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Lessons From Warren Buffett

Lessons From Warren Buffett: Only Buy What You Understand

If a sector you know nothing about is booming, should you still buy it? Not if you are Warren Buffett.

“We will never buy anything we don’t think we understand,” Buffett said at the 2000 Berkshire Hathaway annual meeting. “And our definition of understanding is thinking that we have a reasonable probability of being able to assess where the business will be in 10 years.”

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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Berkadia

Berkadia Partners with Rabbet

(BRK.A), (BRK.B)

Berkadia, Berkshire Hathaway’s joint venture with Jefferies Financial Group, has formed a partnership with Rabbet, the leading provider of construction finance software, to double its servicing capacity.

Berkadia’s adoption of Rabbet’s platform aligns with their commitment to long-term investments in people and technology. With Rabbet, Berkadia FHA/HUD has doubled servicing capacity, improved processing times, and developed insights to better advise customers.

“Rabbet is committed to providing the tools to service even the most complex areas of construction finance, including HUD lending,” said Will Mitchell, CEO of Rabbet. “We are excited to partner with Berkadia to streamline their processes, increase efficiency, and better serve their customers.”

Berkadia Vice President of FHA Construction Ryan Duff, added, “This partnership is a key step in our efforts to grow our FHA construction lending business. By leveraging Rabbet’s technology, we are able to significantly increase our capacity to service this important market segment.”

“Our partnership with Rabbet, a member of Berkadia’s BeEngaged network, has allowed us to collaborate on long-term initiatives, and implement solutions that deliver excellent service to our clients,” said Berkadia Senior Vice President of FHA and Seniors Housing Finance.

Rabbet’s HUD servicing solution is the first and only HUD-focused solution of its kind. This technology allows HUD lenders to read forms like the 92448 and generate the 92403 and 92451 forms which are distinct to HUD. Rabbet’s HUD solution also gives users the ability to track and report on milestones for complex capital stacks. These features and others were specifically built to accelerate and optimize the operations specifically for HUD lenders.

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.

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BYD

BYD EV Buses Coming to Annapolis, Maryland

(BRK.A), (BRK.B)

Buses manufactured by Berkshire Hathaway-backed BYD will be rolling in Annapolis, Maryland, after the city purchased two BYD battery-electric K7M transit buses, which will be the first in its transit fleet.

The BYD K7M seats up to 22 passengers and includes two optional ADA compliant wheelchair positions. BYD buses are equipped with unique iron-phosphate batteries that are recognized as the safest in the industry, and are built with low-floors to enhance accessibility and safety for its passengers.

“BYD is proud to join Annapolis as it starts down the path toward electrification” said BYD Senior Vice President Patrick Duan. “Annapolis is such a beautiful city, full of rich history and it’s an honor to be a part of its journey toward a greener, cleaner future.”

The Annapolis Department of Transportation, which operates Annapolis Transit, aims to provide the highest level of reliable, safe, customer-focused, accessible and efficient public transportation throughout its city. Annapolis Transit plans to enhance the quality of life through making environmentally conscious decisions with clean energy transit.

“We all have to make changes in our lives and routines to become less reliant on energy sources that contribute to climate change and sea level rise,” said Mayor Gavin Buckley. “Migrating our transit fleet from fossil fuels to electric is a step the City of Annapolis can take. We are very happy to be moving forward with this acquisition.”

The buses will be built by members of the Sheet Metal, Air, Rail and Transportation (SMART) workers Union, Local 105, in BYD’s manufacturing facility located in Lancaster, California.

© 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: We Never Talk About This

While financial commentary on TV and in print is often filled with predictions as to which direction the stock market will move, it is not something that Warren Buffett spends any time trying to predict. In fact, as Buffett points out, if he could be successful in predicting price movements, he wouldn’t ever need to buy stocks, as it would be totally unnecessary. He could just bet on stock futures.

“Charlie and I haven’t the faintest idea where the stock market is going to go next week, next month, or next year. We never talk about it. You know, it never comes up,” Warren Buffett said at the 2008 Berkshire Hathaway Annual Meeting. “Obviously, if we could guess successfully a high percentage of the time where the stock market was going to go, we would do nothing but play the S&P futures market. There wouldn’t be any reason to look at businesses and stocks.”

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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Berkshire Hathaway Specialty Insurance

Berkshire Hathaway Specialty Insurance Names Bart De Wilde Head of Property, Switzerland

(BRK.A), (BRK.B)

Berkshire Hathaway Specialty Insurance (BHSI) has appointed Bart De Wilde to lead its growing property underwriting team and portfolio in Switzerland.

“I am very excited to be expanding our Swiss operations with leaders and teammates whose excellent capability and character will drive the best possible experience for customers and brokers seeking stable property solutions,” said Leander Metzger, Country Manager, Switzerland, BHSI. “Bart will build and lead our property team, providing our reliable capacity, risk engineering and CLAIMS IS OUR PRODUCT philosophy to the Swiss marketplace.”

Bart has more than two decades of insurance underwriting and engineering experience. He comes to BHSI from Holcim Ltd, where he was most recently Deputy Head of Group Insurance. He holds a master’s in Industrial Sciences from Catholic University Leuven, Technology Campus de Nayer.

As part of a steady expansion of its global footprint, BHSI opened a new office in Zurich, Switzerland in 2022, where its growing team is offering a full line of commercial property, casualty, and specialty insurance solutions to customers and brokers.

Bart is based in BHSI’s Zurich office.

© 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: Why Buffett Ignores Book Value

Book Value, the total of a company’s tangible assets minus its liabilities, is not a factor for Warren Buffett in buying stocks. In fact, the need for a business to retain cash is the exact opposite of what he is looking for because “the really wonderful businesses require no book value.”

“Book value is not a bad starting point in the case of Berkshire. It’s far from the finishing point. It’s no starting point at all of any kind in whether it’s The Washington Post or Coca-Cola or Gillette,” Buffett said at the 2000 Berkshire Hathaway annual meeting. “It’s a factor we ignore. We do look at what a company is able to earn on invested assets and what it can earn on incremental invested assets. But the book value, we do not give a thought to.”

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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Berkadia

Berkadia Creates Alliance With Knight Frank

(BRK.A), (BRK.B)

Berkadia, Berkshire Hathaway’s joint venture with Jefferies Financial Group, has formed an alliance with global property consultancy Knight Frank that will offer the firms’ clients unmatched access to domestic and internationally-based capital while maximizing their property values.

“This newly-formed relationship between our two privately-held firms will have innumerable benefits for clients on both sides,” said Berkadia CEO Justin Wheeler. “Berkadia’s depth of industry knowledge and experience will flow seamlessly with Knight Frank’s vast global network and valuation expertise to shift our transaction life cycle into high gear.”

The alliance will offer clients connectivity to and relationships with the world’s most active investors, enabling true relationships with diverse capital sources.

“Together, we have created an alliance focused on our clients’ needs, providing strategic advice and delivering a range of best-in-class capital markets solutions,” said William Beardmore-Gray, Senior Partner & Group Chairman at Knight Frank. “But more than that, we have a shared view of the world, that independent long-term relationships offer a superior experience to all our clients. This is the beginning of a lasting partnership, one which will cultivate both our firms’ collective expertise and suite of services we can offer our global client base.”

Knight Frank and Berkadia offer a combined global network comprising more than 22,750 people across 558 offices in 57 territories, spanning all key capital hubs. Together, they will be one of the world’s leading multifamily brokers.

Knight Frank is an estate agency, residential and commercial property consultancy founded in London by John Knight, Howard Frank and William Rutley in 1896. Together with its American affiliate, Cresa, Knight Frank is one of the world’s largest global property consultancies.

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.

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Berkshire Hathaway HomeServices

Berkshire Hathaway HomeServices Orenda India to Develop 1,000-Acre Smart City

(BRK.A), (BRK.B)

Berkshire Hathaway HomeServices Orenda India will develop a 1,000-acre smart city to be located in close proximity to Navi Mumbai airport.

Maharashtra Chief Minister Eknath Shinde signed a MoU with Berkshire Hathaway Home Services Orenda India for a collaboration to create the social and physical infrastructure for a smart city in the Raigad district.

“As part of this agreement, the firm will help develop a complete ecosystem for industrial, commercial, and residential development, while the government will provide access to land as well as assistance in obtaining various permits and licences,” the company said in a statement.

The announcement comes as Berkshire Hathaway HomeServices Orenda India announced in December 2022 the opening of its new office in Mumbai.

The second office will help the firm’s foray into newer markets beyond northern India, as it looks to significantly ramp up its pan-India presence through 15 regional offices by 2025. The company is currently looking to set up additional offices in Bengaluru and other tier-1 cities, which have traditionally been high-income markets with disposable income.

Warren Buffett’s success as an investor and Berkshire Hathaway’s financial strength are key selling points as the brand expands throughout India.

© 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: A Dollar Is a Dollar No Matter Where It Comes From

Some sectors seem to excite investors more than others, but Warren Buffett is quick to remind investors that no matter the source all dollars are equal.

“A dollar earned from a horseshoe company is the same as a dollar earned from an internet company” Buffett said at the 1999 Berkshire Hathaway annual meeting. “It is not worth more, based on whether it comes from somebody named dot-com, you know, or somebody that named, you know, the Old-Fashioned Horseshoe Company. The dollars are equal.”

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.

Categories
BNSF

BNSF Announces 2023 Capital Investment Plan

(BRK.A), (BRK.B)

Berkshire Hathaway’s BNSF Railway has announced a 2023 capital investment plan of $3.96 billion. BNSF’s capital investments play a key role in its ability to operate a safe and reliable network while

“Our capital plan reflects our growth mindset and commitment to having the capacity and equipment we need to support our customers. Continued investment in our network through our capital plans helps ensure we run a safe, efficient and growing railroad that provides customers with the service they expect from BNSF,” said Katie Farmer, President and CEO.

The largest component of this year’s capital plan, $2.85 billion, is devoted to maintaining BNSF’s core network and related assets. Investing in BNSF’s existing infrastructure ensures the railroad is in top condition, which results in less unscheduled service outages that can slow down the rail network and reduce capacity.

Maintenance projects include replacing and upgrading rail, track infrastructure like ballast and rail ties, and maintaining its rolling stock. It will consist of nearly 14,000 miles of track surfacing and/or undercutting work and the replacement of 346 miles of rail and approximately 2.8 million rail ties. $402 million of this year’s capital plan is for equipment acquisitions. Over $700 million of this year’s capital plan will be for expansion and efficiency projects, adding to the nearly $2.5 billion invested in expansion projects over the past five years. This year’s expansion plans support the growth of BNSF Intermodal and Automotive, Agricultural and Industrial Products customers.

On its Southern Transcon route between the West Coast and Midwest, BNSF will support traffic growth by beginning the construction of a second bridge over the Missouri River at Sibley, Missouri, completing double track for one of the last segments of single track along the Southern Transcon. The plan continues projects that add several segments of new track in Eastern Kansas and Southern California. It will also begin a multi-year terminal and fueling project near Belen, New Mexico. All four projects will increase capacity throughout the corridor. Also, in the South, BNSF will complete a second main track expansion in Fort Worth. In the Pacific Northwest, BNSF will begin a multi-year project to add double track near Spokane, Washington, including over the Spokane River and by constructing a siding near Pasco, Washington. BNSF will continue multi-year intermodal facility expansion projects in Chicago (Cicero) and Stockton, California. Also, in California, BNSF will continue its track efficiency improvement projects in San Bernardino, along with property acquisitions in the Barstow area, enabling future rail facility and infrastructure development for the Barstow International Gateway Project.

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.