Tap Dancing to Work: Warren Buffett on Practically Everything, 1966-2013

by Carol J. Loomis

By the mid-1990s, MidAmerican owned regulated utilities in California, Iowa, and Britain. But while Enron and its ilk sported P/Es of 30 to 50, MidAmerican was selling for six to eight times earnings. “We couldn’t figure out what the other companies were doing,” says Sokol. “They kept on building power plants and adding capacity, I guess because they thought demand would go up forever. And their trading businesses were also a mystery. The profits seemed impossible to us.” Meanwhile MidAmerican’s stock was languishing. So Sokol decided in October 1999 to abandon the public markets and sell out to Buffett. Berkshire effectively ended up buying 80% of the company for $35.05 a share, a cost of $3.3 billion. Buffett’s timing wasn’t impeccable, but it was close. By the summer of 2001 the unregulated energy business—headlined by Enron—began its spectacular collapse.