The ultimate value investor has doubled his stake in alternative energy.
In June of this year, Warren Buffett excited the green movement when he indicated the following regarding his current $15 billion allocation towards renewables, “There’s another $15 billion ready to go, as far as I’m concerned. It’s where the country’s going”.
You heard the man.
Irrespective of any feelings about the environment, alternative energy is an economic decision.
And if any man can lead the charge in the investing world, it’s Warren Buffett, who has long-paved the way for like-minded investors.
For those of you unfamiliar with Warren Buffett and his brainchild, Berkshire Hathaway (a US multinational conglomerate holding company), prepare to be amazed:
– Warren Buffett, age 84, has a net worth of approximately $71.5 billion.
– He has made 99% of this amount subsequent to turning 50.
– On a rolling 5-year basis, Berkshire Hathaway’s book value has outperformed the S&P for 43 out of 44 years.
– Last year Buffett made an average of $1.5 million per hour. Read that again.
– Berkshire Hathaway’s cash balance is $50 billion. This is equivalent to the entire GDP of South Dakota plus 45 Airbus A318s.
– Right now, 7:00 AM on 11/19/2014, Berkshire Hathaway’s stock price is 218,868. This equates to a market capitalization of $348 billion.
– If you had invested $1,000 in Berkshire Hathaway in 1970, your investment would have grown by $4.86 million.
And a personal favorite – Buffett has donated a lifetime total, thus far, of $20 billion. This figure is second only to Bill Gates. (Take note of this if you are reading, Larry Page).
So, it’s no small deal when Buffett takes a seat at the alternative energy table.
Today, Berkshire Hathaway Energy derives about 24% of its generation capacity from renewable energy sources – wind, hydroelectric, solar, and geothermal. The company is building one of the world’s largest solar farms in California, owns numerous geothermal plants, and has about $8 bn invested in wind farms. Berkshire Hathaway Energy owns a number of businesses – PacifiCorp, MidAmerican Renewables, and NV Energy – which are designed to aid residential consumers in reducing their carbon footprint to save money. Yes…reducing your carbon footprint saves money.
I want to be very clear. When Warren Buffett makes an investment it’s because he anticipates it to be profitable.
And here’s why I’m optimistic.
1. Buffett gets it.
2. Berkshire Hathaway Energy’s website indicates the following: “Fundamental changes are taking place in the energy sector as world leaders continue to examine the increased presence of greenhouse gases in the Earth’s atmosphere…as the energy debate continues, Berkshire Hathaway Energy companies are taking early action to protect the environment”.
3. Buffett himself recently stated, “Electricity is pretty fundamental, but the means of producing it will shift gradually over time”. He also said that his company would continue investing in energy “as far as the eye can see”.
Let’s hope the rest of the world takes a cue. After all, Buffett’s been known to be correct before…