Berkshire Hathaway Inc.: Capitalizing On Industry Dynamics For Long-Term Growth


By Stella Mwende, SeekingAlpha


  • Increased permits in 2020 will give Berkshire Hathaway a boost in the manufactured housing market.
  • Lubrizol's purchase of Avid Product Development Company will revolutionize the use of 3D Printing in manufacturing.
  • Berkshire Hathaway is expected to recover from the high volatility seen in US auto-insurance shopping experienced from March-to-April 2020 into 2021.
  • Investors should prepare for a stock split in the near future as the company will seek to increase investment capital after the Covid19 recession.

After reducing its stake in the financial sector, Berkshire Hathaway Inc. (NYSE:BRK.A) (BRK.B) has set its eyes on commodities and industrial products. Last week, the former textile milling group added $562 million to its stake at Barrick Gold (GOLD) making it the 11th largest shareholder of the miner. In my previous article, I expressed optimism that Barrick Gold's strategic partnerships coupled with the increase in gold price would see the stock price soar. True to form, the stock is now 14.68% high since July 13, 2020 and with Berkshire Hathaway's input, we are headed for great strides.


Despite the negative impact of operational inefficiencies in the manufacturing space caused by COVID-19, Berkshire Hathaway may rely on high revenues expected from building/ manufacturing dynamics and retailing. Additionally, resurgence of trading in the automotive industry will offset investment losses accrued from Q2 2020.

Industry Dynamics

The number of building permits from the latest release according to the Census bureau rose by 20.47% to stand at 1.49 from the previous reading of 1.241 million on July 17, 2020. The record released was greater than the Q2 2020 projected estimate that was slightly low at 1.320 million indicating a strengthening dollar. Indeed, the positive change in this number from the previous reading shows rising demand in the housing market.

Increased permits give Berkshire Hathaway a boost in the manufactured housing market since the company's total loans in the sector stand at $17.234 billion. Non-performing loans in the sector are almost negligible at 0.59%.

Manufacturing, that rakes in the highest revenue for Berkshire Hathaway dropped its earnings in the second quarter of 2020 by 16.05% as compared to Q2 2019.

Source: Berkshire Hathaway

Berkshire Hathaway's Energy Company (NYSE:BHE) that operates the Northern Power-grid in the UK is scheduled to benefit from the sale of the Western Power Distribution line in the country. PPL Corporation's (PPL) that operates the Western Distribution line has seen its stock fall by 1.08%. In the announcement, PPL stated that it was ready to concentrate on American energy businesses as calls for clean energy in the UK were hurting the company's stock surge.


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