Time Frame

With so many people trading stocks every day, it might seem wise to look to a longer time horizon than just trying to make money overnight. What is a long term time frame? Warren Buffett points out that even three to five years, a seeming eternity to some trade-happy investors, is not really sufficient to give you the safety you hope to gain as a long term investor.

“If your time frame is three to five years, A.) I wouldn’t advise it being that way, because I think if you think you’re going to get out then, it gets more toward, leaning toward the bigger fool theory,” Buffett said at the 1998 Berkshire Hathaway annual meeting. “The best way to look at any investment is how will I feel if I own it forever? You know, and put all my family’s net worth in it.”

Hear Buffett’s full explanation

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© 2022 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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BYD

BYD Announces Fifth Brand

(BRK.A), (BRK.B)

BYD has unveiled its new sub-brand, FANG CHENG BAO, which aims to meet the evolving needs of consumers by offering a range of unique and professional-grade new energy vehicle models. As the fifth addition to BYD’s brand matrix, FANG CHENG BAO complements the existing Dynasty series, Ocean series, Denza, and Yangwang.

The FANG CHENG BAO lineup covers a wide spectrum of vehicles, ranging from off-road vehicles to sports cars. The brand’s inaugural model, a rugged SUV with the codename SF, is expected to hit the market later this year. The brand name itself, FANG CHENG BAO, carries a symbolic meaning. In Chinese, it translates to “Formula” and “Leopard,” representing the pursuit of transformative rise and exploration in the digital realm. By blending the standards and rules of Formula with the agility and wild versatility of the Leopard, FANG CHENG BAO embodies the brand’s essence and BYD’s vision of future cars and lifestyles.

According to Wang Chuanfu, Chairman and President of BYD, the global e-mobility transition is often perceived as a revolution where electric cars replace vehicles powered by fossil fuels. However, BYD believes that this perspective only captures a fraction of the true transformation that lies ahead. Wang Chuanfu shared, “A greater realm is unfolding.” FANG CHENG BAO, therefore, serves as the prelude to this revolution in BYD’s vision. The brand embraces an attitude of always staying ahead of trends, envisioning a future where FANG CHENG BAO and its users decode the personalized car life through a diverse range of new energy vehicle products.

© 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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Announcements

Berkshire Hathaway Has Another $50 Million to Put To Work After Seritage Prepayment

(BRK.A), (BRK.B)

Berkshire Hathaway has another $50 million that it needs to invest.

Seritage Growth Properties, a national owner and developer of retail, residential and mixed-use properties, announced that on June 7, 2023, the company made a voluntary prepayment of $50 million toward its $1.6 billion term loan facility provided by Berkshire Hathaway Life Insurance Company of Company of Nebraska.

With the prepayment, $550 million of the term loan facility remains outstanding.

The prepayment will also reduce the amount of interest Berkshire receives from Seritage’s total annual interest expense by approximately $3.5 million.

© 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: Make the Best Deal You Can Make Now

Warren Buffett, known for his baseball analogies, compares investing to a batter waiting for the right pitch. Unlike the batter, investors face no called strikes and can patiently seek the perfect opportunity. However, it’s important not to let the pursuit of perfection hinder the recognition of good investments. While aiming for home runs, one must also appreciate the value of solid opportunities. Striking a balance between waiting for ideal prospects and seizing worthwhile investments is the key to long-term success.

“One of the things, one of the errors people make in business, and sometimes it can be a huge error, is that they try and measure every deal against the best deal they’ve ever made,” Buffet said 2011 Berkshire Hathaway Annual Meeting. “The goal is not to make a better deal than you’ve ever made before. The goal is to make a satisfactory deal that’s the best deal you can make at the time.”

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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BYD

BYD Posts New Monthly Sales Record

(BRK.A), (BRK.B)

BYD, the Chinese automobile manufacturer backed by Berkshire Hathaway, continues to shatter sales records with its remarkable performance in the market. The company achieved a significant milestone in May, surpassing its previous sales record of 235,197 units, which was accomplished in December 2022. The figures speak volumes about BYD’s unwavering success in the competitive automotive industry.

During the month of May alone, BYD sold an impressive total of 240,220 new energy vehicles (NEVs), exhibiting a remarkable growth rate of 108% compared to May 2022. This tremendous surge in sales reflects the increasing demand for BYD’s innovative and eco-friendly vehicles, which have captured the attention of consumers worldwide.

Furthermore, the year-to-date sales for BYD have reached an impressive figure of 507,314 units, marking a staggering 97% increase over the first five months of 2022. This remarkable growth signifies the company’s ability to consistently deliver high-quality vehicles that cater to the evolving needs and preferences of the modern consumer.

© 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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NetJets

NetJets Opens New Maintence facility in Paris

(BRK.A), (BRK.B)

Berkshire Hathaway’s NetJets, the world’s largest private jet operator, has recently unveiled its state-of-the-art Maintenance Service Hub at Paris Airport-Le Bourget. This new facility aims to provide round-the-clock maintenance services for all NetJets aircraft operating in Europe, catering to the growing demand in the region.

In collaboration with JetSupport, the Le Bourget Maintenance Service Hub offers a comprehensive 24/7/365 MRO (maintenance, repairs, and operations) service. With this strategic expansion, NetJets seeks to ensure the smooth functioning of its impressive annual tally of 450,000 global flights. In addition to the new Paris hub, NetJets also operates a maintenance hub at London Luton Airport.

Spanning an area of 4,014 square meters, the Le Bourget service hub hangar boasts an additional 11,329 square meters of ramp space. This extensive facility can comfortably accommodate NetJets’ largest aircraft models, such as the Bombardier Global 6000 and Bombardier Challenger 650. By providing ample capacity, the company aims to maximize aircraft availability and minimize downtime.

Christian Luwisch, the executive director of NetJets Europe, expressed his delight in officially inaugurating the Maintenance Service Hub at Le Bourget. With NetJets’ continued fleet expansion in Europe, Luwisch emphasized the importance of scaling up operational capabilities to ensure uninterrupted service for aircraft owners. Safety remains the company’s utmost priority, and the strategic locations of both Le Bourget and Luton hubs play a crucial role in delivering seamless and proactive servicing.

NetJets’ new Maintenance Service Hub at Paris Airport-Le Bourget is a testament to the company’s commitment to excellence in aircraft maintenance and customer satisfaction. By establishing this 24-hour facility, NetJets reinforces its position as a leader in the private aviation industry, providing reliable and efficient services to its discerning clientele.

© 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.

Categories
Lessons From Warren Buffett

Lessons From Warren Buffett: Start From a Good Base

Warren Buffett is renowned for his brilliant investment decisions, but even he admits that some of his early ones were not so great. In particular, he acknowledges that his initial purchase of Berkshire Hathaway was a costly mistake, resulting in a missed opportunity worth $200 billion. Although the company was ailing in the textile industry, he thought it was a cheap opportunity to acquire assets below their book value. However, he later realized that the money required to keep it afloat would have been better spent on acquiring a high-quality business instead.

“Start from a good base,” Buffett said at the 2000 Berkshire Hathaway annual meeting. “Don’t follow our example in that respect. Start out with a good business and then keep adding on good businesses.”

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.