The value of a hypothetical $10,000 investment in the iMGP Berkshire Dividend Growth Equity ETF compared with the Russell 1000 Value Index and Morningstar US Large Value Category.

The iMGP Berkshire Dividend Growth ETF returned 7.50% (NAV return) in the first quarter compared to 8.99% for the Russell 1000 Value Index. Considering sector performance year-to-date, we are pleased to see Financials and Energy have emerged as the t MORE

This last point is important, since all cutting tools, whether they are HSS, cobalt, or tungsten carbide (more on this shortly), benefit from coating, be it TiN (titanium nitride), TiAlN (titanium aluminum nitride), or one of the other many tool coatings available on the market today. It’s also important to note that, despite what some websites suggest, there’s no such thing as a titanium drill bit (only drill bits coated with one or more of the thin film materials just mentioned).

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That’s not to say cobalt is obsolete, however. For prototype work and low-volume jobs, carbide’s higher cost probably doesn’t make sense. Nor is it appropriate for repair work or unstable machining conditions, where deflection can lead to disaster. Cobalt is also more suitable for softer materials like mild steel or aluminum, although here again, carbide's greater hole quality and straightness easily justify its use in higher-volume applications. At the end of the day, choosing the right tool means doing the math, asking questions, and being open to new technologies. Get drilling.

Kenneth Krogulski, CFA is Managing Partner and Chief Investment Officer of Berkshire Asset Management LLC. Ken has 42 years of experience in security analysis and portfolio management.  He joined Berkshire in 1990 after serving for 11 years as senior portfolio manager for the First Eastern Bank’s trust company.  He is a director of Allied Services and Cumberland Pharmaceuticals, Inc. (CPIX: NASDAQ). Ken holds a BS from Indiana University of Pennsylvania and an MBA from Wilkes University.

A similar argument can be made for everything from high-end kitchen appliances to CNC machine tools, and if your shop has one of the latter, don’t short-change its potential by using low-cost drills and other cutting tools. Not only does carbide provide cutting speeds at least four to eight times that of cobalt, but far higher feedrates as well. And because carbide drills also support a feature unavailable with their cobalt cousins—coolant through-the-tool—there’s no need to peck. When coupled with high-pressure coolant (HPC), solid carbide blows the doors off traditional drills.

Gerard Mihalick, CFA is a Partner and Portfolio Manager at Berkshire Asset Management LLC. Gerry has over 25 years of experience in the investment management industry and joined Berkshire in 1995. At Berkshire, Gerry is a member of the firm’s investment committee and has equity research and portfolio management responsibilities. Prior to joining Berkshire, he was employed as a portfolio manager with Fleet Investment Advisors in Rochester, New York. Gerry has served on the board of directors for various local non-profit organizations. Gerry holds a BA from Gettysburg College.

Michael Weaver, CFA is a Partner and Portfolio Manager at Berkshire Asset Management LLC. Mike has over 20 years of experience in security analysis and portfolio management. At Berkshire, Mike is a member of the firm’s investment committee and has equity research and portfolio management responsibilities. Prior to joining Berkshire in 1999, Mike was a senior portfolio manager for Mellon Private Asset Management. He is a former director of the North Branch Land Trust and the Luzerne Foundation. Mike holds a BA in Economics from the University of Virginia.

Michael Weaver, CFA is a Partner and Portfolio Manager at Berkshire Asset Management LLC. Mike has over 20 years of experience in security analysis and portfolio management. At Berkshire, Mike is a member of the firm’s investment committee and has equity research and portfolio management responsibilities. Prior to joining Berkshire in 1999, Mike was a senior portfolio manager for Mellon Private Asset Management. He is a former director of the North Branch Land Trust and the Luzerne Foundation. Mike holds a BA in Economics from the University of Virginia.

That brings us to tungsten carbide, more commonly referred to as carbide or sometimes cemented carbide. Think of it as cobalt on steroids. It's been around for nearly one hundred years but didn't come into widespread use as a cutting tool material until after World War II, when Kennametal founder Philip M. McKenna developed the first indexable carbide cutting tools. Since then, this extremely hard and wear-resistant material has consumed an enormous swath of the cutting tool market, drill bits included.

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There’s neither the time nor space for a complete lesson on tool steels. Those interested can read more about it in this sample from ASM International’s Handbook, Volume 16: Machining Handbook. Otherwise, just know that so-called Mushet steel, which most consider the first true tool steel, left the furnace more than 150 years ago.

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Replace some of the iron found in M2 tool steel (and all steels, for that matter) with cobalt and you get “super high-speed steel.” The addition of 5% cobalt, for instance, gives us M35 tool steel, while 8% cobalt and some additional molybdenum make M42 tool steel—whenever anyone talks about cobalt drill bits, they are referring to one of these two.

The hypothetical $10,000 investment at fund inception includes changes due to share price and reinvestment of dividends and capital gains. The chart does not imply future performance. Indexes are unmanaged, do not incur fees, expenses or taxes, and cannot be invested in directly.

The M-series, for instance, gets its name from the primary alloying ingredient, molybdenum, a hard, heat-resistant element sitting at number 42 on the periodic table. M2 tool steel—the stuff of most drill bits—contains 5% molybdenum, but there are also M50, M7, and a few others, all of which provide differing degrees of flexibility, hardness, and toughness needed for holemaking operations.

Michael Weaver, CFA is a Partner and Portfolio Manager at Berkshire Asset Management LLC. Mike has over 20 years of experience in security analysis and portfolio management. At Berkshire, Mike is a member of the firm’s investment committee and has equity research and portfolio management responsibilities. Prior to joining Berkshire in 1999, Mike was a senior portfolio manager for Mellon Private Asset Management. He is a former director of the North Branch Land Trust and the Luzerne Foundation. Mike holds a BA in Economics from the University of Virginia.

This last question is a good one. The answer comes down to the job quantity, machine setup and rigidity, and available budget. Let’s start with expense. As with anything that offers greater performance, carbide cutting tools cost significantly more. How much more depends on the manufacturer and tool geometry, but you can figure at least twice the price for substantially greater tool life and perhaps 10-20 times the metal removal per drill.

Machine shops, maintenance personnel, and the manufacturing community overall face off against a veritable universe of different materials each day:

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As to the question “when should a cobalt drill bit be used," the answer is straightforward: anywhere you would use an HSS drill. Cobalt, however, will in most cases last longer than its less wear and heat-resistant cousin, and as we've seen, run much faster besides. The only caveat is that cobalt drills, due to their greater hardness, are more brittle than HSS. The user must therefore take extra care to align them properly and avoid the radial tool pressures that might occur when drilling into intersecting holes (hydraulic manifolds, for example) and angled surfaces.

Kenneth Krogulski, CFA is Managing Partner and Chief Investment Officer of Berkshire Asset Management LLC. Ken has 42 years of experience in security analysis and portfolio management.  He joined Berkshire in 1990 after serving for 11 years as senior portfolio manager for the First Eastern Bank’s trust company.  He is a director of Allied Services and Cumberland Pharmaceuticals, Inc. (CPIX: NASDAQ). Ken holds a BS from Indiana University of Pennsylvania and an MBA from Wilkes University.

Gerard Mihalick, CFA is a Partner and Portfolio Manager at Berkshire Asset Management LLC. Gerry has over 25 years of experience in the investment management industry and joined Berkshire in 1995. At Berkshire, Gerry is a member of the firm’s investment committee and has equity research and portfolio management responsibilities. Prior to joining Berkshire, he was employed as a portfolio manager with Fleet Investment Advisors in Rochester, New York. Gerry has served on the board of directors for various local non-profit organizations. Gerry holds a BA from Gettysburg College.

Kenneth Krogulski, CFA is Managing Partner and Chief Investment Officer of Berkshire Asset Management LLC. Ken has 42 years of experience in security analysis and portfolio management.  He joined Berkshire in 1990 after serving for 11 years as senior portfolio manager for the First Eastern Bank’s trust company.  He is a director of Allied Services and Cumberland Pharmaceuticals, Inc. (CPIX: NASDAQ). Ken holds a BS from Indiana University of Pennsylvania and an MBA from Wilkes University.

Kenneth Krogulski, CFA is Managing Partner and Chief Investment Officer of Berkshire Asset Management LLC. Ken has 42 years of experience in security analysis and portfolio management.  He joined Berkshire in 1990 after serving for 11 years as senior portfolio manager for the First Eastern Bank’s trust company.  He is a director of Allied Services and Cumberland Pharmaceuticals, Inc. (CPIX: NASDAQ). Ken holds a BS from Indiana University of Pennsylvania and an MBA from Wilkes University.

Gerard Mihalick, CFA is a Partner and Portfolio Manager at Berkshire Asset Management LLC. Gerry has over 25 years of experience in the investment management industry and joined Berkshire in 1995. At Berkshire, Gerry is a member of the firm’s investment committee and has equity research and portfolio management responsibilities. Prior to joining Berkshire, he was employed as a portfolio manager with Fleet Investment Advisors in Rochester, New York. Gerry has served on the board of directors for various local non-profit organizations. Gerry holds a BA from Gettysburg College.

Source: Berkshire Asset Management. Hypothetical chart is for illustrative purposes only. Dividends are not guaranteed and a company's future abilities to pay dividends may be limited. A company currently paying dividends may cease paying dividends at any time

Because it could cut metal much more quickly than the hardened carbon steel tools of the day, they dubbed it high-speed steel. As you will see, that moniker has since become a bit misleading, as tungsten carbide cutting tools—though a bit less forgiving than HSS—are far faster and therefore much more productive.

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At 82 HRC, give or take, tungsten carbide is much harder than cobalt or HSS. This is carbide’s only Achilles’ heel—where cobalt will flex a fair amount in the face of radial cutting forces, carbide will in many cases shatter. This means that proper alignment is critical for tool life and hole accuracy (which is true of any drilling operation). And when breaking through into intersecting holes as in the manifold example just given, the feedrate should be reduced slightly until the drill stabilizes.

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BAM is a fee-based SEC-registered advisory firm serving the portfolio management needs of high net worth and institutional clients specializing in dividend focused equity strategies. The firm was initially focused on direct wealth management solutions but expanded its client base to include third-party advisory relationships with broker dealers, registered investment advisors and turnkey asset management platforms.

Compared to regular M2 tool steel, M35 and M42 are indeed super. Where "regular" M2 HSS comes in at a hardness of around 62 HRC, M35 starts at 65 HRC and M42 measures 67 or so. That doesn't seem like much difference, but together with cobalt's greater heat resistance, it supports higher cutting speeds—depending on the brand and whether the drill is coated, this might mean 50% faster spindle RPM and commensurately higher feedrates. Either way, be sure to follow the cutting tool manufacturer's recommendations.

Berkshire Asset Management (BAM) is located at 46 Public Square, Suite 700, Wilkes-Barre, Pennsylvania 18701, is an SEC-registered investment advisory firm founded in 1986. In 1999 the firm was sold to Legg Mason. In 2007, senior leadership repurchased the firm—forming Berkshire Asset Management, LLC in its current form. The Sub-Advisor is an independent advisor with $4.15 billion in assets under management as of December 31, 2022.

GOdrill™ features grade KC7325 – a multilayered PVD TiN-TiAIN coated fine-grain carbide with a TiN top layer for better wear identfication. This multipurpose grade has been combined with a unique general-purpose cutting geometry to offer high versatility and reliability across all material groups at intermediate cutting conditions.

It’s this last group, HSS, that we’re here to discuss today, along with that most widely used of all cutting tools, the drill bit. Despite their broad popularity, relatively low cost, and excellent mechanical properties, you’ll soon see why HSS and its cobalt counterparts aren’t always the best cutting tool materials for your drilling application. Read on.

Regardless, metallurgists have continued adding various amounts and kinds of alloying elements to the tool steel crucible, among them tungsten, vanadium, chromium, and, most relevant to this discussion, cobalt. The result is six distinct groups of tool steel and many dozens of grades, a few of which we mentioned previously.

Gerard Mihalick, CFA is a Partner and Portfolio Manager at Berkshire Asset Management LLC. Gerry has over 25 years of experience in the investment management industry and joined Berkshire in 1995. At Berkshire, Gerry is a member of the firm’s investment committee and has equity research and portfolio management responsibilities. Prior to joining Berkshire, he was employed as a portfolio manager with Fleet Investment Advisors in Rochester, New York. Gerry has served on the board of directors for various local non-profit organizations. Gerry holds a BA from Gettysburg College.

This list is by no means complete, but we’d be remiss in not tagging a few members of the tool steel family. These include D2, A2, H13, S7, and other tough, heat-treatable, and wear-resistant metals used to make everything from plastic injection molds to stamping dies to high-speed steel (HSS) cutting tools.

Securities that pay dividends, as a group, may be out of favor with the market and underperform the overall equity market or stocks of companies that do not pay dividends. In addition, changes in the dividend policies of the companies held by the Fund or the capital resources available for such company’s dividend payments may adversely affect the Fund. Growth stocks are generally more sensitive to market movements than other types of stocks primarily because their prices are based heavily on the future expectations of the economy and the stock’s issuing company. The interconnectivity between global economies and financial markets increases the likelihood that events or conditions in one region or financial market may adversely impact issuers in a different country, region or financial market.

Michael Weaver, CFA is a Partner and Portfolio Manager at Berkshire Asset Management LLC. Mike has over 20 years of experience in security analysis and portfolio management. At Berkshire, Mike is a member of the firm’s investment committee and has equity research and portfolio management responsibilities. Prior to joining Berkshire in 1999, Mike was a senior portfolio manager for Mellon Private Asset Management. He is a former director of the North Branch Land Trust and the Luzerne Foundation. Mike holds a BA in Economics from the University of Virginia.

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Since we’re comparing cobalt drills to those made of carbide, we won’t delve too deeply into the different types of carbide drills except to say that solid carbide is the closest equivalent from a size, length, and application perspective. After this come replaceable tip modular drills and indexable insert drills for larger holes (say anything above 1-1/2" in diameter).

BDVG fell 1.23% (NAV return) in the second quarter compared to a loss of 2.17% for the Russell 1000 Value Index, the secondary benchmark. The Morningstar US Large Value category had a loss of 1.43% in the second quarter of 2024. MORE

Performance quoted does not include a deduction for taxes that a shareholder would pay on the redemption of fund shares.