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Financials

Berkshire Hathaway Share Repurchases Doubled in Q4

(BRK.A), (BRK.B)

Berkshire Hathaway accelerated its stock buybacks in the fourth quarter of 2023. The repurchases doubled the $1.1 billion in the third quarter. The company reported that “approximately $2.2 billion was used to repurchase Berkshire shares during the fourth quarter of 2023 bringing the total for the year to approximately $9.2 billion. On December 31, 2023 there were 1,441,483 Class A equivalent shares outstanding.”

Berkshire’s stock buyback initiative allows the company to purchase its Class A and Class B shares whenever Warren Buffett, Berkshire’s Chairman and CEO, deems the repurchase price to be below the company’s conservatively estimated intrinsic value. These repurchases can occur through open market transactions or privately negotiated deals.

The conglomerate reported strong operating earnings in Q4 of $8.481 billion as compared to $6.625 billion in Q4 2022. Operating earnings for the full year were a robust $37.350 billion as compared to $30.853 in the full year of 2022.

Berkshire’s cash reserves has continued to grow, reaching $167.6 billion.

© 2024 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 Acquires Major Renewable Energy Project

(BRK.A), (BRK.B)

In a significant move towards bolstering its renewable energy portfolio, Berkshire Hathaway has finalized the acquisition of the Arco Wind and Solar project from NorthRenew Energy. The project, located in southeastern Idaho’s Bingham and Bonneville counties, will eventually bring 1.2 gigwatts of power online and marks a strategic investment by Berkshire Hathaway Energy’s subsidiary, PacifiCorp, into clean energy infrastructure.

Upon completion, the Arco Wind and Solar project is expected to contribute 300 MW of power to the grid when it becomes operational in 2026. Furthermore, there are plans to potentially augment its capacity by an additional 800 MW of solar energy in the future.

Garth Klimchuk, Founder and Managing Partner of NorthRenew Energy, expressed enthusiasm about the acquisition, highlighting the collaboration with one of North America’s largest utility companies. He emphasized the joint effort to advance the Arco project towards construction, indicating a commitment to expanding renewable energy initiatives.

PacifiCorp, as part of Berkshire Hathaway, is a prominent player in the energy sector, particularly as the largest grid operator in the western United States. Serving customers across Oregon, Washington, California, Utah, Idaho, and Wyoming, PacifiCorp’s involvement underscores the company’s commitment to sustainable energy solutions.

With construction set to commence in 2025 and commercial operations scheduled for late 2026, the Arco Wind and Solar project represents a significant step forward in the region’s transition towards renewable energy sources. The project’s integration of wind, solar, and storage technologies showcases a comprehensive approach to clean energy generation and aligns with broader efforts to combat climate change.

Berkshire Hathaway’s acquisition of the Arco project not only underscores its commitment to environmental sustainability but also positions the company as a key player in driving the transition towards a greener energy landscape. As renewable energy continues to gain momentum globally, investments like these signal a paradigm shift towards a more sustainable and resilient energy future.

© 2024 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

Berkshire Hathaway-Backed BYD and Raízen Power Partner to Boost Electric Mobility in Brazil

(BRK.A), (BRK.B)

In a bid to accelerate sustainable electric mobility in Brazil, BYD, backed by Berkshire Hathaway and a global leader in electric vehicle (EV) sales, has joined forces with Raízen Power, a prominent player in Brazil’s electricity sector. The strategic partnership, announced at an event in Shenzhen, China, also involves Shell, aiming to enhance the public infrastructure for EV charging across major Brazilian capitals.

The collaboration outlines ambitious initiatives, including the construction of EV charging hubs under the Shell Recharge brand in eight Brazilian capitals over the next three years. Beginning in 2024, São Paulo, Rio de Janeiro, Belo Horizonte, Brasília, Curitiba, Florianópolis, Salvador, and Belém will witness the installation of these hubs, offering a high-tech recharging experience fueled by 100% clean and renewable energy.

The partnership aims to significantly expand Brazil’s public network of electric chargers by installing 600 new DC charge points, contributing an additional 18 MW of installed power to recharge electric vehicles nationwide. Furthermore, BYD drivers utilizing the Shell Recharge network will benefit from competitive energy prices and services, facilitated by Raízen Power’s expertise.

Raízen Power, a licensee of the Shell brand with an extensive network of nearly eight thousand mobility sites across Brazil, Argentina, and Paraguay, aims to establish itself as a leader in the Brazilian electromobility market. The company aims for a 25% market share in the segment while also targeting a 10% market share in the free energy market and advancing its distributed generation projects.

Ricardo Mussa, CEO of Raízen, expressed the company’s commitment to democratizing access to electric mobility and renewable energy, aiming to make these solutions more accessible, affordable, and attractive to the market. The partnership with BYD aligns with this vision, offering a complete and integrated portfolio within the Shell Recharge network to support the global pursuit of a sustainable future.

For BYD, this partnership represents a strategic opportunity to expand its presence in Brazil’s burgeoning electric mobility landscape. Stella Li, Executive Vice President of BYD and CEO of BYD Americas, emphasized the importance of a robust charging infrastructure in accelerating the transition to sustainable transportation and supporting the company’s ambitious sales expansion plans.

The collaboration between BYD, Raízen Power, and Shell builds upon a previous strategic cooperation agreement signed in 2022 to enhance the charging experience for BYD’s battery electric vehicle (BEV) and plug-in hybrid electric vehicle (PHEV) customers.

István Kapitány, Shell’s Global Executive Vice President for Mobility, highlighted the importance of collaboration in driving the electric mobility transition, emphasizing the role of industry partnerships in achieving shared goals. Shell’s existing global EV charging network, which is set to expand further, underscores the company’s commitment to making EV charging convenient and enjoyable for customers worldwide.

The partnership between BYD, Raízen Power, and Shell signifies a significant step forward in promoting sustainable electric mobility in Brazil, aligning with global efforts to combat climate change and transition to cleaner transportation solutions.

© 2024 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: Ignore Market Noise

In the dynamic world of stock markets, investors often find themselves bombarded with opinions on what stocks to buy, when to buy or sell, and market trends. However, legendary investor Warren Buffett has long held a contrarian view on this strategy, emphasizing the importance of tuning out the noise and relying on individual judgment.

At the 1994 Berkshire Hathaway annual meeting, Buffett expressed his disinterest in following the crowd when it comes to investment decisions. He boldly stated, “We don’t pay any attention to what people say about Coca-Cola stock or Gillette stock or any of those things.” His rationale is grounded in the fact that every day, millions of shares are traded, with each transaction involving someone convinced it’s the right time to sell and another convinced it’s the right time to buy.

Buffett’s key advice revolves around avoiding decisions based solely on public opinion. He highlights the futility of seeking investment guidance from others, stating, “If you talk to one person, you’d hear one thing, and you’d talk to another — you really should not make decisions in securities based on what other people think.”

For Buffett, the secret to successful investing lies in focusing on businesses that can be evaluated independently. He advises investors to steer clear of market predictions, economic forecasts, and analyst opinions, emphasizing that basing decisions on external opinions is not a reliable path to wealth on Wall Street.

Buffett’s skepticism extends to media articles that feature analysts’ views on businesses, the economy, or market trends. He dismissively remarks, “Anytime I see some article that says, you know, these analysts say this or that about some business, it just — it doesn’t mean anything to us. You cannot get rich with a weather vane.”

In essence, Warren Buffett’s timeless advice encourages investors to cultivate a disciplined approach, focusing on understanding businesses rather than getting swayed by market sentiments. By ignoring the noise and trusting their own evaluation, investors can align with Buffett’s proven strategy for long-term success in the unpredictable world of stock markets.

Hear Buffett’s full explanation

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© 2024 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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Brooks

Berkshire’s Brooks Running Achieved Record-Breaking Success in 2023

(BRK.A), (BRK.B)

In the dynamic world of performance running footwear, Brooks Running, a subsidiary of Berkshire Hathaway, emerged as a frontrunner in 2023, achieving remarkable milestones and solidifying its position as a leader in the industry. The company reported a record revenue growth of $1.2 billion, marking a significant 5% increase year over year. Moreover, Brooks witnessed a historic achievement of selling over 20 million units, showcasing its widespread consumer appeal and market penetration.

Since 2018, Brooks has consistently demonstrated impressive growth, boasting a compound annual growth rate surpassing 14%. This growth trajectory continued in 2023, particularly in North America, where revenue surged by 7%, surpassing the $1 billion mark for the first time in the region’s history. This achievement underscored Brooks’ effective multichannel business strategy, which included inventory optimization, strategic investments in key markets, and the delivery of premium performance products across various regions.

The success story of Brooks extends beyond financial metrics, as evidenced by its dominant presence in the adult performance running footwear market. The brand maintained its coveted position as the top player in the U.S. retail market, capturing a remarkable 21% market share throughout the year. Key products such as the Brooks Ghost and Adrenaline GTS shoes emerged as the top two adult performance running styles, commanding over 12% share collectively. Additionally, the Brooks Ghost garnered recognition in the fitness tracking realm, being among the top running styles on the popular app Strava.

Jim Weber, CEO of Brooks, expressed enthusiasm about the brand’s prospects, stating, “There has never been a more exciting time to be in run, especially for a brand as focused on it as Brooks.” He highlighted the thriving landscape of the U.S. retail market and the global increase in participation, emphasizing Brooks’ readiness to cater to a diverse audience seeking the physical, mental, and social benefits of running.

Brooks’ commitment to innovation remained unwavering in 2023, with a particular focus on product development. The performance running category experienced robust growth, outperforming the overall footwear market in the U.S. Brooks seized this opportunity by introducing the all-new Ghost Max, a groundbreaking addition to its Ghost franchise. The Ghost Max garnered unprecedented retail adoption, contributing to Brooks’ notable market share gain in the footwear segment.

For 2024, Brooks aims to build on its momentum with a robust pipeline of product launches and innovations across core footwear offerings. The brand’s strategic expansion efforts will focus on enhancing brand engagement and reaching a broader audience of runners, fitness enthusiasts, and walkers seeking high-performance products.

Brooks’ global success story extends beyond North America, with significant growth witnessed across regions through its multichannel strategy. Europe emerged as a promising market, with notable sales growth in key countries like Germany and France. In addition, Brooks’ direct-to-consumer channels experienced substantial revenue growth, reflecting the brand’s ability to engage consumers through digital platforms and loyalty programs.

Dan Sheridan, President and COO at Brooks, emphasized the company’s resilience in navigating challenges such as supply chain disruptions and economic uncertainties. He expressed confidence in Brooks’ strategic direction and reiterated the brand’s commitment to supporting its customers and the global running community.

In 2023, Brooks also reaffirmed its dedication to elite athletes and the broader running community through increased investments in sustainability initiatives, community activations, and collaborations with key partners. The brand’s Future Run program, aimed at supporting youth running programs and promoting diversity in the industry, impacted thousands of young runners, underscoring Brooks’ commitment to driving positive change within the running community.

As Brooks Running continues to set new benchmarks in the performance running footwear market, the brand’s unwavering dedication to innovation, customer engagement, and community impact positions it as a formidable player in the global athletic footwear industry.

© 2024 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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BNSF

BNSF’s Record On-Time Performance and Safety in Southern California

(BRK.A), (BRK.B)

BNSF Railway, a subsidiary of Berkshire Hathaway, has set a remarkable milestone at its Los Angeles Hobart Intermodal Facility in 2023. Handling the world’s largest quantity of domestic intermodal freight, the facility achieved an impressive on-time departure record of 94%, surpassing the previous high of 86% set in 2012. What makes this achievement even more remarkable is that it was accomplished during the safest year on record for accidents and injuries.

Richard Dennison, BNSF California Division General Manager, attributes this success to the strong execution of the local team, a commitment to continuous improvement, and ongoing investments in Southern California.

To further enhance its capabilities, BNSF has expanded capacity at the Hobart facility by 500 spaces and introduced new crane stacking technology. Moreover, the company is dedicated to increasing efficiency at its San Bernardino intermodal facility and has strategically positioned 100 locomotives across the West Coast and other key network locations to mitigate potential service disruptions.

In a significant infrastructure development, BNSF completed a project in 2023 to add approximately 45 miles of triple track between Barstow and Needles, CA. Additionally, the company is progressing with the Barstow International Gateway, a groundbreaking master-planned rail facility expected to revolutionize logistics in the U.S. Upon completion, this facility will drive down supply chain costs, reduce carbon emissions, and offer a more cost-effective rail move compared to traditional truck transportation.

BNSF is also investing in cleaner technologies, including electric hostlers, as well as implementing advanced systems like Load Plan Optimizer and Automated Yard Checks to boost efficiency.

Looking ahead, Dennison emphasizes BNSF’s commitment to adapting to the evolving supply chain landscape through new service offerings and continued capital investments. With a focus on accommodating the growth in Southern California and across its network, BNSF Railway remains at the forefront of innovation in the transportation industry.

© 2024 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

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Lessons From Warren Buffett

Lessons From Warren Buffett: How to Judge Management

In the world of investing, the quality of a company’s management plays a pivotal role in its long-term success. While providing quality goods or services is essential, effective management is equally crucial in charting a course to profitability. Warren Buffett, renowned investor and CEO of Berkshire Hathaway, offers valuable insights into evaluating management quality, emphasizing two key yardsticks.

Buffett’s perspective, shared during the 1994 Berkshire Hathaway Annual Meeting, revolves around assessing how well management runs the business and how they treat shareholders, or “owners” as Buffett refers to them.

Firstly, evaluating how well management runs the business involves a comprehensive analysis of their performance and strategic decisions. Buffett suggests delving into what management has accomplished, along with benchmarking against competitors. Understanding the capital allocation decisions made over time provides insights into management’s effectiveness in maximizing shareholder value. This entails examining the context in which management operated and assessing their ability to navigate challenges while leveraging opportunities within the industry.

Moreover, Buffett underscores the importance of comprehending the business’s intricacies, as not all industries are equally understandable to every investor. Identifying industries or companies where one can grasp the dynamics allows for a more accurate assessment of management’s performance in executing their strategies.

Secondly, Buffett highlights the significance of how well management treats shareholders. This aspect reflects the company’s commitment to aligning its interests with those of its owners. Shareholders entrust management with their investments, expecting transparency, accountability, and fair treatment. Evaluating management’s attitude towards shareholders involves analyzing their communication practices, dividend policies, corporate governance structures, and commitment to creating long-term value.

In essence, Buffett’s approach to evaluating management quality emphasizes a holistic assessment that combines understanding the business dynamics with observing management’s performance and their treatment of shareholders. This approach aligns with Buffett’s renowned investment philosophy, which prioritizes long-term value creation and prudent capital allocation.

Investors seeking to evaluate management quality can draw valuable insights from Warren Buffett’s approach. By focusing on how well management runs the business and how they treat shareholders, investors can make more informed decisions, contributing to their long-term investment success.

Hear Buffett’s full explanation

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© 2024 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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Minority Stock Positions

Berkshire-Backed Mitsubishi Corporation Launches Record Share Buyback Program

(BRK.A), (BRK.B)

Berkshire Hathaway-backed Mitsubishi Corporation, Japan’s largest trading company, has unveiled its largest-ever share buyback initiative, amounting to a staggering ¥500 million. This move, announced during its recent third quarter earnings call, underscores the company’s commitment to enhancing shareholder value and capitalizing on growth opportunities.

Mitsubishi shares hit a new all-time high on the news.

During the earnings call, Mitsubishi Corporation highlighted the availability of approximately ¥1 trillion in additional funds for both strategic investments and returns to shareholders within the current midterm plan. This substantial allocation signals the company’s proactive approach to leveraging its financial resources for sustained growth and profitability.

This announcement comes on the heels of Mitsubishi Corporation’s earlier buyback worth ¥100 billion in May 2023, which formed part of its fiscal year’s shareholder return strategy. Additionally, the company declared a 1-for-3 stock split and raised its dividend to ¥70 per share in November of the same year, further solidifying its commitment to rewarding shareholders.

Regarding future capital allocation and strategic mergers and acquisitions (M&A), a company spokesman hinted at significant endeavors, stating, “I cannot elaborate any further, but it’s going to be quite sizable.” This statement reflects Mitsubishi Corporation’s strategic vision and ambition in pursuing value-enhancing opportunities in the marketplace.

The interest in Japanese stocks among international investors received a significant boost in 2020 when Warren Buffett’s Berkshire Hathaway invested in Japan’s top five trading companies, including Mitsubishi, Mitsui, Sumitomo, Marubeni, and Itochu. This move not only underscored the attractiveness of Japanese equities but also spotlighted the potential for long-term growth and stability in the Japanese market.

© 2024 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 HomeServices

Berkshire Hathaway HomeServices Expands in Arkansas

(BRK.A), (BRK.B)

Berkshire Hathaway HomeServices, a prominent global residential real estate brokerage franchise network, is excited to announce its latest venture in the United States with the establishment of Berkshire Hathaway HomeServices Arkansas Realty. Leading this endeavor is Robin J. Miller, a seasoned professional with over 35 years of experience in the central Arkansas real estate scene.

Christy Budnick, CEO of Berkshire Hathaway HomeServices, expressed enthusiasm about the expansion, stating, “We warmly welcome Robin J. Miller and her team to Berkshire Hathaway HomeServices. Robin’s extensive knowledge of the local real estate landscape, coupled with her exceptional leadership skills and dedication to customer service, positions her as an excellent ambassador for our brand in Arkansas.”

Miller and her team bring a wealth of expertise catering to diverse clientele, including first-time homebuyers, veterans, luxury buyers and sellers, those seeking relocation services, new construction, and commercial real estate solutions.

Robin J. Miller, CEO/Broker/Owner of Berkshire Hathaway HomeServices Arkansas Realty, shared her excitement about affiliating with the network, saying, “I hold Berkshire Hathaway HomeServices in high esteem. Joining forces with this esteemed network enables us to harness the global brand’s reputation for quality, innovation, and reliability. Additionally, we gain access to a wide array of resources, tools, and technology designed to support agents in navigating any market condition.”

Miller emphasized her admiration for Berkshire Hathaway HomeServices’ reputation, values, and culture, affirming her commitment to cultivating a robust team. She is dedicated to assisting real estate agents in realizing their entrepreneurial aspirations and empowering them to effect positive changes in their professional lives.

Currently active in various real estate and community organizations, Miller is a member of the Little Rock REALTORS® Association, Arkansas REALTORS® Association, and National Association of REALTORS®. Additionally, she contributes to the Little Rock Chamber of Commerce as a Board and Executive Committee member and is actively involved in Geyer Springs First Baptist Church.

The launch of Berkshire Hathaway HomeServices Arkansas Realty marks an exciting chapter in the company’s expansion strategy, reflecting its commitment to providing top-notch real estate services and fostering growth opportunities in diverse markets across the United States.

© 2024 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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Jazwares

Jazwares Enhances UK Leadership Team Amid Record-Breaking Growth

(BRK.A), (BRK.B)

Berkshire Hathaway’s Jazwares, a prominent global toy company, and the maker of the toy sensation Squishmallows, is reinforcing its UK leadership team by appointing Lucy Whitamore as Sales Director, UK, and Adelle Engelbrecht as Operations Director, UK.

Lucy Whitamore, who transitioned from Tesco to Jazwares in 2019, has consistently showcased her commercial acumen and talent. In her new capacity, Lucy will spearhead the UK and Ireland sales team across all Jazwares brands, driving the formulation and execution of sales strategies aligned with the company’s regional growth objectives. Lucy expressed her enthusiasm, stating, “Leading such an exceptional team is truly a privilege, and I eagerly anticipate steering our continued success and expansion in 2024.”

Adelle Engelbrecht, who joined Jazwares in 2020, has played a pivotal role in the company’s rapid growth trajectory. As Operations Director, Adelle will oversee customer operations, warehouse management, and inbound/outbound logistics teams, focusing on strategic growth initiatives and implementing process enhancements to optimize productivity and efficiency. Adelle shared her excitement, stating, “I am thrilled to extend my journey with Jazwares, leveraging past achievements alongside an outstanding team. Over the past few years, we have doubled our UK team and achieved remarkable success across our brands while fostering strong partnerships across all business domains. I am eager to continue this upward trajectory into 2024 and beyond.”

Holly Oldham, Managing Director of UK & European Distributors, lauded the promotions, stating, “As we advance on our growth trajectory in the UK, we are scaling up, and I cannot think of two individuals better suited to lead the charge than Lucy and Adelle. Both possess a fervent passion and unwavering motivation, making them ideal candidates to drive our continued success in the region.”

© 2024 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.