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Appointments Berkshire Hathaway Specialty Insurance

Berkshire Hathaway Specialty Insurance Announces Two Promotions in UK

(BRK.A), (BRK.B)

Berkshire Hathaway Specialty Insurance has promoted Chris Warrior to Head of Executive & Professional Lines in the UK, and named Jessica Kirby as Head of Commercial Management Liability Insurance in the UK.

“BHSI has a rigorous recruiting process that enables us to build our global team with individuals who possess both exceptional capabilities and strong character,” said Vanessa Maxwell, Country Manager, UK, BHSI. “And with our deep bench of talent, we are pleased to be able to give our teammates excellent opportunities to advance in our nimble and always growing organization. I look forward to seeing all that Chris and Jess will achieve for BHSI and our E&P lines customers in their new roles.”

Chris joined BHSI in 2019 as Head of Management Liability for the UK and Ireland. In his new role, he will oversee BHSI’s UK team and portfolio across all Executive & Professional Lines, including Management Liability as well as Professional Indemnity, Cyber and Transactional Liability Insurance. Chris has nearly two decades of experience underwriting in the UK marketplace.

Jess Joined BHSI in 2018 as Senior Underwriter, Commercial D&O. In her new role as Head of Commercial Management Liability for the UK, she will oversee the team and portfolio she has played a critical role in building for BHSI in the UK. Jess has nearly 15 years of experience in the UK Financial Lines market.

© 2021 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 Stock Portfolio

Berkshire-Backed BYD’s HAN EV Enters Dominican Republic

(BRK.A), (BRK.B)

Berkshire Hathaway-backed BYD has announced that its flagship NEV sedan, the Han, has debuted in the Dominican Republic.

The BYD Han has already arrived in Brazil, Mexico, Colombia, Uruguay, Costa Rica, and the Bahamas. The official launching in the Dominican Republic sets another important milestone for BYD in the LATAM and the Caribbean passenger vehicle market.

As the world’s first mass-produced model that applied BYD’s ultra-safe Blade Battery, the HAN EV can achieve 0-100km/h acceleration in 3.9 seconds. The intelligent electric high performance AWD HAN EV boasts a range of up to 550 km（NEDC test cycle) with a drag coefficient of 0.233 Cd which can reduce power consumption while improving driving range.

Nelson Peña, President of Peravia Motors S.A. says, “People’s preference for fuel vehicles is one of the main reasons for global warming. This is why we want to provide new energy solutions and always abide by the highest standards for technologies, safety, and warranties.”

“BYD is one of the most valuable NEV brands in the world and it plays a key role in the EV market. Therefore, we decided to introduce BYD EVs into the Dominican market,” says Sebastián Peña, BYD Brand Leader and Business Director in Peravia Motors S.A..

To protect the forests and ocean in this country, the Dominican government issued Decree 103-13 in 2013, which declares that the customs duties and value-added taxes on electric vehicles will be reduced to 50% of that of the fuel vehicles for the development of clean energy.

About BYD

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 $5.897 billion as of December 31, 2020.

© 2021 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: Study Folly

Warren Buffett has learned a lot over the years from studying the mistakes that other people have made. In fact, he and Charlie Munger are students in the study of folly.

“In terms of reading of financial history and all that sort of thing, I’ve always been absolutely absorbed with reading about disasters,” Warren Buffett said at the 2012 Berkshire Hathaway Annual Meeting. “And there’s no question. I mean, when you look at the folly of humans — you know, I’ve focused on the folly in the financial area — there’s all kinds of folly elsewhere — but just the financial area will give you plenty of material if you like to be a follower of folly. And I do think that understanding, and that’s what gave us some advantage over these people that have IQs of 180, you know, and can do things with math that we couldn’t do. They just, they really just didn’t have an understanding of how human beings behave and what happens. 2008 was a good example of that, too. So, we’ve, we have been a student of other people’s folly, and it’s served us well.”

Hear Buffett’s full explanation

See the complete Lessons From Warren Buffett series

© 2021 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 Stock Portfolio

Berkshire-Backed Paytm Tumbles on IPO Debut

(BRK.A), (BRK.B)

Berkshire Hathaway-backed mobile payment company Paytm fell 26 percent in its stock market debut on Thursday, with intraday trading sending the stock down as much as 28 percent from its issue price.

Paytm is India’s largest mobile payments and commerce platform, and its IPO was touted as India’s largest to date.

The IPO had been projected to be at a valuation of between $24 billion to $25 billion with the company raising around $2.3 billion.

Founded in 2009, Paytm is an Indian e-commerce payment system and financial technology company, based in Noida, Uttar Pradesh, India.

In 2018, Berkshire Hathaway made a $356 million investment for a 3-4% stake in One97 Communications Ltd, the parent of Paytm.

In addition to Berkshire Hathaway, China’s Alibaba and Japan’s SoftBank are also stakeholders.

The investment was made by Berkshire portfolio manager Todd Combs, who said at the time, “I have been impressed by Paytm and am excited about being a part of its growth story, as it looks to transform payments and financial services in India.”

“Berkshire’s experience in financial services, and long-term investment horizon is going to be a huge advantage in Paytm’s journey of bringing 500 million Indians to the mainstream economy through financial inclusion,” Paytm’s founder and CEO Vijay Shekhar Sharma said in 2018.

© 2021 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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Forest River

Forest River Expanding in Noble County and Adding Hundreds of Jobs

(BRK.A), (BRK.B)

Berkshire Hathaway’s Forest River is expanding in Noble County, Indiana with the purchase of three buildings to house its IBEX Travel Trailer production, parts and service center. The facility will encompass 160,000 square feet in the Ligonier Industrial Park.

Forest River will also hire 500 employees over the next three years to work at the facility.

In addition, Forest River plans to spend $4.4 million for 65 acres in the industrial park to build three 95,000-square-foot buildings.

“I could not be prouder to welcome Forest River’s expansions in Ligonier,” said Ligonier Mayor Patty Fisel. “We know our workforce is a great fit for them and that they are a great employer. It is never easy to see jobs lost, as we did when Vibracoustic pulled out last year. This is a great transition and opportunity for us to keep our people working and the community growing.”

The city of Ligonier will consider a 10-year tax abatement on real property and personal property investments, as part of the incentives offered to Forest River. Other incentives that have already been announced, include the Ligonier Industrial Development Corp.’s agreement to invest in site preparation, and the Noble County Economic Development Corp. may invest in an additional access point to the facility.

© 2021 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: There Are More Banks Than Bankers

There are lots of banks and they shouldn’t be treated the same when it comes to investing in the banking sector. Warren Buffett notes that there are lots of banks, and there are more banks than good bank management.

“We’ve also seen all kinds of banks ruined. I think it was, what was the fellow? M.A. Schapiro, who came up with the statement, he said, ‘There are more banks than bankers,’” Warren Buffett said at the 2002 Berkshire Hathaway Annual Meeting, quoting investment banker Morris Schapiro. “And if you think about that a bit, you’ll see what I mean. There have been a lot of people that have run banks in a very injudicious manner, but that’s made for opportunities for other people.”

Hear Buffett’s full explanation

See the complete Lessons From Warren Buffett series

© 2021 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 Opens Office in Frankfurt

(BRK.A), (BRK.B)

Berkshire Hathaway Specialty Insurance has expanded in Germany, opening a new office in Frankfurt. The company already has offices in Cologne and Munich.

“BHSI is committed to building long-term relationships by providing sustainable technical underwriting solutions and excellent service,” said Andreas Krause, Country Manager, Germany. “Being close to our customers in the important financial center of Frankfurt will advance these efforts and is especially important now, with our team and our insurance portfolio growing so substantially in Germany.”

Underwriters from across all product lines, including property, casualty, and executive & professional lines, as well as BHSI risk engineers, will be based in Frankfurt.

© 2021 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 Stock Portfolio

BYD Sets 5th Monthly Passenger Vehicle Sales Record

(BRK.A), (BRK.B)

Berkshire Hathaway-backed BYD sold 88,898 passenger vehicles in October, increasing 90.9% year on year (YoY) and 12.5% month on month (MoM), according to the official data.

In particular, the New Energy Vehicle (NEV) sales reached 80,003 units, soaring 262.9% YoY.

By the end of October, the cumulative annual sales of BYD passenger vehicles topped 200,000 units.

The continued contribution of the DM-i technology fueled further success for the DM model, which saw 38,771 units sold in October, up 444.1% YoY，positioning BYD as a dominant player in China’s plug-in hybrid vehicles market.

Globally, the DM-i model also holds an important position. The Qin Plus DM-i and Song Plus DM-i took the 4th and 8th places, among PHEV market worldwide in August with sales of 13,043 and 8,731 units respectively, according to data from EV SALES/EV VOLUME.

BYD battery-electric vehicles (BEV) witnessed steady growth in sales with 41,232 units sold in October, holding its leadership in a fast-growing local BEV market.

BYD Han, the flagship NEV sedan of the Dynasty series, sold 11,087 units in October. According to China Passenger Car Association (CPCA), BYD Han ranked second among the sales rankings of mid-to-large size sedans, with sales of 10,248 units in September. So far, BYD Han’s cumulative sales have exceeded 130,000 units, with increases for seven consecutive months.

BYD e-platform 3.0 solves battery-related safety problems of the NEV and increases its range at low temperatures. It will alter people’s stereotype of BEVs. EA1, the very first model built upon this platform also enjoyed popularity in the market with 6,018 units sold in October, becoming the biggest contributor to the market for NEVs priced at around RMB 100,000.

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 $5.897 billion as of December 31, 2020.

© 2021 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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Brooks

Brooks Year-to-Date Revenue Up 44 Percent

(BRK.A), (BRK.B)

Berkshire Hathaway’s running shoe and fitness apparel company Brooks’ revenue increased for an eighth consecutive quarter in Q3 2021.

From January through September 2021, Brooks grew revenue 43.5 percent globally.

In the U.S. adult performance running footwear category, Brooks captured 19% market share, based on revenues, and gained 2 percentage points, versus last year, according to The NPD Group Retail Tracking data.

Contributing to this result was third quarter revenue growth of 24 percent year over year as the company continued to feed strong consumer demand around the world. Brooks’ leading footwear franchise styles led the gains as revenue from the Adrenaline GTS, Ghost, and Glycerin super franchise are up 50 percent versus 2020.

“More than twenty years ago, we made a big bet that if we put the runner at the center of everything we do—delivering the product they need and then celebrating the many reasons they run and the positive energy they get from it—we could become a leading brand in run,” said Jim Weber, CEO at Brooks. “We look forward to welcoming more people into the running community as we close out 2021 and enter the new year.”

Brooks’ growth is benefitting from distinctive products, a premium brand positioning, strong multi-channel distribution, digital engagement, and a tailwind of increased participation in running and walking around the world.

Brooks entered the third quarter with strong brand demand amid ongoing pandemic-related quarantines and mandated factory shutdowns coupled with widespread supply chain disruptions. These headwinds began to affect Brooks’ ability to meet consumer demand for the quarter, reducing revenue in September. While supply chain challenges are not unique to Brooks, the brand expects impacts to continue through Q2 2022 and is well positioned to manage through the disruption with strong partnerships in its geographically diverse yet categorically focused supply chain ecosystem.

© 2021 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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Financial Reports

Berkshire Hathaway Q3 Earnings

Earnings of Berkshire Hathaway Inc. and its consolidated subsidiaries for the third quarter and first nine months of 2021 and 2020 are summarized below. Earnings are stated on an after-tax basis. (Dollar amounts are in millions, except for per share amounts).

Third Quarter

First Nine Months

2021

2020

2021

2020

Net earnings attributable to Berkshire shareholders

$

10,344

$

30,137

$

50,149

$

6,686

Net earnings includes:

Investment and derivative gains/losses –

Investments(1)

3,823

24,771

29,363

1,271

Derivatives

55

(34

)

616

(506

)

3,878

24,737

29,979

765

Impairments of intangible assets(2)

—

(78

)

—

(10,980

)

Operating earnings

6,466

5,478

20,170

16,901

Net earnings attributable to Berkshire shareholders

$

10,344

$

30,137

$

50,149

$

6,686

Net earnings per average equivalent Class A Share

$

6,882

$

18,994

$

33,025

$

4,160

Net earnings per average equivalent Class B Share

$

4.59

$

12.66

$

22.02

$

2.77

Average equivalent Class A shares outstanding

1,503,013

1,586,698

1,518,513

1,607,041

Average equivalent Class B shares outstanding

2,254,518,838

2,380,046,304

2,277,769,582

2,410,561,550

Note: Per share amounts for the Class B shares are 1/1,500th of those shown for the Class A.

(1) Generally Accepted Accounting Principles (“GAAP”) require that we include the changes in unrealized gains/losses of our equity security investments as a component of investment gains/losses in our earnings statements. In the table above, investment gains/losses in 2021 include after-tax gains of $3.1 billion in the third quarter and $26.9 billion in the first nine months and in 2020 include $22.4 billion in the third quarter and $2.3 billion in the first nine months due to changes during the third quarter and the first nine months in the unrealized gains that existed in our equity security investment holdings. Investment gains/losses in 2021 also include after-tax realized gains on sales of investments of $757 million in the third quarter and $2.4 billion in the first nine months and in 2020 include $3.1 billion during the third quarter and $552 million during the first nine months.

The amount of investment gains/losses in any given quarter is usually meaningless and delivers figures for net earnings per share that can be extremely misleading to investors who have little or no knowledge of accounting rules.

(2) Impairments of intangible assets in the first nine months of 2020 include charges of $9.8 billion recorded in the second quarter attributable to impairments of goodwill and certain identifiable intangible assets that were recorded in connection with Berkshire’s acquisition of Precision Castparts Corp. in 2016.

An analysis of Berkshire’s operating earnings follows (dollar amounts are in millions).

Third Quarter

First Nine Months

2021

2020

2021

2020

Insurance-underwriting

$

(784

)

$

(213

)

$

356

$

956

Insurance-investment income

1,161

1,015

3,588

3,769

Railroad, utilities and energy

3,034

2,742

7,244

6,257

Other businesses

2,706

2,346

8,329

5,833

Other

349

(412

)

653

86

Operating earnings

$

6,466

$

5,478

$

20,170

$

16,901

Approximately $7.6 billion was used to repurchase Berkshire shares during the third quarter bringing the nine month total to approximately $20.2 billion. On September 30, 2021 there were 1,493,097 Class A equivalent shares outstanding. At September 30, 2021, insurance float (the net liabilities we assume under insurance contracts) was approximately $145 billion, an increase of $7 billion since yearend 2020.

Use of Non-GAAP Financial Measures

This press release includes certain non-GAAP financial measures. The reconciliations of such measures to the most comparable GAAP figures in accordance with Regulation G are included herein.

Berkshire presents its results in the way it believes will be most meaningful and useful, as well as most transparent, to the investing public and others who use Berkshire’s financial information. That presentation includes the use of certain non-GAAP financial measures. In addition to the GAAP presentations of net earnings, Berkshire shows operating earnings defined as net earnings exclusive of investment and derivative gains/losses and impairments of goodwill and intangible assets.

Although the investment of insurance and reinsurance premiums to generate investment income and investment gains or losses is an integral part of Berkshire’s operations, the generation of investment gains or losses is independent of the insurance underwriting process. Moreover, as previously described, under applicable GAAP accounting requirements, we are required to include the changes in unrealized gains/losses of our equity security investments as a component of investment gains/losses in our periodic earnings statements. In sum, investment gains/losses for any particular period are not indicative of quarterly business performance.

About Berkshire

Berkshire Hathaway and its subsidiaries engage in diverse business activities including insurance and reinsurance, utilities and energy, freight rail transportation, manufacturing, retailing and services. Common stock of the company is listed on the New York Stock Exchange, trading symbols BRK.A and BRK.B.

Cautionary Statement

Certain statements contained in this press release are “forward looking” statements within the meaning of the Private Securities Litigation Reform Act of 1995. These statements are not guaranties of future performance and actual results may differ materially from those forecasted.