Usually, at the end of a bull market, companies rush to go public with IPOs (initial public offerings). It feeds the public’s hunger for stocks, but it is of not much interest to Warren Buffett. For Buffett, it’s just not where you are likely to get a good price.
“An auction market, prevailing in the stock market, will offer up extraordinary bargains sometimes, because somebody will sell a half a percent, or one percent of a company at a price that may be a quarter of what it’s worth, whereas in negotiated deals, you don’t get that,” Warren Buffett said at the 2004 Berkshire Hathaway Annual Meeting. “An IPO situation more closely approximates a negotiated deal. I mean, the seller decides when to come to market in most cases. And they don’t pick a time necessarily that’s good for you.”
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 CORT, the nation’s leading provider of furniture rental and transition services, has announced the promotion of Mike Davis to President and Chief Operating Officer.
In his new role, Davis will be responsible for overseeing all operations and sales for CORT Furniture Rental, CORT Trade Show & Events, CORT Party Rental, 4SITE by CORT and Roomservice by CORT in the UK.
“Mike’s leadership experience across the organization gives him great insight and will assist driving client satisfaction and exceptional results across all of our businesses,” said CORT’s Chairman and CEO, Jeff Pederson.
Davis began his career with CORT in 1997 at CORT Furniture Rental in San Francisco. Over the years he has held executive leadership roles in both sales and operations, including Executive Vice President for CORT Furniture Rental and the Trade Show and Events Divisions. In 2016, Mike was promoted to Chief Operating Officer before his current promotion to President and Chief Operating Officer.
“In this new role I look forward to continuing to execute our long-term strategic plans as we recover from the impact of the pandemic,” said Davis. “We have an exceptional group of people at CORT, and I am confident in our ability to exceed our customers’ expectations as we grow and continue to adapt to their changing business needs.”
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’s operating results for the first quarters of 2021 and 2020 are summarized in the following paragraphs. However, we urge investors and reporters to read our 10-Q, which has been posted at www.berkshirehathaway.com. The limited information that follows in this press release is not adequate for making an informed investment judgment.
Earnings of Berkshire Hathaway Inc. and its consolidated subsidiaries for the first quarters 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).
First Quarter
2021
2020
Net earnings (loss) attributable to Berkshire shareholders
$
11,711
$
(49,746
)
Net earnings (loss) includes:
Investment and derivative gains (losses)
4,693
(55,617
)
Operating earnings
7,018
5,871
Net earnings (loss) attributable to Berkshire shareholders
$
11,711
$
(49,746
)
Net earnings (loss) per average equivalent Class A Share
$
7,638
$
(30,653
)
Net earnings (loss) per average equivalent Class B Share
$
5.09
$
(20.44
)
Average equivalent Class A shares outstanding
1,533,284
1,622,889
Average equivalent Class B shares outstanding
2,299,925,502
2,434,333,367
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) include gains of approximately $2.8 billion in the first quarter of 2021 and losses of approximately $54.5 billion in the first quarter of 2020 due to changes during the first quarters of 2021 and 2020 in the amount of unrealized gains that existed in our equity security investment holdings. Investment gains (losses) also include after-tax realized gains on sales of investments of approximately $1,414 million and $965 million in the first quarters of 2021 and 2020, respectively.
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.
An analysis of Berkshire’s operating earnings follows (dollar amounts are in millions).
First Quarter
2021
2020
Insurance-underwriting
$
764
$
363
Insurance-investment income
1,208
1,386
Railroad, utilities and energy
1,954
1,751
Other businesses
2,619
2,038
Other
473
333
Operating earnings
$
7,018
$
5,871
Approximately $6.6 billion was used to purchase shares of Class A and Class B common stock during the first quarter of 2021. On March 31, 2021, there were 1,525,655 Class A equivalent shares outstanding.
At March 31, 2021, insurance float (the net liabilities we assume under insurance contracts) was approximately $140 billion, an increase of approximately $2 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 now 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.
Berkshire Hathaway-backed BYD (Build Your Dreams) has announced that all of its pure electric vehicles will now come with the brand’s ultra-safe Blade Batteries, with nail penetration testing fully adopted as a brand standard.
At the same time, the Blade Battery completed an extreme strength test that saw it being rolled over by a 46-ton heavy truck, once again resetting the bar for power battery safety.
In addition, four recently launched BYD pure electric models in the Chinese market, namely the 2021 Tang EV, Qin PLUS EV, Song PLUS EV, and 2021 e2, all are equipped with Blade Batteries.
At present, one of the biggest problems hindering the development of the EV market is the combustion and explosion of batteries. With the rapid growth of this market, the number of new energy vehicles on the road will increase substantially, and the risk of battery safety accidents will rise accordingly, which makes power battery safety of paramount importance.
The Blade Battery has successfully passed the battery industry’s so-called “Everest” test – the nail penetration test, which proves it will never spontaneously ignite. With its outstanding safety, strength, range, long life, and power all well recognized by the market, BYD Han, the first model equipped with the Blade Battery, has sold more than 10,000 units each month consecutively since its launch in July 2020. It has successfully established itself in the mid-to-large luxury sedan market.
To address users’ concerns about the safety of EV power batteries, BYD will only use the Blade Battery in all its pure electric models moving forward. As the No. 1 brand in China’s EV production and sales for eight consecutive years, BYD has always been committed to safeguarding consumers’ safe travel. The entire series equipped with Blade Battery demonstrates BYD’s determination and strategic plan to completely end the safety issues related to new energy vehicles.
BYD has never compromised in its pursuit of safety, constantly adhering to the industry’s more stringent safety standards, like the nail penetration test, which simulates an internal short circuit of the battery, triggering a thermal runaway, which is the root cause for the combustion and explosion of power batteries. The Blade Battery is currently the only power battery in the world that can safely pass the test.
The heavy truck pressure test is a BYD safety standard that is more stringent than the national standard. The test itself saw a 46-ton fully loaded heavy-duty truck drive over the Blade Battery pack, which the battery successfully passed without leakage, deformation or smoke, coming out perfectly intact and ready to be used in an EV. The test results under such extremely harsh test conditions are sufficient to prove the superior performance of the Blade Battery in terms of safety and strength.
BYD boasts 26 years of R&D experience in the battery field and has 100% independent R&D and design capabilities, with the key components such as the Blade Battery production line and equipment all being developed in-house, which is part of the brand’s long-held insistence on independently mastering the R&D and manufacturing of core industrial equipment.
At present, the production capacity of Blade Batteries is rapidly increasing, and the quality is stable and reliable, with some of the auto industry’s key players beginning to rely on this ultra-safe battery technology. As leading global carmakers now partner with BYD subsidiary FinDreams Battery, the Blade Battery is set to be successively installed on EV models of mainstream brands at home and abroad.
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.
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
Lubrizol Life Science – Beauty (LLS Beauty) is partnering with Canadian firm Advonex International Corp. to develop renewable ingredients for the beauty and personal care market.
Advonex, which is based in Kingston, Ontario, produces plant-based hydrocarbons through patented processes. These innovative hydrocarbons replace petroleum-based ingredients such as silicone, petrolatum and mineral oil with environmentally favorable components. The hydrocarbons also replicate the sensory experience silicone provides in skin care, hair care and skin cleansing products.
“We’re proud to work with Advonex to further expand our growing portfolio of natural and sustainable ingredients,” said Doug Nalley, North America Business Director LLS Beauty and Home. “We expect this partnership to allow us to develop replacements for silicones in beauty products and help us fulfill our mission to help the world Live Better.”
“Working with LLS Beauty provides Advonex with the market expertise and global distribution that is needed to address the growing demand for alternatives to petroleum-based ingredients in the beauty and personal care market space,” said Chad Joshi, President & CEO of Advonex. “This agreement demonstrates LLS Beauty’s on-going commitment to sustainability and accelerates our ability to enter and serve the personal care market.”
The Advonex partnership is only the latest step in LLS Beauty’s commitment to sustainability. In recent years, Lubrizol has acquired Laboratoire Phenobio, an innovative supplier of naturally derived extracts and natural performance ingredients and formed global collaborations with CP Kelco and Corbion Biotech, Inc., market leaders in nature-based chemistry.
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 HomeServices, one of the world’s fastest-growing residential real estate brokerage franchise networks, has expanded into India.
Berkshire Hathaway HomeServices Orenda India marks the brokerage’s first global footprint in India, adding one office and 20 agents, and servicing Northern India including, Delhi, Mumbai, Chennai, Kolkata, Bengaluru, Hyderabad, Pune, Ludhiana, Ahmedabad, Lucknow, Jaipur, and Goa.
“As things are changing quickly from a global perspective, the need to evolve and adapt is only increasing,” said Shrey Aeren, Managing Director, Berkshire Hathaway HomeServices Orenda India. “The values, recognition and consistency of the Berkshire Hathaway HomeServices brand are unmatched by any other and my team and I look forward to bringing that same real estate experience to India.”
“We are excited to welcome Shrey Aeren and his dynamic team to our global network,” said Chris Stuart, CEO, Berkshire Hathaway HomeServices. “Shrey’s leadership, combined with his team’s dedication brings the experience and first-class services that are in perfect alignment with the Berkshire Hathaway HomeServices core values.”
Berkshire Hathaway HomeServices recently added its first brokerage in Portugal, as well.
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.
When Price/Earnings ratios rise, it is the product of two factors, and Warren Buffett detailed them both.
“It’s very simple, the price-earnings ratio, relative price-earnings ratios, move up because people expect either the industry or the company’s prospects to be better relative to all other securities than they have been, than their proceeding view. And that can turn out to be justified or otherwise,” Warren Buffett said at the 1998 Berkshire Hathaway Annual Meeting. “Absolute price-earnings ratios move up in respect to the earning power, or the prospective earning power of, that is viewed by the investing public of future returns on equity, and also in response to changes in interest rates.”
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 HomeServices has expanded into Portugal with the announcement that Berkshire Hathaway HomeServices Atlantic Portugal has joined its worldwide network.
The startup company will add one additional office and eight agents to the global network. The brokerage will service Cascais, Lisbon, Porto, Comporta, Algarve and all over Portugal.
“In Berkshire Hathaway HomeServices we have found a network that truly recognizes that real estate is more than a transaction, but a relationship,” says Patrícia Salgueiro, CEO of Berkshire Hathaway HomeServices Atlantic Portugal. “The network aligns seamlessly with our values and I am looking forward to continuing the promise of trust, integrity, stability and longevity of work due to our tailor-made services within our brokerage. The Clients are my priority and I want to leave an unforgettable memory of the beginning of a great relationship!”
Patrícia Salgueiro brings years of valuable experience to her role. With a background immersed in the luxury market, she has acquired the necessary skills designed to persevere in a competitive market and create strong relationships all across the globe.
With their brand transition, Berkshire Hathaway HomeServices Atlantic Portugal gains access to Berkshire Hathaway HomeServices’ active referral and relocation networks, and its “FOREVER Cloud” technology suite, a powerful source for lead generation, marketing support, social media, video production/distribution and more. Berkshire Hathaway HomeServices has aligned with best-in-class technology platforms to deliver world-class support to its network members far into the future.
The brand also provides global listing syndication, professional training and ongoing education and the exclusive Luxury Collection marketing program for premier listings. Its Prestige Magazine showcases network members’ premium listings with a strong lineup of feature stories covering topics that appeal to high-end real estate consumers.
“We’re proud to welcome Berkshire Hathaway HomeServices Atlantic Portugal,” said Chris Stuart, CEO of Berkshire Hathaway HomeServices. “Patrícia is a skilled and seasoned leader who will effortlessly lead, guide and inspire her team of real estate professionals.”
The new brokerage will also leverage the strength and reliability of the Berkshire Hathaway HomeServices Luxury Collection division, which utilizes an elite network of experienced, service-oriented professionals that combines local expertise with vast global connections, together with marketing resources to deliver the best-in-class results.
Gino Blefari, Chairman of Berkshire Hathaway HomeServices, also welcomed the company to the network, “We’re thrilled to have Berkshire Hathaway HomeServices Atlantic Portugal join the network. Patrícia and her team share our vision to create long-lasting relationships with their clients and truly become Forever Agents.”
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 Lubrizol Advanced Materials’ brand FlowGuard Plus CPVC Pipe has been evaluated by the GRIHA Council and listed as a green product in the GRIHA Green Catalogue under the innovation category.
FlowGuard Plus CPVC piping system is the first piping material that has been granted this enlistment in India.
Manish Jain, Sr. Manager – South Asia, said, “Creating innovative sustainable products is a core pillar of our organization and we are proud to announce that our FlowGuard Plus CPVC Pipe has received the green certification from GRIHA, thus making it the first CPVC enlisted brand in the GRIHA Green Product Catalogue and a preferred material in home building projects in India. This listing will benefit the home and building owners using our products to earn green points under the GRIHA rating scheme of green buildings.”
Lubrizol Advanced Materials’ TempRite’s success on the green certifications and enlistments are on account of years of R&D, Innovation in CPVC technology and transparency in communicating the environmental aspects of the products to the market through lifecycle assessments and detailed environmental product reports for FlowGuard.
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 Specialty Insurance has appointed Brian Robb as Senior Vice President, Head of Cyber/MPL/Tech, in the U.S.
“We are pleased to welcome Brian to lead our Cyber, Miscellaneous Professional Liability & Technology E&O team in the U.S.,” said Anthony Tatulli, Head of Executive & Professional Lines, North America, at BHSI. “His expertise adds fuel to our efforts to expand our portfolios and deliver the sound, stable solutions customers are seeking now and for the long-term.”
Brian comes to BHSI after nearly 11 years at CNA Insurance, where his experience spanned both the underwriting and claims sides of the business. He was most recently Product Leader, Cyber/Media/MPL/Tech E&O. Prior to that, Brian held the positions of Cyber Industry Leader and Senior Claim Counsel, Global Cyber and Technology Claims, at CNA. He holds a master’s degree from City University of New York-Baruch College, Zicklin School of Business, and a law degree from Brooklyn Law School. He received a bachelor’s degree in Political Science from the University of North Carolina at Chapel Hill.
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.