No. of Recommendations: 18
"and I think it is legitimate to ask whether the utilities can really still be relied on to pick up the slack in future years, given Buffett's comments."
Buffett's last comment on BNSF section:
A century from now, BNSF will continue to be a major asset of the country and of
Berkshire. You can count on that.
Buffett's last comment on BHE is much more negative.
A confiscatory resolution of our present problems would obviously
be a negative for BHE, but both that company and Berkshire itself are structured to survive
negative surprises. We regularly get these in our insurance business, where our basic product is
risk assumption, and they will occur elsewhere. Berkshire can sustain financial surprises but we
will not knowingly throw good money after bad.
BHE is a smaller fraction of earnings than the railroad though maybe we thought it would grow faster and longer. BRK/BHE explain that they will exit states that break the "the fixed-but-satisfactory-return pact" If they leave a state or two it might stop the spread.
If BHE profits decline linearly for 5 years and then becomes a zero and confiscated by the government, how much does that alter your value of BRK looking out 10 years? 9%? More? It is a good business but not a great business, right? I think most states will realize BHE is one of the best partners in the game and give them their good but not great returns to keep the lights on. It's a massive undertaking with massive amounts of capital needed so I suspect it will be OK in the end and continue to provide at least the income that it did in 2023. I suspect we've seen the floor on BHE's earnings. Anything can happen though so I am curious of what people think the hit would be in a worst case scenario.
