Author Topic: Buffett/Berkshire - general news  (Read 653538 times)

Munger_Disciple

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Re: Buffett/Berkshire - general news
« Reply #360 on: December 05, 2016, 10:13:09 AM »
Buffett
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But I think the return figures that you have are wrong. We paid $35.05 a share for the utility [in 2000]. And this year itíll earn something around $30 a share, after tax.

Most of the earnings growth at BHE/Mid American occurred prior to 2007. Per the 2007 annual report, Mid American earned $15 per share in 2007. So its per share earnings doubled in 9 subsequent years, a pretty decent result (8% CAGR) given what we went thru' during 2008-2009.  But it is not amazing.

However from 1999-2007, Mid American earnings per share increased at a CAGR of 24.5%, a stunning result.
« Last Edit: December 05, 2016, 10:15:54 AM by Munger_Disciple »


longinvestor

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Re: Buffett/Berkshire - general news
« Reply #361 on: December 05, 2016, 10:30:32 AM »
Buffett
Quote
But I think the return figures that you have are wrong. We paid $35.05 a share for the utility [in 2000]. And this year itíll earn something around $30 a share, after tax.

Most of the earnings growth at BHE/Mid American occurred prior to 2007. Per the 2007 annual report, Mid American earned $15 per share in 2007. So its per share earnings doubled in 9 subsequent years, a pretty decent result (8% CAGR) given what we went thru' during 2008-2009.  But it is not amazing.

However from 1999-2007, Mid American earnings per share increased at a CAGR of 24.5%, a stunning result.
Does this $30 per share include the earnings from Home Services?

rb

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Re: Buffett/Berkshire - general news
« Reply #362 on: December 05, 2016, 10:40:06 AM »
It's true that earnings at Mid-American are up a lot. But Berkshire also dropped a lot of capital into Mid-American.

Munger_Disciple

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Re: Buffett/Berkshire - general news
« Reply #363 on: December 05, 2016, 10:44:06 AM »
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Does this $30 per share include the earnings from Home Services?

My guess is yes. There is a line called "Real estate brokerage" under BHE earnings in all the annual reports.

Munger_Disciple

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Re: Buffett/Berkshire - general news
« Reply #364 on: December 05, 2016, 10:45:57 AM »
 
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But Berkshire also dropped a lot of capital into Mid-American.

Additional shares were issued by BHE to Berkshire due to the additional capital invested along the way, so per share comparisons are quite valid.

rb

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Re: Buffett/Berkshire - general news
« Reply #365 on: December 05, 2016, 10:49:50 AM »
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But Berkshire also dropped a lot of capital into Mid-American.

Additional shares were issued by BHE to Berkshire due to the additional capital invested along the way, so per share comparisons are quite valid.
Still BHE doesn't pay a dividend to BRK and plows all earnings back. That's basically still a lot of capital being dropped in but gets you better PR.

DooDiligence

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Re: Buffett/Berkshire - general news
« Reply #366 on: December 05, 2016, 10:59:22 AM »
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But Berkshire also dropped a lot of capital into Mid-American.

Additional shares were issued by BHE to Berkshire due to the additional capital invested along the way, so per share comparisons are quite valid.
Still BHE doesn't pay a dividend to BRK and plows all earnings back. That's basically still a lot of capital being dropped in but gets you better PR.

This seems like a huge advantage for them over other utlilities.

What do you think the effect will be on the competitive landscape & will capital allocation change for other utilities?
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rb

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Re: Buffett/Berkshire - general news
« Reply #367 on: December 05, 2016, 11:04:43 AM »
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But Berkshire also dropped a lot of capital into Mid-American.

Additional shares were issued by BHE to Berkshire due to the additional capital invested along the way, so per share comparisons are quite valid.
Still BHE doesn't pay a dividend to BRK and plows all earnings back. That's basically still a lot of capital being dropped in but gets you better PR.

This seems like a huge advantage for them over other utlilities.

What do you think the effect will be on the competitive landscape & will capital allocation change for other utilities?
Well being part of Berkshire is a huge advantage for them. But I don't think that other utilities will change their capital allocation to match.

The point i was trying to make though is that if I retain all earnings and reinvest I'm gonna grow my EPS a lot faster than my dividend paying competitors even if I have no idea what I'm doing. Obviously the people at BHE know what their doing. But still a larger EPS CAGR should not be that surprising since they employ larger and larger amounts of capital.

Munger_Disciple

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Re: Buffett/Berkshire - general news
« Reply #368 on: December 05, 2016, 11:09:30 AM »
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But still a larger EPS CAGR should not be that surprising since they employ larger and larger amounts of capital.

So do you think 24.5% CAGR in earnings from 1999-2007 at BHE is not impressive?

With or without dividends, 24.5% CAGR is stunning in my mind especially given that return on invested capital is decent.

longinvestor

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Re: Buffett/Berkshire - general news
« Reply #369 on: December 05, 2016, 03:22:09 PM »
Quote
But Berkshire also dropped a lot of capital into Mid-American.

Additional shares were issued by BHE to Berkshire due to the additional capital invested along the way, so per share comparisons are quite valid.
Still BHE doesn't pay a dividend to BRK and plows all earnings back. That's basically still a lot of capital being dropped in but gets you better PR.

This seems like a huge advantage for them over other utlilities.

What do you think the effect will be on the competitive landscape & will capital allocation change for other utilities?
Well being part of Berkshire is a huge advantage for them. But I don't think that other utilities will change their capital allocation to match.

The point i was trying to make though is that if I retain all earnings and reinvest I'm gonna grow my EPS a lot faster than my dividend paying competitors even if I have no idea what I'm doing. Obviously the people at BHE know what their doing. But still a larger EPS CAGR should not be that surprising since they employ larger and larger amounts of capital.
BHE is a thorn to other Utilities by holding rates charged for long periods. Iowa as an example. While Illinois is deliberating adding surcharges to keep nuclear plants operating.
« Last Edit: December 05, 2016, 06:28:36 PM by longinvestor »