How a company weathers adversity tells you interesting things about a business, according to Warren Buffett. Among the things it shows you is not only the resiliency of a company, but also how wide its moat truly is.
“If you see a business take a lot of adversity and still do well, that tells you something about the underlying strength of the business,” Warren Buffett said at the 2000 Berkshire Hathaway Annual Meeting. “So, occasionally, you will find that an interesting test of the strength of a business. Coca-Cola had some problems, you know, in Europe. But it comes back stronger than ever. They certainly had problems with New Coke, and they came back stronger than ever. So you do see that underlying strength. And that’s very impressive as a way of evaluating the depth and impenetrability of the moat that we talked about earlier.”
Buffett’s full explanation on adversity and how it tests a business
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.
BNSF Railway Company and Wabtec have announced a new biofuel testing project that will quantifying the impact of alternative fuels on emissions, durability, and performance in Wabtec locomotives.
“The rail industry is intently focused on reducing its environmental footprint by exploring emerging technologies,” said Bob Bremmer, Group Vice President for Wabtec’s Fleet Innovation and Transformation division. “Biofuels provide a unique near-term opportunity to have a significant impact on reducing carbon intensity.”
BNSF and Wabtec will begin testing biofuel in the second quarter of this year. The two companies will demonstrate the performance of biodiesel (B20) and renewable diesel (R55) in revenue service on Wabtec Tier 3 and Tier 4 Evolution Series locomotives in California. BNSF will operate the locomotives between Barstow and Los Angeles, California.
“BNSF is pleased to partner with Wabtec to test higher percentage blends of biodiesel and renewable diesel,” said John Lovenburg, Vice President, Environment & Sustainability. “Rail is already the most carbon-efficient mode of land freight transport, and the use of these lower carbon fuels is another means for BNSF to reduce its emissions and help meet its carbon reduction goal. Wabtec continues to be a good innovation partner for us – last year, we piloted the first battery-electric freight locomotive in North America.”
Wabtec already has approved a 5-percent biodiesel (B5) and 30 percent renewable diesel (R30) blend for its locomotive engines. There currently are approximately 11,000 Evolutions Series engines in operations today with railroads around the world.
Biofuel is a domestically produced, clean-burning, renewable substitute for petroleum diesel. This renewable fuel increases energy security, improves air quality, and provides safety benefits.
Today’s announcement comes after BNSF conducted a pilot last year with a battery-electric locomotive developed by Wabtec in commercial service between Barstow and Stockton that showed an 11% reduction in fuel consumption and greenhouse gas emissions compared with standard diesel units operated on the same route.
Union Pacific has also announced that it will start testing B20 biodiesel and R55 renewable diesel on trains powered by Wabtec FDL locomotives operating in California.
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.
While Warren Buffett is always looking to buy stocks and whole businesses that are undervalued, he always keeps in mind that you need to maintain enough reserves to have adequate liquidity.
“We know we don’t want to go broke,” Warren Buffett said at the 2012 Berkshire Hathaway Annual Meeting. “I mean, we start with that. And we know you can’t go broke if you’ve got a fair amount of liquid reserves around and you don’t have any near-term debts and so on.”
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.
Berkshire Hathaway’s The Lubrizol Corporation has appointed Mary Rhinehart as president and CEO on an interim basis, effective immediately.
Rhinehart currently serves as the chair of Lubrizol’s board. She succeeds Chris Brown, who joined Lubrizol in 2021 to help the company with important work around safety and operational excellence.
Rhinehart also serves as board chair of Berkshire Hathaway’s Johns Manville, a global building and specialty products manufacturer. She became Johns Manville’s president and CEO in 2012 and assumed the additional role of chair in 2014. Prior to these roles, she was the company’s chief financial officer for eight years. During her more than 40 years with Johns Manville, she held leadership roles in treasury, supply chain, mergers and acquisitions, and human resources. She also managed several of the company’s business units.
Rhinehart will lead the search and selection process for a new CEO and will continue to serve as Lubrizol’s board chair.
“It is an honor to serve in this role for a company with such a rich heritage as a leader in the chemical industry,” Rhinehart said. “I look forward to working alongside Lubrizol’s dedicated employees to continue to deliver value for our customers and support our communities.”
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.
Berkshire Hathaway’s Dairy Queen will open 600 new locations in China by 2030, adding the first 100 by the end of 2022.
China is the fastest growing market for the DQ brand and is among the top three in size, alongside the U.S. and Canada. There are currently more than 1,100 DQ restaurants in China.
The quick serve locations will be owned by FountainVest Partners, a leading independent private equity firm with offices in Beijing, Shanghai and Hong Kong. The franchise development agreement, spearheaded by the FountainVest-acquired franchise ownership company CFB Group, expands its stronghold in China. FountainVest recently acquired CFB Group, a franchise ownership group in mainland China with more than 900 DQ restaurants.
“The market for frozen treats is booming in China and we predict the industry will continue a rapid growth trajectory during the next ten years,” said Andrew Huang, managing director at FountainVest Partners. “FountainVest is committed to fully supporting CFB Group’s growth of both its existing DQ restaurants and opening 600 new DQ restaurants by 2030.”
CFB Group has worked with IDQ to develop and launch products unique to the Chinese market, including hard pack ice cream, specialty novelties, light meals and artfully designed DQ Cakes. Across a more than 20-year relationship, CFB Group has outperformed China’s industrial average for frozen treats, making the DQ brand one of the best performing QSR brands in China.
“China remains an important growth market to us, and this expansion with FountainVest provides the opportunity to widen our footprint in one of the fastest-growing countries for QSR,” said Jean Champagne, chief operating officer, international, at International Dairy Queen. “The continued success of our investment in China, which includes several unique-to-China food and treat offerings, showcases the strength of the DQ brand to fans throughout the country.”
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.
Berkshire Hathaway’s CORT, the nation’s leading provider of furniture rental and transition services, has seen its conversion rates increase 111% since the launch of an immersive shopping experience allowing customers to have real-time interaction with products while remaining in their own home.
In January, CORT and Vertebrae, the technology leader in 3D & augmented reality (AR) solutions for retail, rolled out an immersive shopping experience allowing customers to have real-time interaction with products. Through its partnership with Vertebrae, CORT is able to utilize 3D and AR technology to bridge the gap between physical stores and online retail to give customers a hybrid shopping experience.
Customers can now view over 150 furniture and home accessory products from every angle, and virtually assess how a piece of furniture will look and fit in their own space.
In its first full month since launching in mid-January, CORT has seen conversion rates increase 111% with beds and sofas receiving the most interaction. In addition to doubling conversion rates from customers engaging with 3D products versus those not engaging, CORT has seen an 122% increase in revenue per visit for desktop users and 78% for mobile users.
“More consumers are shopping online than ever before, which makes this an exciting time to explore ways to enhance our online experience with the use of virtual technology,” said Ben Clark, senior manager of online business development at CORT. “Being able to provide our customers with the tools necessary to make educated rental decisions is a top priority for CORT.”
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.
BYD Yuan Plus, dubbed the ATTO 3 in Australia, the first A-class SUV built upon BYD’s e-platform 3.0, was jointly launched in China and Australia and began pre-sales in Australia.
Two models of ATTO 3 would enter the Australian market with the official guide prices ranging from 44,990 to 47,990 AUD (approximately $32,350 to $34,500).
In the Australian market, Yuan Plus is named ATTO 3. ATTO is inspired by the Attosecond, the smallest time scale unit in physics, which means ATTO 3 is speedy, energetic, and dynamic.
ATTO 3 is the first SUV built on BYD’s e-platform 3.0, specially designed for high-performance electric vehicles with four significant advantages: intelligence, efficiency, safety, and aesthetics.
The e-platform 3.0 improves EV safety and battery performance as well as optimizes the driving experience. It creates a new generation of smart electric vehicles that are more efficient and safer. Concurrently, ATTO 3 is also specially configured with the BYD auto applications for the Australian market.
Embodying BYD’s new design language, ATTO 3 is the first SUV featuring the sporty-themed interior designed by BYD Global Interior Design Director, Michele Jauch-Paganetti, exhibiting the senses of passion and energy for the customers.
BYD’s revolutionary Blade Battery technology comes as a standard in ATTO 3, offering drivers industry-leading safety levels as well as an extended single-charge range capability. Launched by BYD in 2020, Blade Battery is the only battery that successfully passes the nail penetration test, the most rigorous way to test the thermal runaway of batteries. Also, the space utilization of the Blade Battery pack increases by over 50%, compared with that of conventional lithium iron phosphate block batteries, resulting in significant improvements in energy efficiency and range.
Wang Chuanfu, Chairman and President of BYD Company Limited, said, “2022 will see the accelerated evolution of new energy vehicles and a new start for BYD’s development in the Australian market. This year, BYD will introduce several new energy passenger vehicles to the Australian market.”
BYD and Berkshire Hathaway
In 2008, Berkshire Hathaway bet on BYD’s potential, purchasing 225 million shares for $232 million. It’s an investment that has paid off handsomely. Berkshire’s original investment of $232 million had grown in value to $7.69 billion as of December 31, 2021.
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.
Warren Buffett is fond of reminding investors about “Mr. Market,” Benjamin Graham’s personification of stock market fluctuations that he describes in Chapter 8 of The Intelligent Investor. Graham notes that sometimes the prices for stocks that Mr. Market quotes are reasonable, but sometimes “Mr. Market lets his enthusiasm or his fears run away with him, and the value he proposes seems to you a little short of silly.”
This brings us to a key point that Warren Buffett is keen to emphasize. The market is there to serve you not instruct you.
“The beauty of stocks is they do sell at silly prices from time to time,” Warren Buffett said at the 2012 Berkshire Hathaway Annual Meeting. “Ben Graham writes about it in Chapter 8 of The Intelligent Investor. . . Chapter 8 says that in the market you’re going to have a partner named ‘Mr. Market,’ and the beauty of him as your partner is that he’s kind of a psychotic drunk, and he will do very weird things over time and your job is to remember that he’s there to serve you and not to advise you. And if you can keep that mental state, then all those thousands of prices that Mr. Market is offering you every day on every major business in the world, practically, that he is making lots of mistakes, and he makes them for all kinds of weird reasons. And all you have to do is occasionally oblige him when he offers to either buy or sell from you at the same price on any given day, any given security.”
As Graham wrote:
“If you are a prudent investor or a sensible businessman, will you let Mr. Market’s daily communication determine your view of the value of a $1,000 interest in the enterprise? Only in case you agree with him, or in case you want to trade with him. You may be happy to sell out to him when he quotes you a ridiculously high price, and equally happy to buy from him when his price is low. But the rest of the time you will be wiser to form your own ideas of the value of your holdings, based on full reports from the company about its operations and financial position. “
Buffett’s full explanation on the stock market and stock prices
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.
BNSF Railway Company’s 2022 capital investment plan will be $3.55 billion. The amount is up markedly from the 2021 capital investment plan of $2.99 billion.
This year’s capital plan focuses on projects that support the company’s growth and efficiency objectives while maintaining a strong and reliable railroad.
“Every year through our capital plan, we work to ensure we are able to continue to operate a safe and efficient rail network, provide our customers with the level of service they have come to expect from BNSF as well as position ourselves for future growth opportunities,” said Katie Farmer, president and CEO.
The largest component of this year’s capital plan will be to replace and maintain BNSF’s core network and related assets. Maintaining the railroad results in less unscheduled service outages that can slow down the rail network and reduce capacity.
The maintenance component of this year’s plan is $2.71 billion. The projects included in this part of the plan mostly entail replacing and upgrading rail as well as track infrastructure like ballast and rail ties (which are the main components for the tracks on which BNSF trains operate) and maintaining its rolling stock. It will include nearly 14,000 miles of track surfacing and/or undercutting work and the replacement of 381 miles of rail and approximately 2.7 million rail ties.
$580 million of this year’s capital plan will be for expansion and efficiency projects to support the growth of our Consumer, Agricultural and Industrial Products customers’ businesses. On its Southern Transcon route between Southern California and the Midwest, BNSF will continue a multi-year effort to add several segments of new double-track in eastern Kansas and begin a multi-year effort to add a new segment of triple-track in California, both supporting traffic growth. In addition, BNSF will continue a multi-year bridge project near Sandpoint, Idaho, to increase train capacity in the Pacific Northwest. Finally, BNSF will continue or begin multi-year intermodal facility expansion projects in North Texas (Alliance) and Chicago (Cicero). In Southern California (San Bernardino), BNSF is undertaking various initiatives to improve the efficiency of its intermodal facility. $259 million of this year’s capital plan is for freight cars and other equipment acquisitions.
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.
BNSF Railway Company has reported investments from customers served by the freight rail provider in 2021 totaled approximately $1.5 billion.
Large investments from customers including The Gatorade Company Inc., Mark Anthony Brewing and Northern Metal Recycling contributed to the sum. As a result of customer investments, BNSF projects the creation of more than 1,700 new jobs in local communities.
This marks the 11th consecutive year that BNSF customers and local economic development organizations have invested more than $1 billion in a calendar year for new or expanded facilities.
“The success of BNSF’s rail development program is a result of our employees working with our customers to build unique supply chain solutions that fit their distinctive needs,” said Chris Danos, assistant vice president, economic development. “Flexibility is the key to helping our customers maximize their investments, saving them development costs and expediting their speed to market.”
In 2021, new developments supported a wide variety of commodities including consumer, agricultural and industrial products in communities across the BNSF network. Highlights of supply chain solutions BNSF helped its customers achieve in 2021 include:
• The Gatorade Company, Inc. – With a significant investment, The Gatorade Company, Inc., co-located at BNSF’s Logistics Park Kansas City for warehouse and distribution center capabilities, generating 200 employment opportunities for surrounding communities.
• Mark Anthony Brewing – In Glendale, Arizona, Mark Anthony Brewing invested $450 million to build a new facility capable of receiving tank car shipments of glucose and alcohol to produce White Claw Hard Seltzer, creating 300 jobs.
• Northern Metal Recycling – Investing $75 million, Northern Metal Recycling constructed a new facility at the Becker Industrial Park in Becker, Minnesota, to handle both manifest and unit train shipments of scrap metals, offering 90 new roles for community members.
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.