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Commentary: Berkshire Hathaway Takes the Easy Money in IBM-Red Hat Merger

(BRK.A), (BRK.B)

In life there’s hard money and there’s easy money. There are times when you work day and night and have little to show for it, and there are times when the money falls like leaves from a tree.

One thing about Berkshire Hathaway, they’re never afraid to make money the easy way.

And what could be easier than with a click of a mouse buying up shares that somebody’s already committed to paying more for?!

With IBM set to buy Red Hat Software for $34 billion, Berkshire Hathaway has been busy buying up shares for what looks to be a profitable merger arbitrage play.

IBM’s move is the third-biggest U.S. technology merger history, trailing only Dell’s acquisition of EMC, and the JDS Uniphase acquisition of SDL, and Berkshire has jumped in and scarfed up 4,175,792 shares of Red Hat at an average price of $175.64 per share, it just revealed in its latest 13F filing for Q4 2018.

The shares represent 2.3730% of the software and cloud computing company, and if the deal goes through, Berkshire will make a profit of 7.55% for just buying and holding until the closing date.

The deal is expected to close in late 2019.

Berkshire does not disclose who makes a particular stock purchase or sale, so it’s not known whether the move is the handiwork of Warren Buffett, or his portfolio managers Todd Combs and Ted Weschler.

Combs and Weschler each handle separate portfolios of roughly $10 billion each, which combined is just over 10% of Berkshire’s diverse $183 billion portfolio of shares in companies such as Apple, Coca Cola, Bank of America, Wells Fargo, American Express, JP Morgan Chase, Delta, Goldman Sachs, and Southwest Airlines, among others.

IBM hopes its acquisition of Red Hat will provide an open approach to cloud computing, and make IBM the #1 hybrid cloud provider in an emerging $1 trillion growth market. It plans for Red Hat to operate as a distinct unit within IBM’s Hybrid Cloud team.

We Don’t Care. We Don’t Have To

However Red Hat operates, it won’t matter to Berkshire.

Berkshire previously dumped all its IBM shares when it lost hope in IBM’s growth plans after company racked up almost six years of declining sales.

Unlike IBM, Red Hat has seen dramatic revenue growth. Its revenue shot up 21% between the 2017 and 2018 fiscal years.

However, IBM’s offer to pay $190 a share for Red Hat has Berkshire excited if not for IBM, than at least for the billions it will pay for Red Hat.

IBM is swinging for the fences with its largest acquisition in its history. And Berkshire is more than happy to hit a nice clean single of its own.

© 2019 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 on a Roll with 50,000 Electric Buses

(BRK.A), (BRK.B)

BYD (Build Your Dreams), a world leader and pioneer in battery and zero-emission vehicles, has hit a remarkable figure in its quest to get the world of buses to change from the soot-belching, diesel polluters of yore, to a vehicle that’s on the forefront of environmentally sound transportation.

BYD reached has a new milestone with the completion of its 50,000th battery-electric bus.

The company notes that according to the U.S. Department of Transportation’s research, operating 50,000 electric buses is equivalent to taking 1.35 million cars off the road and eliminating 84.5 million tons of C02 over the vehicles’ 12-year lifespan.

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 almost ten-fold, and is now worth roughly $1.96 billion.

For More on BYD, read the Special Report: BYD, Berkshire’s Tesla.

© 2019 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
Minority Stock Positions Stock Portfolio

Fleet of BYD Electric Buses to Run in Colombia

(BRK.A), (BRK.B)

BYD (Build Your Dreams), a world leader and pioneer in battery and zero-emission vehicles, has sold 64 electric buses to Medellín, Colombia’s second largest city.

The order is second in Latin America only to Chile’s order of 100 buses.

The buses will be BYD’s 12.5-meter-long K9G, which has a seating capacity of 80. The buses are have a range of roughly 300 kilometres per charge, with a two hour charging time.

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 almost ten-fold, and is now worth roughly $1.96 billion.

For More on BYD, read the Special Report: BYD, Berkshire’s Tesla.

© 2019 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
Minority Stock Positions Stock Portfolio

BYD Selling 1,000 Electric Buses a Month

(BRK.A), (BRK.B)

BYD (Build Your Dreams), a world leader and pioneer in battery and zero-emission vehicles, is selling 1,000 of it pure electric buses a month.

BYD announced that its unaudited sales volume for November 2018 was 1,049 buses.

The new energy company based in Shenzhen, China, has its buses in service around the world, including the U.S. , Canada, India, South Korea, Norway, and of course China.

The company has successfully partnered with local bus manufacturers in a number of countries, including Alexander Dennis Limited (ADL) in England and Olectra Greentech in India.

In England, BYD-ADL is producing the first pure electric double-decker buses.

Through November, BYD had sold a total of 451,050 cars, SUVs, buses, and other vehicles, with 201,161 being New Energy vehicles.

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 almost ten-fold, and is now worth roughly $1.96 billion.

For More on BYD, read the Special Report: BYD, Berkshire’s Tesla.

© 2018 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 Minority Stock Positions Stock Portfolio

Hedge Fund Opposes Kraft Heinz’s Campbell’s Bid

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Unhappy with its large position in Kraft Heinz, Czech Republic-based hedge fund Krupa Global Investments is threatening to wage a proxy fight over a possible Kraft Heinz bid for Campbell Soup Co.’s international business.

Kraft Heinz and Mondelez, along with private equity firms Bain Capital LP, KKR and FinTrek Capital Hong Kong Co., are reportedly the approved bidders for an auction that will see the winner gain Campbell’s Australian cookie brand Arnott’s and its Danish baked-snacks maker Kelsen Group.

“This auction process may be great for Dan Loeb and Campbell’s Soup but it does nothing for Kraft Heinz and its shareholders,” said KGI Chairman Pavol Krupa in a statement. “Campbell’s Soup is selling its international assets for a reason thus we are concerned that these assets could be a drain on Kraft Heinz’s profitability and add to its debt. We strongly oppose Kraft Heinz’s participation in this auction and will organize a strong campaign against it if necessary.”

KGI has been campaigning for an $80/share buyout of public investors by Warren Buffett and Berkshire Hathaway.

KGI cites a recent piece by Daniel Thurecht in Seeking Alpha backing up KGI’s $80/share valuation published on November 20, 2018 and a piece by Lauren Hirsch in CNBC underscoring the benefits of large legacy consumer companies going private published on October 27, 2018.

“We do not believe Warren Buffett wants his career tarnished by the embarrassment of losing Kraft Heinz investors 40 percent of their investments from 2015 prices. We are liaising with Kraft Heinz management, 3G Capital and Berkshire Hathaway to figure out a constructive solution that will benefit Berkshire Hathaway, 3G, Kraft Heinz shareholders, and the Kraft Heinz brand. We believe such a resolution is possible and will not rest until one is achieved,” added Krupa.

© 2018 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
Minority Stock Positions Stock Portfolio

BYD Electric Buses Begin Test Runs in Delhi

(BRK.A), (BRK.B)

BYD (Build Your Dreams), a world leader and pioneer in battery and zero-emission vehicles, has begun a three month test run of its pure electric bus in Delhi.

Built in India, the 12-metre pure electric bus, eBuzz K9, has a seating capacity of 35.
The buses are manufactured in New Delhi by Olectra Greentech (formerly known as Goldstone Infratech) in partnership with BYD Auto Industry Co. Ltd.

Olectra-BYD buses are currently running in four states. The company first placed electric buses in service, beginning in September 2017 between Kullu-Manali under the Himachal Roadways Transport Corporation (HRTC), and in September 2018 between the city of Hyderabad and the Rajiv Gandhi International Airport under the Telangana State Road Transport Corporation (TSRTC).

Olectra-BYD’s eBuzz K7 is also in service in Mumbai under the Brihan Mumbai Electricity Supply and Transport Undertaking (BEST).

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 almost ten-fold, and is now worth roughly $1.96 billion.

For More on BYD, read the Special Report: BYD, Berkshire’s Tesla.

© 2018 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
Minority Stock Positions Stock Portfolio

BYD to List Battery Unit by 2022

(BRK.A), (BRK.B)

BYD (Build Your Dreams), a world leader and pioneer in battery and zero-emission vehicles, has announced plans to list its battery unit by 2022.

The company did not specify the exchange it would be listed on.

The move, which was reported by Reuters out of Beijing, comes roughly six months after BYD opened the world’s largest battery manufacturing plant in the western province of Qinghai. The plant is designed to keep up with the demands of a company that has become the world leader in battery powered cars.

The facility has commenced manufacturing batteries, but the entire facility will not be fully completed until the end of 2019.

The plant opened with a manufacturing capacity of 24 GWh, and BYD aims to increase its total manufacturing capacity to 60 GWh by 2020.

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 almost ten-fold, and is now worth roughly $1.96 billion.

For More on BYD, read the Special Report: BYD, Berkshire’s Tesla.

© 2018 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
Minority Stock Positions Stock Portfolio

Ecuador City Vies to Have First All-Electric Mass Transit

(BRK.A), (BRK.B)

The city of Guayaquil, Ecuador may soon have the honor of being the first in the world to have an all-electric mass transit system.

The port city, which is known as “the Gateway to the Galapagos,” is swapping its entire fleet of diesel transit buses for pure-electric buses.

The move comes after a five month pilot program proved the viability of the buses. The test bus ran an average of 250 kilometers per day.

BYD’s K9 buses feature air conditioning and Wi-Fi, and will have a dramatic impact on air pollution and fuel costs.

The buses are projected to reduce 12.8 tons of CO2 and 2.9 million gallons of diesel annually.

The buses are scheduled to be in service by March 2019.

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 almost ten-fold, and is now worth roughly $1.96 billion.

For More on BYD, read the Special Report: BYD, Berkshire’s Tesla.

© 2018 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
Minority Stock Positions Stock Portfolio

BYD Hires Former Tesla Executive

(BRK.A), (BRK.B)

BYD (Build Your Dreams), a world leader and pioneer in battery and zero-emission vehicles, has added a former Tesla executive to its U.S. operations.

Sam Jammal was hired by BYD as Senior Manager of Government Relations for the Western United States.

Jammal comes to BYD from SolarCity and Tesla. Before that he held several high-level jobs in the federal government, including Chief of Staff in the U.S. House of Representatives and Presidential Appointee (Obama) at the U.S. Department of Commerce.

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 almost ten-fold, and is now worth roughly $1.96 billion.

For More on BYD, read the Special Report: BYD, Berkshire’s Tesla.

© 2018 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
Minority Stock Positions Stock Portfolio

BYD Making Major Strides in Brazil

(BRK.A), (BRK.B)

BYD (Build Your Dreams), a world leader and pioneer in battery and zero-emission vehicles, is making major strides in Brazil.

BYD Americas CEO Stella Li met recently with São Palo Mayor Bruno Covas at the Brazilian Consulate in Los Angeles to discuss zero-emission mobility in one of the world’s most vibrant cities.

Projects in progress across Brazil, include a fleet of 200 electric refuse trucks in Indaiatuba, and a $689 million monorail system in Salvador.

The company is also building a solar panel manufacturing facility in the city of Campinas.

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 almost ten-fold, and is now worth roughly $1.96 billion.

For More on BYD, read the Special Report: BYD, Berkshire’s Tesla.

© 2018 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.