Big Baller – Berkshire Hathaway Buys Dominion Energy

Unsplash/Zbynek Burival


 

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Stop the presses (…because that’s the way Warren Buffett thinks the news is still delivered), the Oracle is at it again.

While Elon and Kanye were making headlines over the weekend, Warren Buffett finally put his seal of approval on an acquisition.

Berkshire Hathaway announced Sunday that it is purchasing Dominion Energy’s natural gas transmission business for $9.7B, including $5.7B of debt. To clarify, that is just one part of the second-largest energy companies’ portfolio.

The move gives Berkshire an 18% share of total interstate natural gas transmission in the US, up from the 8% it presently owns. It will own 100% of Dominion Energy Transmission, Questar Pipeline and Carolina Gas Transmission, and 50% of Iroquois Gas Transmission System.

The Omaha-based conglomerate has been jonesin’ to put its record $137B cash reserve to work. Warren and Charlie haven’t found anything to their liking…until now. This is awfully confusing since every pre-teen with a Robinhood account and some Bar Mitzvah money has found value in this market.

Dominators

Dominion isn’t just closing up shop. Getting rid of its transmission (read: pipelines) biz will allow it to go all-in on the production of clean energy. The company will now produce power from wind, solar, and natural gas sources as it looks to become more carbon conscious. Rumor has it the company is launching a Vegan creamer for its break rooms as well…

Coinciding with the purchase, Dominion also announced it is ending its controversial Atlantic Coast Pipeline project with Duke Energy that was set to cost $8B. Hey, it could be worse Duke, you could own the Dakota Access Pipeline.

The bottom line…

This is another, um “interesting” move by Warren and his conglomerate. Obviously, he sees value in the gas infrastructure assets but that doesn’t mean it’s a long-term play. Buffett whiffed on airlines and abandoned his stake altogether earlier this year…right before a massive comeback. And, Berkshire posted a $50M net loss for Q1 this year.

Energy companies are feeling the pressure from regulators to become carbon neutral. It doesn’t sound like an ideal time to buy 7.7k miles of gas pipelines along with 900B cubic feet of gas storage.

It remains to be seen if this will shut up the Warren haters, of which there have been many as of late. Davey Day Trader said that WB is “washed up” and noted misogynist Ken Fisher argued that Warren has gone soft in his old age. You see, during the financial crisis was grinding.

Water Cooler Talking Point(s)

💧 “I hate when Buffett makes prudent, non-sexy decisions. Can’t he just tweet like Elon…just once!” (Ian, The Water Coolest HQ)

 

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