Author Topic: Berkshire Hathaway Energy  (Read 9850 times)

Spekulatius

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Re: Berkshire Hathaway Energy
« Reply #50 on: November 09, 2019, 11:32:50 AM »
I am surprised that WEB isnít more interested in pipelines, since the FERC regulation is often more favorable than utility regulation. He did indeed buy some pipeline assets in 2001 or so post the IPP crash from Williams and I believe one from Dynegy (which bought it from Enron shortly before and then they got into trouble themselves). I believe he laid around 8x EBITDA for utility like assets, which was cheap. Now we have pretty decent pipeline companies valued at 10x EBITDA (maybe a bit less even) when interest rates are much much lower. Might be a time for them to at least start looking.
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Cigarbutt

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Re: Berkshire Hathaway Energy
« Reply #51 on: November 10, 2019, 04:56:00 AM »
I am surprised that WEB isnít more interested in pipelines, since the FERC regulation is often more favorable than utility regulation. He did indeed buy some pipeline assets in 2001 or so post the IPP crash from Williams and I believe one from Dynegy (which bought it from Enron shortly before and then they got into trouble themselves). I believe he laid around 8x EBITDA for utility like assets, which was cheap. Now we have pretty decent pipeline companies valued at 10x EBITDA (maybe a bit less even) when interest rates are much much lower. Might be a time for them to at least start looking.
I would say the interest is there and the finger may be on the trigger.

Just look at the stake in Phillips 66. It's an integrated and diversified company but pipelines are part of its core operations and, in 2014, which is yesterday in a way, Mr. Buffett (I don't think that one came from the lieutenants) bought the Philips Specialty Products unit from the parent. The now integrated chemical sub is not a pipeline asset per se but the move constitutes a significant vote of confidence for pipelines in general, an investment posture confirmed by public endorsement of key but controversial pipeline projects.

Also look at the ownership in Suncor Energy. Suncor is also diversified and integrated, and pipeline operations may not be the primary driver of future returns but a bet on Suncor is, in a way, a vote that the pipeline approval process will move forward, somehow.

Pipeline assets are very interesting but my investing style may prevent me from making easy money like you. :)