On My Mind & Worth Noting
Inspired by the recent market fears around SaaS disruption through AI, I continue to think about businesses or more broadly about industries that seem quite immune to disruption.
One sector standing out is transmission and distribution of electricity. While returns are regulated, the assets are extremely difficult to replicate. There are a few pure-play companies that are not vertically integrated and therefore have no generation business (which is great). If generation technology changes they will not be affected, and transmission still remains essential.
In 2006, Warren Buffett attempted an acquisition of the transmission assets of TXU but was ultimately outbid by Sempra Energy.
I listened to a podcast this week with the CEO of Fortis Inc., a Canadian holding company that owns more than $60 billion of regulated electricity and gas transmission and distribution assets across North America. The entire company is managed from a headquarters of only 50 employees in Newfoundland. It is one of the largest pure-plays in the sector.
(Energy) infrastructure that is essential, regulated, and nearly impossible to replicate tends to age very well as an investment.
If you are interested in the topic, I highly recommend this episode:
One Asset
This week, for me, was all about Berkshire Hathaway. CEO Greg Abel announced he intends to purchase Berkshire shares with his entire net salary of approximately 15 million USD throughout his tenure. After consultation with Warren Buffet Berkshire also has resumed share repurchases on Wednesday. The last share repurchases happened in 2024.
Alignment between me as a shareholder and company management is one of the most important factors when evaluating a business. Knowing that my capital is in good hands, and there is a very high probability that decisions will (continue) to be made through the lens of a long-term owner by the management team feels very comforting. As a Berkshire shareholder, I have rarely felt more comfortable holding the stock.
Thank you for reading along.