An 82-page financial presentation made by Berkshire Hathaway Energy in November at the Edison Electric Institute now appears on Berkshire Hathaway’s website. It is a possible sign that Berkshire CEO Warren Buffett wants to highlight the strength of this important subsidiary and potentially reference the presentation in his annual shareholder letter, due for release on Feb. 26.
9 Likes
Interesting, thanks for posting the link.
Not that the presentation itself is earth-shattering, but I can’t remember ANY investor presentation ever having shown up at the Berkshire web site before.
It’s a great business.
One of my mottos: “boring can be good”.
Nobody wants excitement from their banker. Why desire it from a company you invest in?
Side note: I’m glad Berkshire is figuring out this investment for me.
At some point, understanding the regulatory implications is beyond me.
Check out page 10, “regulatory overview adjustment mechanisms”, and let me know if it seems obvious to you.
Random observation: their revenue streams are remarkably diversified.
Most firms with multiple units have a couple of key ones, and a long tail. Not BHE. See p.12.
6 of the eight profit-generating units have at least half the earnings of the biggest one.
Separately, I love the incongruity of the HomeServices segment, still fully 10% of earnings.
It reminds me of Noritake, the Japanese firm that makes amazing vacuum fluorescent displays…and dishware.
(both of which I buy)
I sure wish they’d make fluorescent dishware.
Jim
16 Likes
Ol’ Andrew agrees that BHE is a crown jewel-
https://www.barrons.com/articles/berkshire-hathaways-utility…
Berkshire Hathaway Energy, a big diversified utility business 91% owned by Berkshire Hathaway , is an industry leader with a huge portfolio of renewable power and one of the most ambitious capital spending programs in the electric industry.
An 82-page financial presentation made by Berkshire Hathaway Energy in November at the Edison Electric Institute now appears on Berkshire Hathaway’s website. It is a possible sign that Berkshire CEO Warren Buffett wants to highlight the strength of this important subsidiary and potentially reference the presentation in his annual shareholder letter, due for release on Feb. 26.
Buffett has talked favorably about the unit in previous letters, calling it and the Burlington Northern Santa Fe railroad the “two lead dogs” of Berkshire’s sprawling non-insurance operations
2 Likes
“Separately, I love the incongruity of the HomeServices segment, still fully 10% of earnings.”
Would anyone happen to know the ROE of Berkshire Hathaway Home Services? I’ve read that real estate brokerages can be quite profitable.
Also from Bary piece in Barron’s:
“Last year’s adjusted net income of $3.47 billion was up 9% from 2019. This calculation excludes a big unrealized gain of $4.8 billion before taxes last year from BHE’s stake in BYD (BYDDY), the Chinese battery vehicle producer whose stock price soared in 2020. That gain flowed through BHE’s income statement. The BYD stake was worth $5.9 billion on Dec. 31, 2020, up from $1.1 billion a year earlier. The BYD stake is shown as one of Berkshire’s largest equity holdings in Buffett’s recent shareholder letter. Total revenue at BHE was $21 billion, up 6% from 2019…
“Owned generation capacity in operation and under construction consists of 38% wind and solar, 32% natural gas, 24% coal, 5% hydroelectric and geothermal and 1% nuclear and other,” BHE said in its 10-K. BHE also has substantial debt of about $48 billion and shareholder equity of $47 billion at the end of 2020.
BHE is probably worth around $53 billion now given the appreciation in BYD last year and the increase in 2020 operating earnings, solidifying its position as one of the jewels in Buffett’s crown. At $53 billion, BHE would be valued at a modest 1.15 times its year-end 2020 book value, a discount to public utility peers.
The other three jewels are Berkshire’s property and casualty insurance businesses, the Burlington Northern Santa Fe railroad, and a large stake in Apple (AAPL). BNSF probably is worth around $140 billion based on the market cap of rival Union Pacific (UNP) and the current value of Berkshire’s Apple stake is about $120 billion.”
3 Likes
Side note: I’m glad Berkshire is figuring out this investment for me.
100% agree. The best part of BRK are the “special” investments he makes that aren’t often available (or easily understandable) by most of us. This is why I don’t need (or want) BRK investing in TSLA - I can make that decision on my own. Insurance, Railroads, Utilities, these are the areas that I don’t understand well and like the steady hand of BRK.
tecmo
…
4 Likes
BHE being a utility has stakeholder beyond Berkshire (as shareholder), like utility commissions, bankers (yeah BHE carries debt on its balance sheet), etc. All utilities make these kind of presentations regularly. The regulatory stuff, rate adjustment are close quarters knife fight, where some utilities goes into argument for even one mile extensions.