Be kinde to folk. This changeth the whole habitat.
- Manlobbi
Stocks A to Z / Stocks B / Berkshire Hathaway (BRK.A)
No. of Recommendations: 7
I'm starting this thread as a placeholder for any questions we all have sent to Becky Quick to ask at this year's annual meeting (one week from today!), as well as for any comments we have about those questions. I sent her the following and hope she doesn't eliminate it out of hand for being too long:
Among currently available energy sources, nuclear provides the highest energy-return-on-energy-invested over the full cycle, delivering baseload power with very low carbon intensity. Its development requires several things that Berkshire has:
• Abundant capital
• Long-term thinking
• Operational discipline
• Regulatory expertise and patience
• Risk mitigation mindset
• Power distribution knowledge and assets
Why hasn’t Berkshire gone big into nuclear energy production? We could gain the needed engineering expertise via acquisition or partnership, and nuclear could be a good place to put lots of capital at reasonable regulated returns while supporting U.S. industrial reshoring.
No. of Recommendations: 8
I sent Becky:
“Our cash equivalents are now over $375B and growing with T-bills earning ~4%. Large private businesses that would move our needle are rare and public equity valuations are still lofty. Approximately $65B of normalized owner earnings are pouring into Berkshire annually. How and when do you anticipate we will be able to allocate a large portion of this enormous amount of cash & can we repurchase the large blocks of shares that Warren(his estate) will donate to foundations?”
No. of Recommendations: 19
Why hasn’t Berkshire gone big into nuclear energy production?
If I may answer in her place, the history of investment in the nuclear industry has been, uh, challenging.
From cost overruns, construction delays, and at times uncompetitive pricing compared with other, easier to mine and find energy sources, nuclear has been in the “too hard” pile for someone with Berkshire’s focus. It also carries massive liabilities, and while that attribute could be “walled off” with adroit legal work, it’s quite one thing to walk away from such liabilities when you are a multidimensional conglomerate than when that is your sole business.
Yes, it’s huge. Yes, it could suck up untold “extra” dollars, yes it might turn out to be a very nice regulated business after years (and years) of the entrance, but I’d be cautious about this, to the point of saying “not for us, thanks.”
For the record, I was with Westinghouse (different division) in the 1980’s when they were almost bankrupted by being whipsawed with contracts for provision of uranium to nuke plants they had built as the price gyrated and they were caught almost terminally underwater. They survived, but Westinghouse Nuclear did finally go bankrupt in 2017 based on cost overruns on plant constructions in Georgia and South Carolina.
Simple rule: Too hard pile.
No. of Recommendations: 12
Ted Weschler and Todd Combs managed a minority but growing of Berkshire’s equity portfolio for over 15 years. Todd has now joined JPM, leaving only Ted in this role alongside Greg to manage our equity portfolio. What is the plan going forward for Ted within Berkshire, how has his portion of the portfolio performed and how do you envision Ted’s role and responsibilities changing within Berkshire given his experience and skillset?
No. of Recommendations: 1
Berkshire is already in the Nuclear business with BHE and Terra power are working together.
No. of Recommendations: 12
Berkshire has sold down a lot of equities in the last few years. There has been much speculation about Mr Buffett's thoughts on those specific firms, and much speculation about the lack of attractive large scale investments. But my question is how much the new tax rules were a factor in the top level decision to realize some taxable profits rather than be exposed to minimum corporate income taxes on unrealized positions.
Jim
No. of Recommendations: 3
hy hasn’t Berkshire gone big into nuclear energy production?
Nuclear requires enormous upfront capital costs years before generating any returns. It is sort of an anti-Berkshire industry in that regard.
No. of Recommendations: 7
I just now submitted this question.
Berkshire is pursuing several avenues to address wildfire losses at PacifiCorp, including upgrading facilities and de-energation practices, defending itself against litigation, attempting to separate Pacific Power from Rocky Mountain Power, selling assets in Washington and Oregon and raising rates. Nevertheless, PacifiCorp still faces large litigation claims. When all is said and done, what is a reasonable estimate for losses due to the 2020 and 2022 wildfires?
Also, if you choose to answer, what ia a reasonable valuation for Berkshire Hathaway Energy (BHE)? Warren stated at last year’s annual meeting that BHE was worth considerably less than it was two years prior. Purchases of shares in 2024 from the Walter Scott estate would suggest a valuation of about $49B, while purchases from Greg Abel in 2022 would suggest a valuation of about $87B.
Thank you for helping me understand PacifiCorp and BHE, and best wishes for addressing the PacifiCorp wildfire issues.
Sincerely,
Dan Roberts
Santa Rosa, California
No. of Recommendations: 0
I think the first part, the estimated losses from the 2020 wildfires, will be something that is too uncertain to answer, and that the second part, BHE's valuation, will be something that Berkshire never answers. But what the heck, I won't get an answer unless I ask. I would welcome answers from this informed group.
No. of Recommendations: 0
"attempting to separate Pacific Power from Rocky Mountain Power" PacifiCorp would like to do this, and so would the governors of Utah, Wyoming and Idaho. The governors don't want their residents to pay higher rates to pay for fires in Washington, Oregon and California.
No. of Recommendations: 0
"de-energation practices"
I think the correct term is de-energize.
No. of Recommendations: 4
Let me just say it. It seems to me that there is a real possibility that PacifiCorp declares bankruptcy within the next two years, causing maybe an 8% hit to Berkshire Hathaway's BV and IV.
No. of Recommendations: 1
Let me just say it. It seems to me that there is a real possibility that PacifiCorp declares bankruptcy within the next two years, causing maybe an 8% hit to Berkshire Hathaway's BV and IV.
I agree there's a risk that PacifiCorp could declare bankruptcy. But 8% for just PacifiCorp seems high. How did you arrive at that figure?
No. of Recommendations: 11
It seems to me that there is a real possibility that PacifiCorp declares bankruptcy within the next two years, causing maybe an 8% hit to Berkshire Hathaway's BV and IV.
...
I agree there's a risk that PacifiCorp could declare bankruptcy. But 8% for just PacifiCorp seems high. How did you arrive at that figure? I came up with a back-of-the-envelope figure of 2.5%-2.8% of the value of a Berkshire share.
https://www.shrewdm.com/MB?pid=432544551The main pessimistic assumption is that it's a total wipe-out, zero value to any equity or assets in any place Pacificorp operates.
The main optimistic assumption is that there is no spill-over to other operating units. The debt is non-recourse, but that isn't always the end of the story.
Jim
No. of Recommendations: 0
"But 8% for just PacifiCorp seems high. How did you arrive at that figure?"
It seemed high to me, too. I used the total equity of $54B on the balance sheet (p. 508) of the 2025 10-K. Did I mis-read the financial statement?
https://www.brkenergy.com/assets/upload/financial-...
No. of Recommendations: 1
"I used the total equity of $54B on the balance sheet (p. 508) of the 2025 10-K."
Oops. That was the equity of BHE, not PacifiCorp.
No. of Recommendations: 0
One concerning aspect of PacifiCorp's handling of the fire liability is that they allegedly reneged on their agreement to provide sufficient power to four Amazon data centers. Amazon claims PacifiCorp is supplying the first data center with “significantly less power than promised.” They also said it has provided no power to the second data center, and has refused to complete its own standard contracting process for the third and fourth centers.
https://finance.yahoo.com/news/failure-deliver-ama...PacifiCorp's reputation with residential customers is already toast. Now they're ruining their reputation with data center customers. PacifiCorp must be very careful that they are willing to do that.
No. of Recommendations: 0
I'm beginning to think that Berkshire should throw in the towel on the wildfire defense. Apologize to the customers harmed, while maintaining adamantly that "gross negligence" is untrue and that $54B in liabilities is vastly inappropriate. Declare bankruptcy, and take the 2.5% hit to BV and IV, then move on. Lesson learned about the risk of power transmission in fire prone areas.
