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Stock Portfolio

Berkshire Hathaway-Backed BYD Jumps 11% to All-Time High

(BRK.A), (BRK.B)

Shares of Berkshire Hathaway-backed Chinese battery and vehicle manufacturer BYD Co., Ltd. jumped 11% on Monday to a new all-time high.

BYD’s stock (BYDDF), which had been as low as $4.35 on March 23, closed at $26.38 on Monday.

The stock is up over 400% year-to-date.

A Profitable EV Company

BYD recently reported a strong third quarter with earnings per share skyrocketing 3,000% from the same quarter in 2019 at $0.093 (RMB 0.62).

The company has reported strong sales of its vehicles, including the Han luxury car, which debuted in July.

Han EV’s long-range pure electric version has a single-charge range of 605 kilometers (376 miles) based on the NEDC test cycle.

In other news, BYD recently announced it is furthering its push into the battery-powered commercial truck market with the creation of a new BEV truck company in combination with Hino Motors, Ltd., which is backed by Toyota.

The goal of the new company is to combine the strengths of both companies to develop BEVs and electric units primarily in the Asian market.

The venture plans to initially launch vehicles under the Hino brand in the first half of the 2020s.

BYD and Berkshire Hathaway

In 2008, Berkshire Hathaway bet on BYD’s potential, purchasing 225 million shares. It’s an investment that has paid off handsomely. Berkshire’s original investment of $230 million has grown in value over twenty-fold.

© 2020 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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McLane

McLane and RaceTrac Extend Service Agreement

(BRK.A), (BRK.B)

Berkshire Hathaway’s McLane Company, Inc., a leading supply chain services company providing grocery and foodservice solutions, announced today that they have renewed their multi-year service agreement with RaceTrac Petroleum, Inc.

McLane and RaceTrac’s relationship dates back to 1996, and McLane’s distribution services encompass all convenience store categories including tobacco, grocery, candy, snacks, and store supplies.

“McLane has been a valuable partner of RaceTrac and plays an integral role in keeping our stores supplied with the products our guests know and love,” says Natalie Morhous, president of RaceTrac. “We are looking forward to our continued partnership.”

McLane’s senior vice president of sales, Vito Maurici, agrees. “RaceTrac is a best-in-class retailer, and McLane is proud to support their growth and expansion initiatives. We anticipate continued success for both parties moving forward.”

RaceTrac is a privately held, family-owned corporation that operates more than 550 stores in six states. As a leader in the grocery convenience store marketplace, RaceTrac maintains its focus on growth, expecting approximately 10% year over year growth in store count as well as continuing a remodel program for a significant portion of their locations. RaceTrac is also expanding its portfolio to travel centers to better serve the professional driver and stores with an expanding diesel offering for small to mid-size fleet drivers.

Foodservice remains a key component of RaceTrac’s growth strategy by offering programs that resonate with their guests while expanding inside sales. McLane helps RaceTrac support these goals by leveraging their purchasing power, geographic distribution, and product assortment, allowing RaceTrac to offer competitive pricing across all of their stores.

“McLane helps ensure that we are able to grow and succeed. The reliability of their deliveries, both in completeness and accuracy, is essential for our stores to remain stocked and able to meet the needs of our guests,” says Jason Phillips, director of procurement at RaceTrac.

Under the renewed agreement, RaceTrac will continue to pull from seven of McLane’s 24 grocery distribution centers to provide excellent service to all of their locations. RaceTrac will also continue to utilize a number of McLane’s innovative solutions and value-adds, such as Virtual Trade Show (VTS), an internet-based trade show that offers new products and promotions from suppliers, and McLane Link, an online portal that allows retailers to access key information like order activity and metric data from their computer or tablet.

© 2020 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

DHL Piloting BYD’s Class 8 Battery-Electric Trucks in Los Angeles

(BRK.A), (BRK.B)

Parcel and express mail service DHL is using BYD’s Class 8 battery-electric trucks as part of its efforts to reduce its carbon footprint.

Four of the trucks are now on the streets of Los Angeles for DHL just in time for the peak holiday shipping season. BYD’s big rigs will haul goods to and from the DHL Los Angeles International Airport gateway and local service centers.

BYD’s 8TT’s are built with long-lasting and safe battery technology, capable of running all day on a single charge. Equipped with a comfortable air-ride cab and air suspension, the trucks have more than enough power and torque to operate at 82,000 lbs. combined weight.

DHL estimates the use of the trucks will prevent more than 300 metric tons of greenhouse gas emissions from entering the atmosphere per year.

“The introduction of these efficient electric trucks is a huge step forward, not only toward achieving our own clean transport goals, but also California’s ambitious goals on the adoption of zero-emission vehicles,” said Greg Hewitt, CEO of DHL Express U.S. “By implementing these electric trucks, we will prevent more than 300 metric tons of greenhouse gas emissions from entering the atmosphere per year, as we continue to grow and enhance our clean pick-up and delivery solutions.

The new trucks enhance DHL’s already robust alternative fuel vehicle (AFV) fleet in the U.S., which includes fully electric, hybrid-electric, and clean diesel – in addition to low-power electric-assist e-Cargo Cycles.

“As a global leader in logistics and express services, DHL has proved that they’re serious about their commitment to transition to zero-emission trucking,” said John Gerra, Sr. Director of Business Development at BYD Motors. “DHL is doing more than just talking about it; they’re actually putting BYD electric trucks into commercial service, today.”

In addition, DHL Express has 72 all-electric battery-powered vans on order from multiple vendors, which will support DHL pickup and delivery operations throughout California and New York.

BYD and Berkshire Hathaway

In 2008, Berkshire Hathaway bet on BYD’s potential, purchasing 225 million shares. It’s an investment that has paid off handsomely. Berkshire’s original investment of $230 million has grown in value more than twenty-fold.

© 2020 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 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
Brooks

Brooks Running Has 49% Global Growth in Q3

(BRK.A), (BRK.B)

While indoor athletic activities were curtailed this summer and fall due to Covid, outdoors was a different matter. Items such as bicycles and running shoes were flying off the shelves.

Berkshire Hathaway’s Brooks Running reported record third quarter global revenue up 49 percent year over year, leading to a 2020 outlook of 27 percent growth.

“We believe in the positive power the run can create in someone’s day and its additive benefits over time. It is also an effective antidote in troubling times, and we’ve seen that prove true as running participation increased since March,” said Jim Weber, CEO at Brooks Running. The 2020 running boom created amidst the pandemic has been driven by people running for mental and physical health.

According to Brooks sales data, the brand gained 1.6 million runners through October of this year.

“We have worked alongside our retail, factory and distribution partners to ensure those who want to run can find the product they trust and need to bring positive energy into their lives,” Weber notes.

Despite challenges and uncertainty felt around the world caused by COVID-19 and an ensuing volatile economy, Brooks came into the global pandemic with strong product lines. Market share growth accelerated in Q3 as the brand added new runners.

According to The NPD Group, Brooks captured the largest share increase year-to-date through September in the U.S. adult performance running footwear category, gaining 4 share points versus the same period in 2019.

© 2020 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 Forming New Company with Hino to Produce BEVs

(BRK.A), (BRK.B)

Berkshire Hathaway-backed BYD is furthering its push into the battery-powered commercial truck market with the creation of a new BEV truck company.

BYD and Hino Motors, Ltd. have signed a joint venture to establish a new company for commercial battery electric vehicles development. The new venture is scheduled to be established in China in 2021, with BYD and Hino each making a 50% capital investment.

Hino represents the Toyota Group in the global market for medium-duty trucks, heavy-duty trucks, and buses. In 2001, Toyota Motor Corporation acquired a majority ownership of Hino Motors, Ltd.

The goal of the new company is to combine the strengths of both companies to develop BEVs and electric units primarily in the Asian market.

The venture plans to initially launch vehicles under the Hino brand in the first half of the 2020s.

BYD and Berkshire Hathaway

In 2008, Berkshire Hathaway bet on BYD’s potential, purchasing 225 million shares. It’s an investment that has paid off handsomely. Berkshire’s original investment of $230 million has grown in value more than twenty-fold.

© 2020 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 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
McLane

McLane and Koupon Partner to Boost Consumer Loyalty for C-Stores

(BRK.A), (BRK.B)

Berkshire Hathaway’s McLane Company, Inc., a leading supply chain services company providing grocery and foodservice solutions, and Koupon, the leading promotion solution in the convenience store industry, have partnered to create a seamless integration of Koupon’s digital promotion platform with McLane’s Consumer Loyalty Program application.

McLane is well known for its innovative technology solutions for c-stores, and Koupon provides c-store retailers and CPG brands with the easiest solution to connect with shoppers and grow sales. Together, their partnership will allow c-store operators to take advantage of hundreds of industry CPG coupon offers within McLane’s Consumer Loyalty Program application, reducing product costs for both the retailer and the consumer.

Within McLane’s enhanced Consumer Loyalty Program application, consumers can access digital promotions powered by Koupon’s technology and redeem them at checkout.

There are a number of benefits to McLane and Koupon’s integrated solution, including:

• It is completely free to retailers who use McLane’s Consumer Loyalty Program.
• Consumers can search for and easily redeem coupons pertaining to their purchases at checkout.
• Consumers can receive and redeem store loyalty points based on their purchases, leading to additional offers and benefits.
• As new coupons are added, consumers can take advantage of them in real time.
• Integrated security identifies or limits age-restricted content.

“We are delighted to work with Koupon, who has distinguished itself as the industry leader in this space,” says Deon Johnson, vice president of development at McLane. “By working together, we created a solution that truly benefits both retailers and consumers.”

“This partnership is a significant milestone for the convenience store industry,” notes Brad Van Otterloo, CEO of Koupon. “Integrating Koupon’s digital promotion technology with McLane’s leading Consumer Loyalty Program will benefit the industry as a whole.”

© 2020 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
Mouser Electronics

Mouser Electronics Expands Headquarters with New Building Dedicated to Customer Service

(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, has opened a new Customer Service Center building at its corporate headquarters, devoted entirely to customer service and support.

The new two-story, 50,000-square-foot building, located on Mouser’s 78-acre campus of its worldwide headquarters in Texas, is designed to be energy efficient and can also expand to 100,000 square feet to meet demand. The building features state-of-the-art amenities, inside and outside eating areas and a large parking expansion.

“Mouser has been fortunate to see strong growth over the last several years, and we need more space for more people to provide our signature customer service,” said Coby Kleinjan, Vice President of Americas Customer Service and Sales. “The idea is to allow room for additional staffing while boosting efficiency and collaboration. This additional capacity will strengthen our efforts to provide best-in-class customer service across the board.”

Including the new Customer Service Center building, Mouser offers 27 customer support locations located across three continents to provide customer support in local language, time zone and currency. The authorized global distributor provides customers with service and technical support via phone, email, and chat or through its industry-leading website, mouser.com. The company calls the approach “glocal” — giving localized service across the globe.

© 2020 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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Financials

Berkshire Hathaway Accelerates Share Buybacks

(BRK.A), (BRK.B)

Investors wondering whether Warren Buffett thinks that Berkshire Hathaway stock has been undervalued, now have their answer. He does.

Berkshire Hathaway dramatically increased its share buybacks in the third quarter.

Approximately $9 billion was used to repurchase Berkshire shares during the third quarter, as compared to $5.1 billion in buybacks in the second quarter. This brings the nine month total share repurchases to approximately $16 billion.

The average share price Berkshire paid was: $188 for $2.5 billion in July, $210 for $3.1 billion in August, and $215.8 for $3.6 billion in September.

Warren Buffett’s annual letter to shareholders for 2019 detailed his thinking on share buybacks:

In past reports, we’ve discussed both the sense and nonsense of stock repurchases. Our thinking, boiled down: Berkshire will buy back its stock only if a) Charlie and I believe that it is selling for less than it is worth and b) the company, upon completing the repurchase, is left with ample cash.

Calculations of intrinsic value are far from precise. Consequently, neither of us feels any urgency to buy an estimated $1 of value for a very real 95 cents. In 2019, the Berkshire price/value equation was modestly favorable at times, and we spent $5 billion in repurchasing about 1% of the company.

Over time, we want Berkshire’s share count to go down. If the price-to-value discount (as we estimate it) widens, we will likely become more aggressive in purchasing shares. We will not, however, prop the stock at any level.

© 2020 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 Third Quarter Earnings

(BRK.A), (BRK.B)

Earnings of Berkshire Hathaway Inc. and its consolidated subsidiaries for the third quarter and first nine months of 2020 and 2019 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

2020

2019

2020

2019

Net earnings attributable to Berkshire shareholders

$

30,137

$

16,524

$

6,686

$

52,258

Net earnings includes:

Investment and derivative gains/losses –

Investments(1)

24,771

8,481

1,271

31,745

Derivatives

(34

)

185

(506

)

961

24,737

8,666

765

32,706

Impairments of intangible assets(2)

(78

)

(214

)

(10,980

)

(214

)

Operating earnings

5,478

8,072

16,901

19,766

Net earnings attributable to Berkshire shareholders

$

30,137

$

16,524

$

6,686

$

52,258

Net earnings per average equivalent Class A Share

$

18,994

$

10,119

$

4,160

$

31,944

Net earnings per average equivalent Class B Share

$

12.66

$

6.75

$

2.77

$

21.30

Average equivalent Class A shares outstanding

1,586,698

1,633,002

1,607,041

1,635,903

Average equivalent Class B shares outstanding

2,380,046,304

2,449,502,430

2,410,561,550

2,453,854,768

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 2020 include gains of $22.4 billion in the third quarter and $2.3 billion in the first nine months and in 2019 include gains of $8.0 billion in the third quarter and $30.1 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 2020 also include after-tax realized gains on sales of investments of $3.1 billion during the third quarter and $552 million during the first nine months. In 2019, investment gains/losses include after-tax realized gains of $513 million during the third quarter and $1.6 billion 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

2020

2019

2020

2019

Insurance-underwriting

$

(213

)

$

440

$

956

$

1,182

Insurance-investment income

1,015

1,484

3,769

4,087

Railroad, utilities and energy

2,742

2,644

6,257

6,447

Other businesses

2,346

2,455

5,833

7,142

Other

(412

)

1,049

86

908

Operating earnings

$

5,478

$

8,072

$

16,901

$

19,766

Approximately $9 billion was used to repurchase Berkshire shares during the third quarter bringing the nine month total to approximately $16 billion. On September 30, 2020 there were 1,570,636 Class A equivalent shares outstanding. At September 30, 2020, insurance float (the net liabilities we assume under insurance contracts) was approximately $135 billion, an increase of $6 billion since yearend 2019.

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.

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.

Categories
Pampered Chef

Berkshire Hathaway’s Pampered Chef Enters the France Market

(BRK.A), (BRK.B)

As part of its international expansion strategy, Berkshire Hathaway’s Pampered Chef has expanded to France.

This is the company’s third market opening in Europe, with the Germany launch in 2000 and Austria in 2019.

“At Pampered Chef, we believe our purpose – to enrich lives one meal and one memory at a time – is one that can have an impact globally, and we are excited to continue our Europe expansion efforts with Pampered Chef France,” said Nevena Srebreva, chief field and international officer for Pampered Chef. “This year, we celebrate our 40th anniversary as a company and our 20th anniversary in Germany. The brand’s tremendous international growth during that time demonstrates how much the power of mealtime resonates with people worldwide.”

French consumers will be able to access Pampered Chef’s high-quality kitchen tools and time-saving cooking solutions, designed to enhance and simplify mealtime without sacrificing quality time with loved ones. This trusted and distinctive product offering is delivered by a global community of more than 50,000 independent cooking consultants, who have a business opportunity that combines their passion for food with products they love.

© 2020 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.