The Next Big Berkshire Hathaway Acquisition Is Hiding in Plain Sight

In April, Warren Buffett quashed a rumor that Berkshire Hathaway (NYSE: BRK-A) (NYSE: BRK-B) was in talks to acquire embattled utility PG&E (NYSE: PCG). But that denial isn't an unconditional rejection: Price is a significant variable when a canny value investor considers an investment opportunity. That was then, with PG&E's stock at $21.53, and this is now, with the stock at $6.48 (last Friday's close). With the rumor resurfacing -- before being summarily dismissed -- this Buffett watcher thinks it's highly plausible; in fact, a deal to acquire PG&E has the hallmarks of a classic Buffett "coup."

As fires continued to burn in California, The New York Times reported (subscription required) at the end of last month that Buffett's vehicle, Berkshire Hathaway, is (again) rumored to be a potential buyer for the struggling company. Faced with mounting liabilities linked to California wildfires, PG&E filed for Chapter 11 bankruptcy in January; the shares have lost close to 90% of their value over the past 12 months.

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