Author Topic: Berkshire Hathaway Energy  (Read 9986 times)

Cigarbutt

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Re: Berkshire Hathaway Energy
« Reply #20 on: August 26, 2019, 01:27:30 PM »
Berkshire Hathaway Energy is the only subsidiary I know of where you can see the valuation that Buffett places on it.  Since Walter Scott is a minority shareholder and he periodically sells his shares to Berkshire Hathaway Energy, those transactions are reported in the Berkshire Hathaway Energy filings.  Scott's last reported sale was in Q1 2019.  He sold 447,712 shares for $293mm ($654 per share).  This transaction values BHE at approximately $50 billion.

Transactions in previous years suggest the following per share values....
2018 $602
2017 $542
2015 $480
2013 $350
2010 $225
2009 $210

He purchased MidAmerican for $35/share in 1999.  This equates to an annual rate of return of close to 16%.
Reviewing regulatory filings and the March 2019 fixed income presentation, it seems that the long term growth of earnings and reported equity (which includes goodwill) corresponds to the value-based long term redemption activity revolving around Mr. Scott's declining stake. No activity in Q2 2019 but, in Q1 2019, 447,712 shares were redeemed for $293 million, implying a $654 per share value and a 1.7 ratio to reported book value.
It looks like the future will look like the past. It seems to me that the future of private ownership of energy utilities includes a component of the increasing realization that infrastructure spending can and should be delegated to strong, reliable and private hands. 
BHE has relatively high exposure to Nevada and related wildfire risks but they interestingly note that the $risk is less because of lower concentrations of population in the interface areas.


Spekulatius

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Re: Berkshire Hathaway Energy
« Reply #21 on: August 26, 2019, 03:21:43 PM »
Berkshire Hathaway Energy is the only subsidiary I know of where you can see the valuation that Buffett places on it.  Since Walter Scott is a minority shareholder and he periodically sells his shares to Berkshire Hathaway Energy, those transactions are reported in the Berkshire Hathaway Energy filings.  Scott's last reported sale was in Q1 2019.  He sold 447,712 shares for $293mm ($654 per share).  This transaction values BHE at approximately $50 billion.

Transactions in previous years suggest the following per share values....
2018 $602
2017 $542
2015 $480
2013 $350
2010 $225
2009 $210

He purchased MidAmerican for $35/share in 1999.  This equates to an annual rate of return of close to 16%.
Awesome post. It gives us a great idea what BHE is worth right now. 9-10% return forever is a great deal and I think the longevity is what WEB is after in this case. A lot of business die over time or need to reinvent themselves, which sometimes works and something it does not. BHE probably doesn’t need to reinvent itself for the next 50 years.
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longinvestor

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Re: Berkshire Hathaway Energy
« Reply #22 on: October 05, 2019, 06:55:07 PM »
https://www.pacificorp.com/about/newsroom/news-releases/2019-draft-irp-increased-renewables-phased-coal-transition.html

October 18 is the date they target releasing the long term plan. Lots of investments.

longinvestor

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Re: Berkshire Hathaway Energy
« Reply #23 on: October 27, 2019, 05:14:17 AM »
https://finance.yahoo.com/news/california-governor-wants-berkshire-bid-235301474.html

Now that the cat’s out of the bag, thought this belongs here as well as on the Investment ideas section. More surely to come. This should be way more interesting than the Oncor deal with the same familiar players squaring off, once again! And boy, this is California and we’re a year from an election. May the fun begin!
« Last Edit: October 27, 2019, 05:29:06 AM by longinvestor »

Cigarbutt

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Re: Berkshire Hathaway Energy
« Reply #24 on: October 27, 2019, 06:01:30 AM »
https://finance.yahoo.com/news/california-governor-wants-berkshire-bid-235301474.html

Now that the cat’s out of the bag, thought this belongs here as well as on the Investment ideas section. More surely to come. This should be way more interesting than the Oncor deal with the same familiar players squaring off, once again! And boy, this is California and we’re a year from an election. May the fun begin!
In my humble opinion, this is another example of the brilliance displayed by Mr. Buffett and his model. He is in a position to negotiate without having actually entered the negotiation process as (I imagine) he would look for some kind of partnership where the public entity would be responsible for a reinsurance type of excess loss deal on past and future wildfires' damages. I'd say he will pretend to have no real interest but he may have defined the price he's ready to pay and the mantle of protection required already with the potential to close a transaction at a lightning speed.

Jurgis

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Re: Berkshire Hathaway Energy
« Reply #25 on: October 27, 2019, 07:41:36 AM »
... close a transaction at a lightning speed.

 ;D

Keep those zingers coming.
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Spekulatius

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Re: Berkshire Hathaway Energy
« Reply #26 on: October 27, 2019, 12:27:46 PM »
https://finance.yahoo.com/news/california-governor-wants-berkshire-bid-235301474.html

Now that the cat’s out of the bag, thought this belongs here as well as on the Investment ideas section. More surely to come. This should be way more interesting than the Oncor deal with the same familiar players squaring off, once again! And boy, this is California and we’re a year from an election. May the fun begin!
In my humble opinion, this is another example of the brilliance displayed by Mr. Buffett and his model. He is in a position to negotiate without having actually entered the negotiation process as (I imagine) he would look for some kind of partnership where the public entity would be responsible for a reinsurance type of excess loss deal on past and future wildfires' damages. I'd say he will pretend to have no real interest but he may have defined the price he's ready to pay and the mantle of protection required already with the potential to close a transaction at a lightning speed.

PG&E could be a great deal for BRK, because Berkshire has both utility management, insurance capacity and expertise and the ability to write a Check worth tens of billions of $. There is really no competition out there who can even Doo all three.
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longinvestor

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Re: Berkshire Hathaway Energy
« Reply #27 on: October 27, 2019, 02:56:05 PM »
https://finance.yahoo.com/news/california-governor-wants-berkshire-bid-235301474.html

Now that the cat’s out of the bag, thought this belongs here as well as on the Investment ideas section. More surely to come. This should be way more interesting than the Oncor deal with the same familiar players squaring off, once again! And boy, this is California and we’re a year from an election. May the fun begin!
In my humble opinion, this is another example of the brilliance displayed by Mr. Buffett and his model. He is in a position to negotiate without having actually entered the negotiation process as (I imagine) he would look for some kind of partnership where the public entity would be responsible for a reinsurance type of excess loss deal on past and future wildfires' damages. I'd say he will pretend to have no real interest but he may have defined the price he's ready to pay and the mantle of protection required already with the potential to close a transaction at a lightning speed.

PG&E could be a great deal for BRK, because Berkshire has both utility management, insurance capacity and expertise and the ability to write a Check worth tens of billions of $. There is really no competition out there who can even Doo all three.

For sure, BHE stands uniquely positioned .

My question is, how does BHE deal with next years’ fires? Is BHE setting up 10 foot hurdles for themselves? Was PG&E that negligent or blamed for an act of God type event? This opens up the Pandora’s box wide open when it comes to regulated utilities, roles, shareholders etc.

Cigarbutt

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Re: Berkshire Hathaway Energy
« Reply #28 on: October 27, 2019, 05:07:19 PM »
https://finance.yahoo.com/news/california-governor-wants-berkshire-bid-235301474.html

Now that the cat’s out of the bag, thought this belongs here as well as on the Investment ideas section. More surely to come. This should be way more interesting than the Oncor deal with the same familiar players squaring off, once again! And boy, this is California and we’re a year from an election. May the fun begin!
PG&E could be a great deal for BRK, because Berkshire has both utility management, insurance capacity and expertise and the ability to write a Check worth tens of billions of $. There is really no competition out there who can even Doo all three.
For sure, BHE stands uniquely positioned .

My question is, how does BHE deal with next years’ fires? Is BHE setting up 10 foot hurdles for themselves? Was PG&E that negligent or blamed for an act of God type event? This opens up the Pandora’s box wide open when it comes to regulated utilities, roles, shareholders etc.

This may appear simplistic to you but here's an attempt at an answer. There is also a bankrupt thread on PG&E.
The situation in California is contaminated by the inverse condemnation doctrine which is enshrined in their Constitution and stuck in political inertia. The doctrine (quite a unique situation in the US) means that the utility will be considered responsible for damages whether it was negligent or not!
https://www.insurancejournal.com/news/west/2019/01/15/514846.htm

What's nice (for an opportunistic white knight) is that the Pandora's box has been wide opened and bad spirits have hit the high winds down to Sacramento and people from diverse camps have been looking at stop loss options (really attachment points in reinsurance contract parlance), a situation simply and literally unthinkable just a short while ago. There are many alternative scenarios that imply skin in the game for the utility with rate-based and a government-sponsored options.
https://www.reuters.com/article/us-california-wildfire-fund-idUSKCN1TM2JX

Now longinvestor, note that the bankruptcy judge has to choose between a wounded and bad corporate citizen, and a vulture group with questionable intents to unite conditions leading to some kind of phoenix entity with a viable future. Isn't there a potential opportunity to get to swing at this amazingly slow pitch right in the middle of the plate and with even the umpire on your side?
« Last Edit: October 27, 2019, 05:09:26 PM by Cigarbutt »

longinvestor

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Re: Berkshire Hathaway Energy
« Reply #29 on: October 27, 2019, 05:25:04 PM »
Buffett is wired to look down before looking up. If there’s a whiff of permanent loss, he’ll pass.