In Warren Buffett's recent letter to Berkshire Hathaway shareholders, the investing legend quipped about his firm's purchase of Energy Future Holding, saying it was a mistake he made without the approval of his partner, Charlie Munger. This small blunder has been the focus of news outlets everywhere since the letter was published, but not too many are looking at the gem of a deal Berkshire acquired in NV Energy.
This regulated utility not only supplies 88% of Nevada with electricity, it also delivers a reasonable return after covering interest expenses. The real sweetener of this deal is NV Energy's intention to join the Cal-ISO, supplying California with much needed renewable energy. Knowing that the state is eying a renewable portfolio standard for publicly traded utilities of 33% by 2020, NV Energy and Berkshire shareholders are looking at a hefty premiums for the energy it will sell in the energy hungry Californian market.
This segment is from Tuesday's edition of "Digging for Value," in which sector analysts Joel South and Taylor Muckerman discuss energy and materials news with host Alison Southwick. The twice-weekly show can be viewed on Tuesdays and Thursdays. It can also be found on Twitter, along with our extended coverage of the energy and materials sectors @TMFEnergy.