Author Topic: Next Berkshire acquisition speculation  (Read 40915 times)

rb

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Re: Next Berkshire acquisition speculation
« Reply #150 on: July 06, 2020, 02:26:29 PM »
This makes no sense to me. Why would they move to delver these assets given BRK's monster credit?


Cigarbutt

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Re: Next Berkshire acquisition speculation
« Reply #151 on: July 06, 2020, 04:38:08 PM »
This makes no sense to me. Why would they move to delver these assets given BRK's monster credit?
i don't see it that way. Let's say BRK buys a (re)insurance entity. They could boost reserves even if they have capital to support the business going forward. It may have to do with financial conservatism a building a goodwill account with regulators.
If you look at BH Energy (see below, page 21 and especially page 14). They are building while deleveraging and retaining capital. This may come handy if a consolidation (like railways, airlines (oups)) of the midstream energy sector is triggered somehow by a higher cost of capital. Building "partnerships" with regulators and credit rating agencies makes a lot of sense from a long term perspective.
https://www.brkenergy.com/assets/pdf/2019-eei-presentation.pdf

rb

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Re: Next Berkshire acquisition speculation
« Reply #152 on: July 07, 2020, 06:57:39 AM »
The problem with that is that while insurance regulators like reserves, utility regulators like leverage. If a wave of consolidation comes in the utility industry there's always that 140 billion bank account at the mothership.