Tag Archives: Tracking
BERLIN (Reuters) – Aerospace suppliers are starting to explore blockchain technology to keep tabs on their supply chain, potentially tracking parts such as those identified as the cause of a Southwest Airlines accident last month.
While blockchain is best known as the digital transactions technology that underpins cryptocurrency bitcoin, it can also be harnessed to track, record and transfer assets across all manner of industries, potentially smoothing operations, cutting costs and improving cash management.
The challenge faced by the aerospace industry in keeping track of tens of thousands of different parts came to light when it emerged after last month’s fatal explosion that some airlines do not keep track of the history of each individual fan blade within an engine.
In addition to the operational and cost benefits, improved parts management could speed up safety checks after an accident, industry experts said, and an increasing number of aerospace suppliers are looking at blockchain as a potential solution.
Blockchain offers a secure encrypted audit trail because there is only one version of the data, meaning it can be used to ensure traceability without reams of paperwork. It is already being used to track cobalt on its journey from Congo mines to smartphones, for example.
Moog, a U.S. manufacturer of flight control systems, is working with partners to create a blockchain-based solution called VeriPart, which will initially be used to track 3D printed components.
Moog’s technology chief George Small said the aerospace industry, like other highly regulated sectors such as the medical and nuclear power industries, was expending considerable effort on tracking parts across the supply chain to keep up with quality and regulatory demands.
Small said the use of blockchain could increase efficiency and transparency in the sharing of data and that customer feedback has been positive so far. Though VeriPart is still in development, Moog has already had talks with customers on other potential uses for the technology.
“The solution is broadly applicable to manufactured goods and associated data that need to be tracked across supply chains from origin to delivery and on into service,” Small said in an emailed response to questions.
Advocates for the technology say transparency is ensured by the encrypted audit trail and because blockchains are open and decentralized, allowing different parties to share information.
Engine maker Rolls-Royce (RR.L) is among those working with blockchain developers to establish how it could be used in the supply chain and says it is rapidly developing solutions.
“The company sees opportunities to automate records for complex products that currently require significant manual effort to ensure they are well managed,” a Rolls-Royce spokesman said.
Technology company Sabre (SABR.O), which has been looking at various uses for blockchain in the travel and aviation industries, said it could see the case for using it as a system to track components.
“It’s a situation where you don’t need ultra fast technology, but you need to be able to trust what’s in the blockchain record,” said Philip Likens, director of Sabre Labs.
Likens said the technology could be used to show who created what part on what date, when it was put on a plane and then how many hours the plane was in operation.
“You want to know that all those things are right and correct, that’s the immutability part,” he said, referring to how blockchain entries cannot be changed.
Planemaker Airbus (AIR.PA), meanwhile, is looking for a blockchain solution architect to be based at one of its sites in either Toulouse, Filton, Broughton or Hamburg, according to an online job posting.
It has formed a working group within the company to identify business challenges worth addressing with blockchain and a spokeswoman said the supply chain seems a natural fit.
“Blockchain could improve the tracking of goods and become a complement to, not a wholesale replacement of, suppliers’ procurement software,” she said
But blockchain isn’t the only technology that can be used to keep a closer eye on parts in the supply chain.
Enders Analysis, in a wide-ranging note on blockchain and its use across various industries, says that a lot of the capabilities of blockchain are exaggerated or misunderstood and that existing technology can often perform the same roles.
It says that while blockchain-inspired technology could be used to bring transparency to supply chain management, it could be hard to guarantee that goods really were delivered as specified on the blockchain.
“Upgrading systems to take advantage of technological progress is important and can increase efficiency,” the analysts wrote in general advice to any company looking at blockchain.
“But those ends are much more important than the means: there is no point deploying blockchain – or a product marketed as blockchain – just for the sake of it.”
In an example of other technology that can be used to improve supply chain efficiency, Airbus last week signed up aircraft structures maker Premium Aerotec to its cloud-based aviation data platform, Skywise.
The platform will take order, production and quality data from Airbus and Premium Aerotec and analyze the data with a view to keeping the manufacturing process stable and providing transparency in the supply chain.
“To build the aircraft, Airbus needs to know where the parts are and when they are coming,” Premium Aerotec CEO Thomas Ehm told Reuters, adding that the Skywise platform aims to provide much better visibility of the manufacturing process.
Reporting by Victoria Bryan; Additional reporting by Tim Hepher; Editing by David Goodman
This article is part of a series that provides an ongoing analysis of the changes made to Berkshire Hathaway’s US stock portfolio on a quarterly basis. It is based on Warren Buffett’s regulatory 13F Form filed on 02/14/2018. Please visit our Tracking 10 Years Of Berkshire Hathaway’s Investment Portfolio article series for an idea on how his holdings have progressed over the years and our previous update for the moves in Q3 2017.
During Q4 2017, Berkshire Hathaway’s (BRK.A, BRK.B) US long stock portfolio value increased ~8%, from $ 178B to $ 191B. The top five positions account for ~62% of the portfolio: Apple Inc. (NASDAQ:AAPL), Wells Fargo (NYSE:WFC), Kraft Heinz Co. (NASDAQ:KHC), Bank of America (NYSE:BAC), and Coca-Cola (NYSE:KO). There are 45 individual stock positions, many of which are minutely small compared to the overall size of the portfolio.
Teva Pharmaceuticals (NYSE:TEVA): TEVA is a very small 0.19% of the portfolio stake established this quarter at prices between $ 11.20 and $ 19.33, and the stock currently trades at $ 19.33.
Apple Inc.: AAPL is now the largest 13F portfolio stake at 14.63%. It was established in Q1 2016 at prices between $ 93 and $ 110, and increased by ~55% the following quarter at prices between $ 90 and $ 112. Q4 2016 saw another ~275% increase at prices between $ 106 and $ 118, and that was followed with a stake doubling in January 2017 at prices between $ 116 and $ 122. There was another ~23% increase this quarter at prices between $ 154 and $ 176. The stock currently trades at $ 167.
US Bancorp (NYSE:USB): The 2.44% USB stake has been in the portfolio since 2006. The original position was tripled during the 2007-2009 time frame. It was then kept relatively steady till Q2 2013, when ~17M shares were purchased at prices between $ 32 and $ 36. The last significant activity was a ~5% increase in Q1 2015 at prices between $ 41 and $ 45. Berkshire’s cost basis on USB is ~$ 32, and the stock is now at $ 55.31. There was a marginal increase this quarter.
Bank of New York Mellon Corp. (NYSE:BK): BK is a 1.71% of the 13F portfolio stake. The bulk of the original position was purchased in Q2 2012 at prices between $ 19.50 and $ 25. The stake was increased by 30% in Q2 2013 at prices between $ 26.50 and $ 30.50. The five quarters through Q3 2015 had seen an about-turn, as there was a combined ~20% reduction at prices between $ 36 and $ 45. Q1 2017 saw a ~50% increase at prices between $ 43.50 and $ 49, and that was followed with another similar increase the following quarter at prices between $ 46 and $ 51. There was a ~20% further increase this quarter at prices between $ 51 and $ 55. The stock currently trades at $ 55.98.
Monsanto Company (NYSE:MON): The 0.71% MON position was established in Q4 2016 at prices between $ 98 and $ 106, and the stock currently trades at $ 120. In September 2016, Bayer AG (OTCPK:BAYRY) agreed to acquire Monsanto in a $ 128 per share cash deal. The last two quarters have seen a combined ~46% stake increase at prices between $ 115 and $ 122.
Wells Fargo & Co.: WFC is Buffett’s second-largest stake at 14.54% of the US long portfolio. In recent activity, around 9M shares were sold in Q2 2017 at around $ 53 per share to bring the ownership stake below the 10% threshold. The stock currently trades at $ 59.55. Berkshire’s cost basis is at ~$ 25.50. The last two quarters have seen marginal trimming.
American Airlines (NASDAQ:AAL): AAL stake was first purchased in Q3 2016. The position is now at 1.25% of the portfolio. The original purchase was at prices between $ 28 and $ 39 and doubled in Q4 2016 at prices between $ 36.50 and $ 50. The stock is now at $ 51.07. There was a ~2% trimming this quarter.
Note: Berkshire controls 9.6% of AAL.
General Motors (NYSE:GM): GM is a ~1% of the 13F portfolio position that was first purchased in Q1 2012 at prices between $ 21 and $ 30. The stake was increased by 60% in Q2 2013 at prices between $ 27.50 and $ 35. There was a ~20% increase in Q3 2014 at prices between $ 32 and $ 38, and a similar increase in Q3 2015 at prices between $ 27 and $ 33.50. Q2 2017 saw another 20% increase at prices between $ 32.50 and $ 35.50. There was an about-turn this quarter: a ~17% selling at prices between $ 40.50 and $ 46.50. The stock currently trades at $ 41.81.
International Business Machines (NYSE:IBM): The original IBM position was purchased in Q3 2011 at prices between $ 158 and $ 185. As of Q4 2016, the share count had gone up by almost 40% through periodic purchases. There was an about-turn in Q1 2017: a ~21% selling at prices between $ 166 and $ 182, and that was followed with another ~16% reduction in early May at prices between $ 150 and $ 160. Last quarter saw another one-third reduction at prices between $ 140 and $ 156. The remaining position was almost sold out this quarter at prices between $ 145 and $ 162. The stock currently trades at ~$ 155.
Note: Berkshire’s cost basis on IBM was ~$ 170 per share.
Sanofi (NYSE:SNY): The minutely small 0.09% of the portfolio stake in SNY saw marginal trimming this quarter.
Note: Per the annual report, Berkshire has a $ 1.7B position in Sanofi – so in addition to the ADRs listed in the 13F report, Berkshire also owns Sanofi securities listed in Euronext Paris.
Kraft Heinz Co.: KHC is currently the third-largest 13F stock position at 13.24% of the portfolio. Kraft Heinz started trading in July 2015, with Berkshire owning just over 325M shares (~27% of the business). The stake came about as a result of two transactions with 3G Capital as partner: a ~$ 4B net investment in 2013 for half of Heinz, and a ~$ 5B investment for the acquisition of Kraft Foods Group earlier this year. Berkshire’s cost basis on KHC is below $ 30 per share, compared to the current price of $ 71.92.
Bank of America: Berkshire established this large (top-five) 10.48% of the portfolio position through the exercise of Bank of America warrants. The warrants had a strike price of $ 7.14, compared to the current price of $ 32. The cost to exercise was $ 5B, and it was funded using the $ 5B in 6% preferred stock they held.
Note: Berkshire’s ownership stake in Bank of America is ~6.5%.
American Express (NYSE:AXP) and Coca-Cola: These two very large stakes were kept steady during the last ~4 years. Buffett has said these positions will be held “permanently”. Berkshire’s cost basis on AXP and KO are at around $ 8.49 and $ 3.25 respectively, and the ownership stakes are at ~17.5% and ~9.4% respectively.
Phillips 66 (NYSE:PSX): PSX is a fairly large 4.27% of the portfolio stake. It is a long-term position. As of Q4 2014, the stake was very small at ~0.5% of the portfolio (~6.5M shares). Q1 2015 saw a ~14% increase at prices between $ 59 and $ 80. The following quarter saw an additional ~300% increase at prices between $ 76.50 and $ 82, and that was followed with a stake doubling in Q3 2015 at prices between $ 70.50 and $ 84.50. Q2 2016 saw another ~23% increase in the high $ 70s price range. The stock currently trades at $ 93.33. Berkshire’s cost basis is $ 78.31.
Note 1: Earlier this week, it was disclosed that Phillips 66 agreed to repurchase 35M shares from Berkshire at $ 93.725 per share. Berkshire indicated the transaction’s sole purpose was to eliminate additional regulatory requirements that come with ownership stake above 10%.
Note 2: Berkshire avoided disclosing PSX stake in the original Q2 2015 13F by making use of the “Section 13(f) Confidential Treatment Requests”. An amendment filed on 9/4/2015 disclosed the huge stake build-up. Berkshire controlled ~16% of PSX at the time.
Moody’s Inc. (NYSE:MCO): MCO is a 1.90% of the US long portfolio stake. It is a very long-term position, and Buffett’s cost basis is $ 10.05. The stock currently trades at ~$ 164. Berkshire controls 11.5% of the business.
Southwest Airlines (NYSE:LUV): LUV is a 1.63% portfolio stake purchased in Q4 2016 at prices between $ 38.50 and $ 51 and increased by ~10% in the following quarter at prices between $ 49.50 and $ 59. The stock is now at $ 57.73.
Note: Berkshire owns ~7.9% of LUV.
Delta Air Lines (NYSE:DAL): DAL was a very small 0.19% position in Q3 2016. The stake saw a whopping ~850% increase in Q4 2016 at prices between $ 39 and $ 52. The stock currently trades at $ 52.20, and the stake is now at 1.56% of the portfolio. There was a ~12% trimming during H1 2017.
Note: Berkshire controls ~7.3% of DAL.
Charter Communications (NASDAQ:CHTR): CHTR is a 1.49% of the US long portfolio position. It was established in Q2 2014 at prices between $ 118 and $ 158 and more than doubled the following quarter at prices between $ 151 and $ 164. Q4 2014 saw a further ~25% increase at prices between $ 140 and $ 170. In Q2 2015, the position was again increased by ~42% at prices between $ 168 and $ 193, and that was followed with another ~21% increase the following quarter at prices between $ 167 and $ 195. Q2 2016 saw a ~10% trimming at prices between $ 198 and $ 233. The stock currently trades at $ 359, compared to Berkshire’s cost basis of around $ 160. There was a ~10% trimming last quarter.
Note: Berkshire controls ~3.4% of CHTR.
Goldman Sachs (NYSE:GS): GS is a 1.46% of the US long portfolio stake established in Q4 2013. Berkshire Hathaway received $ 5B worth of warrants to buy GS stock during the financial crisis (October 2008) at a strike price of $ 115 (43.5M shares) that was to expire October 1, 2013. Buffett exercised the right before expiry to start this long position. Q3 2015 saw a ~13% reduction at prices between $ 172 and $ 213. It currently trades at ~$ 263.
DaVita Inc. (NYSE:DVA): DVA is a 1.29% of the US long portfolio position that was aggressively built up over several quarters: the original stake was doubled in Q1 2012, increased by over 50% in Q2 2012, 24% in Q4 2012, and an additional 16% in Q1 2013. There has been marginal buying since. The bulk of the stake build-up happened at prices between $ 30 and $ 49. The stock currently trades at $ 74.75, compared to Berkshire’s overall cost basis of $ 45.33.
Note 1: Berkshire’s ownership stake in DVA crossed the 20% ownership threshold last quarter as a result of buybacks at DaVita.
Note 2: In May 2013, Berkshire’s Ted Weschler signed an accord with DVA, limiting open market purchases to 25% of the company.
United Continental Holdings (NYSE:UAL): A minutely small 0.18% UAL position as of Q3 2016 saw a huge ~540% increase in Q4 2016 at prices between $ 52.50 and $ 76. It currently goes for $ 65.68. The stake is at ~1% of the portfolio.
Note: Berkshire controls ~9.3% of UAL.
Liberty SiriusXM Group (LSXMA, LSXMK): The tracking stock was acquired as a result of Liberty Media’s recapitalization in April 2016. Shareholders received 1 share of Liberty SiriusXM Group, 0.25 share of Liberty Media Group, and 0.1 share of Liberty Braves Group for each share held. Berkshire held 30M shares of Liberty Media, for which he received the same amount of Liberty SiriusXM Group shares. There was a ~40% stake increase in Q2 2017 at a cost basis of ~$ 40 per share. The stock is now at $ 41.77.
Note: LSXMA/LSXMK is trading at a significant NAV discount to the parent Sirius Holdings’ (NASDAQ:SIRI) valuation. For investors attempting to follow Buffett, LSXMA/LSXMK is a good option to consider for further research.
USG Corporation (NYSE:USG): USG is a very long-term holding, and there was a significant 21.39M share stake increase in Q4 2013 due to conversion of notes at $ 11.40 per share – Berkshire acquired the convertible notes during the financial crisis (2/2009), and USG opted to redeem them on 12/16/2013. Q2 2014 saw a ~12% stake increase at prices between $ 30 and $ 33. The stock currently trades at $ 33.88. Buffett controls around 27% of the business, and his cost basis is ~$ 19.
Verisign Inc. (NASDAQ:VRSN): VRSN was first purchased in Q4 2012 at prices between $ 34 and $ 49.50. The position was more than doubled in Q1 2013 at prices between $ 38 and $ 48. The following quarter saw a one-third increase at prices between $ 44 and $ 49. Q1 and Q2 2014 also saw a combined ~17% increase at prices between $ 47 and $ 63. The stock currently trades at $ 114, and the position is at 0.78% of the portfolio (~10% of the business).
Liberty Global PLC (LBTYA, LBTYK): The position was established in Q4 2013 at prices between $ 37.50 and $ 44.50 (adjusted for the 03/2014 stock split) and increased significantly in the following two quarters at prices between $ 38.50 and $ 46. The three quarters through Q1 2016 had also seen a combined ~30% increase at prices between $ 30 and $ 50. Q2 2016 saw a ~17% further increase at prices between $ 27 and $ 39. The stock is now at $ 34.92, and the stake is at 0.51% of the 13F portfolio.
Note: Berkshire controls 7.9% of Liberty Global.
Sirius XM Holdings: The 0.39% SIRI stake was purchased in Q4 2016 at prices between $ 4.08 and $ 4.61. Q2 2017 saw selling: a ~20% reduction at prices between $ 4.70 and $ 5.50. The stock is currently at $ 6.09.
Synchrony Financial (NYSE:SYF): SYF is a 0.42% of the portfolio position purchased in Q2 2017 at prices between $ 26.50 and $ 34.50 and increased by ~20% last quarter at prices between $ 28.50 and $ 31.25. The stock is now at $ 36.70.
Note: Synchrony is the private-label credit card business spin-off from GE that started trading in August 2014 at ~$ 23 per share. It has seen recent super-investor interest – Baupost Group has a ~10% portfolio stake.
Axalta Coating Systems (NYSE:AXTA): AXTA is a small 0.39% of the portfolio stake established in Q2 2015 at prices between $ 28 and $ 36 and increased by ~16% the following quarter at prices between $ 24.50 and $ 33.50. The stock currently trades at $ 30.84. Berkshire owns ~9.8% of the business.
Restaurant Brands International (NYSE:QSR): QSR is a 0.27% of the 13F portfolio position established in Q4 2014 at prices between $ 35 and $ 42. The stock currently trades well above that range at $ 57.71. It started trading in December 2014 following a merger/rename transaction between Tim Hortons and Burger King Worldwide.
Note: Berkshire’s stake in the business is ~4.2%.
Store Capital (NYSE:STOR): The 0.25% STOR stake was established in Q2 2017 in a private placement transaction at $ 20.25 per share. The stock is now at $ 23.41.
Costco Wholesale (NASDAQ:COST), Graham Holdings (NYSE:GHC), Johnson & Johnson (NYSE:JNJ), Liberty LiLAC Group (LILA, LILAK), Mondelez International (NASDAQ:MDLZ), M&T Bank (NYSE:MTB), MasterCard Inc. (NYSE:MA), Procter & Gamble (NYSE:PG), Torchmark Corporation (NYSE:TMK), United Parcel Service (NYSE:UPS), Verisk Analytics (NASDAQ:VRSK), Verizon Communications (NYSE:VZ), Visa Inc. (NYSE:V), and Wal-Mart Stores (NYSE:WMT): These are very small positions (less than ~0.5% of the portfolio each) kept steady this quarter.
Note: Since November 2015, Warren Buffett is known to own ~8% of Seritage Growth Properties (NYSE:SRG) at a cost basis of $ 36.50 in his personal portfolio. It currently trades at $ 38.96. SRG is a REIT spin-off from Sears Holdings (NASDAQ:SHLD) that started trading in July 2015.
The spreadsheet below highlights changes to Berkshire Hathaway’s US stock holdings in Q4 2017:
Disclosure: I am/we are long BAC, GM.
I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.
Editor’s Note: This article discusses one or more securities that do not trade on a major U.S. exchange. Please be aware of the risks associated with these stocks.