John Petersen

Is Berkshire’s Burlington Move All About Coal?

Regardless of whether it's hauling coal for the short-term or hauling increasing amounts of freight over the long-term, BNSF should be very good for Berkshire. The development of North American rail was stunted by the development of the highway system. In a world where minimizing waste is important, rail will become critical. Several years ago I was delighted when my son-in-law quit his job at the airline and went to work for the railroad. This is just one more case where all things old are new again.

Questioning Berkshire Hathaway's BYD Purchase: Long-Term Economics?

BYD may have been fairly priced when Berkshire paid $1.12 per ordinary share for its stake. At the current price of $5.62 per ordinary share, the stock seems to have far more downside than upside.

BYD: Risky Now, Value Later

I recently pulled BYD’s annual report and was able to calculate the following valuation metrics for the Buffet purchase:

Price/Earnings – 12.3
Price/Book – 1.18
Price/Sales – 0.6

Buffet's effective price per share was in the $1.12 range. Since BYD is now trading north of $4.00 (presumably from the Buffet halo effect) the market valuation metrics for investors are nowhere near as attractive as they were for Warren.

BYD: Positioning Berkshire for the 'Chinese Century'

Buffet's effective price per share was in the $1.12 range. Since BYD is now trading at about $2.85 (presumably from the Buffet halo effect) the market valuation metrics for investors are nowhere near as attractive as they were for Warren.

BYD: Positioning Berkshire for the 'Chinese Century'

Thanks for the link to the BYD report. It gave me an opportunity to go back and calculate the core valuation metrics for Buffet's purchase of a 10% stake at a post-money valuation of $2.3 billion. The numbers are:

Price/Earnings – 12.3
Price/Book – 1.18
Price/Sales –0.6

Buffett on Alt Energy

It's also worth noting that MidAmerican recently bought a 10% stake in BYD for $230 million. BYD claims to be the world's largest manufacturer of Li-ion batteries for portable electronics and has recently introduced a PHEV-60 in China. Since the PHEV costs almost 60% more than the gas powered version of the same car, it's hard to tell whether the PHEV is intended as a serious product or a PR tool. In any event, I view the BYD investment as recognition that the energy storage sector is due to catch up with the rest of the AE industry.