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Pilot Flying J

Berkshire Hathaway Breaks with Tradition, Appoints New Executives to Lead Pilot Company

(BRK.A), (BRK.B)

In a surprise move, Berkshire Hathaway has broken with its longstanding tradition of only acquiring companies that provide management and has appointed new executives to lead Pilot Company.

The largest operator of travel centers in North America, Pilot Company has become a pillar of the transportation ecosystem, providing fuel and other services to millions of travelers each year.

The announcement came today that Adam Wright will be joining the company as Chief Executive Officer, and Joe Lillo will become Chief Financial Officer. Both executives are longtime Berkshire Hathaway employees, and they will officially take their positions on May 30, 2023. Shameek Konar and Kevin Wills, the current CEO and CFO, will be leaving their respective positions after supporting the transition.

After Berkshire Hathaway became the majority owner of Pilot Company on January 31, 2023, they identified Wright and Lillo as the best candidates to lead the company’s long-term growth and vision plans. Wright has over two decades of experience as a leader in the energy sector, and Lillo has been an integral part of the Berkshire Hathaway Energy family of businesses for more than 25 years.

Greg Abel, Vice Chair, Non-Insurance Operations for Berkshire Hathaway, commented on the appointment, saying, “Pilot Company has become one of the most future-forward companies in our industry. Adam’s energy expertise, leadership, and focus on customer satisfaction will help ensure Pilot Company remains a pillar of North America’s transportation ecosystem for decades to come. From the beginning of our journey together, Berkshire Hathaway recognized Pilot Company as a strong business that was well-positioned for the long term and was backed by an innovative and hardworking team. I am confident Adam and Joe have a solid platform from which to propel the company forward.”
It’s an honor to join the Pilot family and to lead such an influential company that has fueled millions of journeys over the past 65 years,” said Wright. “Pilot remains focused on meeting the unique needs of our pro drivers, fleets, guests, and Team Members while advancing a strong company strategy that positions us for the future.”

The Haslam family continues to be an integral part of the company with 20 percent ownership and James A. Haslam II, founder of Pilot Company, and James A. “Jimmy” Haslam III as members of the Board.

“I want to thank Shameek and Kevin for all that they have done for Pilot Company. They have been instrumental in leading our over 30,000 Team Members through several years of growth and innovation,” said Jimmy Haslam. “While we express our utmost gratitude to them, I also want to welcome Adam, Joe and their families to Pilot Company and to the Knoxville community.”

© 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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BYD

BYD Brings Its EVs to Spain

Berkshire Hathaway-backed BYD, the world’s leading manufacturer of new energy vehicles, has introduced a range of pure-electric vehicles to consumers in Spain.

Three models make up BYD’s collection debuting in Spain: the BYD ATTO 3 C-Segment SUV, the BYD TANG SUV, and the BYD HAN executive sedan. All feature BYD’s innovative technology that is inspiring the EV market on a global scale, bringing exciting new 100% electric eco-friendly vehicle choices with high levels of standard equipment to consumers in Spain.

BYD customers in Spain will have local sales and aftersales support from three of the country’s most established automotive distribution groups: Astara, Quadis, and Caetano Retail Spain. There will be two BYD Pioneer Stores opening soon, one in Barcelona (Avenida Aragó 29) and the other in Madrid, on 20 Concha Espina Street, giving customers the opportunity to view and experience the future ways of mobility.

Customers in Spain now have access to electric vehicles such as the expressive BYD ATTO 3, a C-Segment SUV with modern European design, creating a dynamic silhouette. The BYD ATTO 3 offers exceptional intelligence and efficiency derived from pioneering EV technology. It is the first SUV to be built on BYD’s latest e-Platform 3.0. With a 60.5 kWh battery, the BYD ATTO 3 has a WLTP city range of 565 km and 420 km (WLTP combined) with an acceleration of 0-100 km/h in 7.3s. The BYD ATTO 3 has scored Five-Star Rating in Euro NCAP Safety Tests. It is available in two trim levels: Comfort and Design. Starting Price is 41,400 euros.

This is joined by the larger BYD TANG, a family-sized pure-electric SUV with a capacity for 7 people and a high-tech premium feeling interior with refined elegance. The BYD TANG is AWD, with the quick acceleration of 0-100km/h in 4.6s and a range of 528 km (WLTP city) and 400 km (WLTP combined). Independently tested by Motor and NAF in Norway, the BYD Tang achieved the lowest level of battery degradation in cold climate conditions versus over 30 other electric vehicles tested. Starting Price is 69,990 euros.

Completing the initial offerings is the BYD HAN, a premium electric sedan with a luxurious interior finish. The twin electric motors supply an all-wheel-drive system, delivering enhanced handling and superb traction in all weather conditions. Combined, they deliver an impressive 380 kW or 516 horsepower, enabling a 0-100 km/h sprint time of just 3.9 seconds. The BYD HAN offers the perfect balance of elegance and sportiness with a WLTP range of 662 km (city) and 521 km (WLTP combined). Starting price is 69,990 euros.

All three BYD models utilize the safe and durable Blade Battery which has surpassed rigorous safety tests, including the nail penetration test.

© 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: Don’t Just Focus on Return on Principal

Chasing higher interests rates to boost your return on principal is fine, as long as you don’t put your principal at risk of loss, notes Warren Buffett. It was a lesson that he learned the hard way when he made a mistake in investing in USAir preferred stock in 1989.

“It isn’t the return on principal that you care about,” Buffett said at the 1995 Berkshire Hathaway annual meeting. “It’s the return of principal.”

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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Shaw Industries Group

Berkshire’s Shaw Industries Enters Recycling Partnership

(BRK.A), (BRK.B)

Shaw Industries Group, a global flooring manufacturer under Berkshire Hathaway, has announced a recycling partnership with Encina Development Group. Shaw will provide over 2 million pounds of waste materials from its carpet manufacturing processes annually, contributing to its long-standing sustainability commitment. This partnership will reduce Shaw’s greenhouse gas emissions, carbon footprint, and overall waste.

Shaw has had Cradle to Cradle design programs in place for over 20 years, with almost 90% of its products being Cradle to Cradle Certified. The partnership with Encina is a significant step towards Shaw’s commitment to fueling the circular economy and reducing environmental impact.

Encina’s innovative technology will enable the production of high-quality circular chemicals from materials like carpet waste, diverting them from landfills and helping to close the loop on plastic. This initiative is a significant move towards creating circular solutions for end-of-life plastics.

The partnership between Shaw and Encina demonstrates the potential for innovative technologies and partnerships to reduce waste and environmental impact while fueling the circular economy. It is an excellent example of how businesses can work together to promote sustainability and reduce their carbon footprint.

© 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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Commentary

Commentary: BNSF’s Swinomish Trial Looks Headed for a Train Wreck

(BRK.A), (BRK.B)

BNSF, a subsidiary of Berkshire Hathaway, is facing a costly lawsuit by the Swinomish Tribal Community over the crossing of its reservation in Washington state and looks ever more to be headed down the wrong track.

The lawsuit, initially filed in March 2015, claims that BNSF violated the terms of a right-of-way easement granted to the railroad by running more trains and cars than allowed under the agreement.

On March 27, a federal judge ruled that BNSF “willfully, consciously and knowingly exceeded the limitations on its right of access” from September 2012 to May 2021. U.S. District Court Judge Robert Lasnik also noted that this action was “in pursuit of profits.”

The Swinomish Tribe is concerned that the oil trains are a potential threat to their waterways, as they pass over the Swinomish Channel, which connects Skagit Bay to the south and Padilla Bay to the north.

The tribe’s historic treaty rights protect their fishing rights, and they fear that BNSF’s shipment of Bakken crude across the right-of-way in a manner and in quantities that violate the explicit terms of the easement agreement could put their way of life at risk. The Swinomish also claim that BNSF ran the trains without their consent or permission.

The railroad is facing the potential of significant damages if it loses the lawsuit.

The Swinomish Indian Tribal Community is a federally recognized tribe located in the Pacific Northwest region of the United States, specifically in the state of Washington. They have lived in the Skagit River-Delta of Puget Sound for many centuries, fishing the region’s brackish waters. The tribe’s historic treaty rights protect their way of life and cultural heritage, and they are deeply connected to the land and waterways of the region.

The tribe’s concerns about the potential threat to their waterways posed by the oil trains are not unfounded. The Swinomish Channel, which the trains pass over, is an 11-mile-long saltwater channel that connects Skagit Bay to the south and Padilla Bay to the north, separating Fidalgo Island from mainland Skagit County. Any spill or accident involving the trains could have severe consequences for the local environment, including the contamination of the water supply, harm to fish and wildlife, and damage to tribal lands.

The Swinomish’s fears were realized on March 16 when two BNSF locomotives derailed on the Swinomish Indian Tribal Community Reservation, spilling diesel fuel. In total, cleanup crews removed approximately 2,100 cubic yards of contaminated soil and 4,300 gallons of groundwater from the site.

This is not the first time that the tribe has had to fight for their rights over the use of their land. Train travel across the tribe’s land has a long contentious history, with the original track having been laid in the late 1800s without the consent of the Swinomish or the US government. The tracks cross the northern edge of the reservation, and the Swinomish, as the present-day political successor-in-interest to certain of the tribes and bands that signed the 1855 Treaty of Point Elliott, first sued the railroad in 1976, alleging a century of trespassing on tribal land. The resulting settlement led to the 1991 Easement Agreement that allowed only the 25-car train limit without the Tribe’s permission.

Despite the agreement, BNSF began running its Bakken oil trains across the Reservation without asking or even notifying the tribe, a move that the tribe views as a direct violation of the agreement. The tribe has repeatedly told BNSF to stop, but the trains kept rolling. The Swinomish have shown willingness to negotiate with BNSF, but their concerns for their environment, cultural heritage, and way of life are not negotiable.

Heading for a Costly Resolution?

The lack of respect shown by BNSF towards the Swinomish Indian Tribal Community’s treaty rights, makes it highly probable that this lawsuit will lead to a costly end for BNSF. It doesn’t require clairvoyance to foresee this outcome. The railroad seems to be on a one-way track towards an expensive train wreck.

© 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: Not All Brands Travel Well

Warren Buffett has a preference for brands that are capable of expanding their sales, whether it be regionally, nationally or internationally. He refers to these as brands that “travel well”. Nevertheless, he acknowledges that not all brands have the ability to do so. This is an important reminder when considering the enticing prospect of national distribution or international expansion.

“We love the idea of products that will travel. Some travel well, some don’t,” Buffett said at the 2000 Berkshire Hathaway annual meeting. “I mean, it’s an incredible world that way. Candy bars don’t seem to travel so well, you know. Soft drinks travel terrifically. And razor blades travel terrifically. But the Cadbury bars sell in England. And, you know, and the Hershey bars sell here.”

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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Kraft Heinz

Kraft Heinz’s Sale of Baby Food Business in Russia to Local Company Estimated at $32.4-$38.9 Million

Berkshire Hathaway’s Kraft Heinz, the US food giant, has announced that it will be selling its baby food business in Russia to local snacks and drinks manufacturer Chernogolovka, according to Reuters.

Kraft Heinz’s sale of its baby food business in Russia is estimated to be valued between 2.5 and 3 billion roubles ($32.4-$38.9 million), according to sources cited by Russia’s Kommersant newspaper on Thursday.

However, the government is yet to approve the valuation, and deals in Russia require approval from a government commission that monitors foreign investment.

This week, the commission announced that foreign investors from “unfriendly” countries selling assets in Russia would be required to donate at least 10% of the sale price to the Russian budget. It remains to be seen how this may impact the valuation and the sale itself.

This move comes as Western companies continue to exit the Russian market, allowing local firms like Chernogolovka to expand their market share and become more self-sufficient. As the Russian government tightens its regulations on foreign investment, it is becoming increasingly challenging for international companies to operate in the country.

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Lessons From Warren Buffett

Lessons From Warren Buffett: The Danger That Tempts the Wonderful Business

The biblical tale of Adam and Eve illustrates how yielding to temptation caused their expulsion from paradise into a more challenging existence. Warren Buffett observes a comparable temptation for thriving businesses that have discovered a prosperous niche, yet strive for additional opportunities.

“I pointed out the danger of having a wonderful business is the temptation to go into less wonderful businesses,” Buffett said at the 2000 Berkshire Hathaway annual meeting. “And it’s a risk I pointed out that when a company with a wonderful business gets into a mediocre business that usually the reputation of the mediocre business prevails over the supposed invincibility of the management of the wonderful business.”

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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Lessons From Warren Buffett

Lessons From Warren Buffett: We Think About What Can Go Wrong With Businesses

When Warren Buffett purchases a stock or an entire business, he doesn’t just consider its positive attributes. Instead, one of the most important mental exercises he undertakes is to identify potential threats that could harm or even destroy the business.

“When we look at businesses, we try to think of what can go wrong with them. We try to look [for] businesses that are good businesses now, and we think about what can go wrong with them,” Buffett said at the 2000 Berkshire Hathaway annual meeting. “If we can think of very much that can go wrong with them, we just forget it. We are not in the business of assuming a lot of risk in businesses. That doesn’t mean we don’t do it inadvertently and make mistakes, because we do. But we don’t intentionally, or willingly, voluntarily, go into situations where we perceive really significant risk that the business is going to change in a major way.”

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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Nebraska Furniture Mart

Berkshire’s Austin Development Receives Zoning Approval

(BRK.A), (BRK.B)

Berkshire Hathaway’s Nebraska Furniture Mart has won key zoning approval for its new Austin development. NFM is set to build a retail, hotel, and convention center in Cedar Park, a town located 16 miles north-west of Austin.

The Cedar Park City Council unanimously approved the rezoning of the 118-acre parcel, with construction anticipated to begin in 2024.

The development will comprise a 250-room hotel with a 30,000-square-foot convention center, 250,000 square feet of commercial space, a 500,000-square-foot NFM store, and a 700,000-square-foot warehouse servicing NFM.

The city of Cedar Park has offered $45 million in performance-based rebates if Berkshire invests $400 million and creates 725 jobs in the first year of operation. NFM’s CEO Tony Bolt chose Cedar Park after searching for a second Texas location, and it will complement NFM’s Grandscape development in Dallas-Fort Worth.

© 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.