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Lessons From Warren Buffett

Lessons From Warren Buffett: When Diversification Makes Very Little Sense

Diversify your portfolio. It is a bedrock tenet that gets preached over and over. However, to Buffett, if you know what you are doing, that doesn’t make sense. Why? Because there are only a limited number of great companies that are worth owning. So, why do people do it? “Diversification is a protection against ignorance,” Warren Buffett says. However, he notes that its not the secret to great wealth. As he points out, “If you look at how the fortunes were built in this country, they weren’t built out of a portfolio of fifty companies.”

“We think diversification is, as practiced generally, makes very little sense for anyone that knows what they’re doing,” Warren Buffett said at the 1996 Berkshire Hathaway Annual Meeting. “I mean, if you want to make sure that nothing bad happens to you relative to the market, you own everything. There’s nothing wrong with that. I mean, that is a perfectly sound approach for somebody who does not feel they know how to analyze businesses. If you know how to analyze businesses and value businesses, it’s crazy to own fifty stocks or forty stocks or thirty stocks, probably, because there aren’t that many wonderful businesses that are understandable to a single human being, in all likelihood. And to have some super-wonderful business and then put money in number thirty or thirty-five on your list of attractiveness and forego putting more money into number one, just strikes Charlie and me as madness.”

Buffett’s full explanation on diversification

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

BYD eBus Bridges the Danube With Pollution-Free Public Transport

(BRK.A), (BRK.B)

Berkshire Hathaway-backed BYD, the world’s leading electric bus manufacturer, is uniting the people of Slovakia and Hungary with the delivery of its best-selling 40-foot eBus to Volánbusz Zrt. — one of Hungary’s largest public transport operators.

Volanbusz Zrt. will offer daily electric bus services across the Danube river to the cities of Komarom, Hungry on the south bank of the river, and Karmano, Slovakia on the north bank.

Now citizens on both sides of the river can travel between the two countries on board an electric bus for the first time.

Volánbusz’s latest low-floor BYD vehicle delivers a 180-mile single-charge range from its 348kWh battery capacity. The two-door model will also provide class-leading safety and high levels of comfort for passengers. BYD’s 40-foot eBus remains the company’s, and the European market’s, best-selling electric bus.

Volánbusz plans to buy additional electric vehicles and charging infrastructure.

In 2017, BYD opened its first European bus factory in Komárom, Hungary. The factory produces roughly 400 buses annually, and employs over 300 people.

“This is an historic day for the people of Komárom and Komárno,” said Yongping Chen, Managing Director, BYD Electric Bus & Truck Hungary. “Passengers can travel across the Danube on board a pure-electric BYD eBus in safety, comfort and, above all, help promote a cleaner, more sustainable future for the two cities.

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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Berkshire Hathaway Specialty Insurance Insurance

Berkshire Hathaway Specialty Insurance Expands Casualty Capabilities to Energy & Technical Lines in the UK

(BRK.A), (BRK.B)

Berkshire Hathaway Specialty Insurance has launched Energy and Technical Lines Casualty products in the UK and established a dedicated London-based Energy & Technical Lines underwriting team.

The company’s UK Casualty Energy & Technical Lines team includes:

• Oliver Brown, Manager, Energy Casualty. He comes to BHSI with 20 years of experience in technical energy risks. He most recently spent 10 years at AXA XL as Class Underwriter, Energy Casualty.

• Penny Wang, Senior Energy Casualty Underwriter. She joins BHSI with 16 years of energy casualty experience, most recently as Senior Casualty Underwriter at Starr Companies.

• James Emson, who has been promoted to Casualty Manager, Technical Casualty, UK. He was previously Senior Casualty Underwriter, UK.

• Jack Erritt, Technical Casualty Underwriter, UK. He was most recently Energy Casualty Underwriter at AIG.

“We are pleased to expand our casualty capabilities with the deep technical risk expertise of our new team,” said Hilary Browne, Head of Casualty, UK & Europe. “Now BHSI can provide both technical Casualty and Property solutions, backed by stellar financial strength and service, to energy operations and other technical risks across the U.K.”

© 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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Mouser Electronics

Mouser Electronics Gets E-Catalog Distributor of the Year Award from Omron Electronic Components

(BRK.A), (BRK.B)

Berkshire Hathaway’s Mouser Electronics, Inc., the industry’s leading New Product Introduction (NPI) distributor with the widest selection of semiconductors and electronic components, is proud to announce that it has been named 2020 E-Catalog Distributor of the Year by Omron Electronic Components.

“We are extremely honored to be recognized by Omron for outstanding performance in the digital space,” said Tom Busher, Mouser Vice President of Supplier Management. “Omron is a valued manufacturer partner and we thank them for this important recognition and charity donation.”

“Omron Electronic Components is incredibly proud of Mouser Electronics’ performance in Fiscal Year 2020. Mouser set a high bar with best-in-class POS growth and strong global customer count growth,” said Caroline Wells, Distribution Sales Manager, Omron Electronic Components — Americas.

“Mouser partnered strongly with Omron on creative marketing activities to promote our newest products and technologies,” said Kris Whitehouse, Vice President of Sales, Omron Electronic Components — Americas.

Mouser received the top award for high performance in criteria that include point-of-sale and point-of-purchase growth, customer count growth, and cooperative marketing engagement. As part of the award, Omron is making a generous donation in Mouser’s name to the Mansfield Independent School District Education Foundation to support local teachers and students in Mouser’s hometown. Mouser regularly supports the MISD Education Foundation with technology grants to enhance science, technology, engineering and math (STEM) education and engaging opportunities for students.

© 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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Lessons From Warren Buffett

Lessons From Warren Buffett: Shorting Stocks, It Just Takes One to Kill You

Warren Buffett is no fan of shorting stocks. His aversion goes back to what he called a “particularly harrowing experience” shorting in 1954 when he found “my net worth was evaporating and my liquid assets were getting less liquid.”

“It just takes one to kill you,” Warren Buffett warned at the 2002 Berkshire Hathaway Annual Meeting. “And you need more and more money as the stock goes up. You don’t need more and more money when a stock goes down, if you paid for it originally and didn’t buy it on margin. You just sit and find out whether you were right or not. But you can’t necessarily sit and find out whether you’re right on being short a stock.”

Hear Buffett’s full explanation

See the complete Lessons From Warren Buffett series

© 2021 David Mazor

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Minority Stock Positions Stock Portfolio

Berkshire Hathaway-Backed BYD Up 57% Since May

(BRK.A), (BRK.B)

Berkshire Hathaway-backed BYD’s stock (BYDDF) has been on a tear recently with a 57 percent rise in just under five weeks. The stock hit a low of $18 on May 10, 2021 and has since reached $28.19 on June 14, 2021.

BYD shares had been on a dramatic run in 2020 since rising from only $4.52 on March 20, 2020 to a peak of $35.94 on January 24, 2021. The stock then fell almost 50 percent to its May low.

Now, the stock has regained its momentum at an exciting time for the company.

In May, the one-millionth car, the Han EV, rolled off its production line at BYD’s headquarters and manufacturing facility in Shenzhen, China. And the company recently announced the delivery of the first 100 European-specification BYD Tang SUVs for customers in Norway, which is part of a larger 1,500 cars slated for Norway.

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 has 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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Lubrizol

Lubrizol Suffers Catastrophic Fire Forcing Evacuation in Illinois Town

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Berkshire Hathaway’s Lubrizol Corporation has suffered a catastrophic fire at its Chemtool plant in Rockton. Illinois. The fire has multiple area fire departments battling the blaze, which was first called in around 7:00am. One firefighter has reportedly been injured.

The fire has forced the mandatory evacuation of everyone within a one-mile area of the plant, and people took shelter in the Roscoe Middle School.

“At approximately 7 a.m. today, local emergency personnel responded to a fire at the Lubrizol Corporation’s Chemtool Facility in Rockton, Ill. We have confirmed all on site are safe and accounted for. Our concern right now is for the safety of all our employees and the surrounding community. As a precaution, authorities have evacuated residents in a one-mile radius of the site. We do not yet know what caused this incident, but we will be working with local authorities and with our own risk management team to determine what happened and identify any corrective actions. We will share more details as they are known. We are grateful to our employees, first responders and safety forces responding to this incident,” Alicia Gauer, Senior Director, Global Communications for the Lubrizol Corporation said.

© 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 Debuts Electric School Buses

(BRK.A), (BRK.B)

Berkshire Hathaway-backed BYD (Build Your Dreams) the world leader in electric vehicles, is introducing a battery-electric Type D school bus with unparalleled safety features and performance, wrapped in a sleek design that will have students wanting to step onboard.

With length options of 35, 38, and 40 feet, BYD’s Type D battery-electric school bus is perfect for transporting students to classes, field trips, as well as athletic and band events. The Type D can seat up to 84, and can be equipped with an ADA liftgate. The bus has a range of up to 155 miles on a single charge.

BYD’s smart technology creates a new environment where for bi-directional charging can be the norm. School buses can be charged overnight when energy demand is low, and clean emission free energy can be fed back into the classroom during school hours when the bus is parked keeping classrooms well-lit and students and teachers plugged-in.

“We are raising the bar for design, innovation, range and quality, giving parents peace of mind knowing their children are benefitting from the safest school bus anywhere,” said Stella Li, President of BYD North America. “At the same time, our buses will give operators the performance and cost savings that will make migrating to zero emission technology affordable and practical.”

BYD made safety the top priority in its school bus design, including such features as electronic stability control to aid handling, a collision avoidance system, and a 360-degree monitoring system to detect pedestrians and cyclists when the bus is operating at slow speeds.

In addition, BYD adds an additional layer of protection for children as they exit the bus with its Predictive Stop Arm™, which monitors approaching traffic and notifies students when it may not be safe to cross.

BYD buses can be equipped with IMMI’S Safeguard 3-point lap-shoulder belts, integrated child seats, and portable restraints. These school bus seats are not only designed to keep children safer, but they have the benefits of improving behavior, reducing bullying, and minimizing driver distraction.

“From the beginning, our team has always been focused on many key features,” said Samuel Kang, BYD’s Head of Total Technology Solutions. “We believed the Type D electric bus needed to be appealing to kids while at the same time offer the upmost safety features and driver ergonomics, be equipped with a safe, high-performance battery, and have plenty of storage capacity for road trips. The BYD Type D school bus achieves all those goals.”

With the driver being the first safety element, BYD drew from the experience of thousands of bus operators to enhance comfort and ergonomics in designing the driver’s cockpit. The driver’s area features comfort seats, an 18-inch power steering wheel and telescopic steering column, high level of visibility, and easy to reach control switches. The driver can also control the air conditioning over the cockpit in addition to controlling the system for passengers.

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 Value Investing Warren Buffett

Lessons From Warren Buffett: Asset Allocation Formulas are Pure Nonsense

Rebalancing your portfolio is something that is constantly preached by the financial industry, and if you don’t do it yourself, they are happy to create an account or a fund that does it for you automatically. However, Warren Buffett scoffs at the whole concept and sees it to be more about marketing than good investing.

“The idea that you have, you know, you say, ‘I’ve got 60 percent in stocks and 40 percent in bonds,’ and then have a big announcement, now we’re moving it to 65/35, as some strategists or whatever they call them in Wall Street do. I mean, that has to be pure nonsense,” Warren Buffett said at the 2004 Berkshire Hathaway Annual Meeting. “What you ought to do is have (as) your default position is always short-term instruments. And whenever you see anything intelligent to do, you should do it. And you shouldn’t be trying to match up with some goal like that. . . . But so much of what you see when you talk about asset allocation, it’s just merchandising. It’s a way to make you think that if you don’t know how to determine whether it should be 60/40 or 65/35, that you need these people. And you don’t need them at all in investing.”

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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Acquisitions Kraft Heinz

Kraft Heinz Acquiring Assan Foods

(BRK.A), (BRK.B)

Berkshire Hathaway-backed The Kraft Heinz Company is acquiring Assan Foods from privately held Turkish conglomerate Kibar Holding in a deal that values the enterprise at approximately $100 million.

Assan Foods is a rapidly growing sauces-focused business with local manufacturing facilities in Balikesir and Izmir that has been a certified production partner for Kraft Heinz since 2019 and offers Kraft Heinz the opportunity to build its retail and foodservice business across Europe, the Middle East and Africa.

The deal is expected to be completed in the second half of 2021.

“This is a great opportunity to accelerate our international growth strategy centered on Taste Elevation,” said Rafael Oliveira, International Zone President at Kraft Heinz. “We believe Assan Foods is a high-performance organization that brings best-in-class local innovation and production of sauces and tomato products, as well as a significant distribution network in the fast-growing foodservice channel, enabling us to further build our scale and agility by expanding the Heinz brand in Turkey, as well as our International Taste Elevation platform more broadly.”

Headquartered in Istanbul, Assan Foods was established in Balikesir in 1998 as a Kibar Holding investment in the food sector and evolved into one of the top producers in the region. Assan Foods manufactures and sells a wide range of products including tomato paste, ketchup, mayonnaise, and pasta and meat sauces that appeal to a variety of international cuisines and are sold under brands such as Colorado, Kingtom, and Oba, as well as private label. With approximately 400 employees, Assan Foods serves the domestic market and exports to around 50 countries on four continents.

© 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.