No. of Recommendations: 11
It seems to me that there is a real possibility that PacifiCorp declares bankruptcy within the next two years, causing maybe an 8% hit to Berkshire Hathaway's BV and IV.
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I agree there's a risk that PacifiCorp could declare bankruptcy. But 8% for just PacifiCorp seems high. How did you arrive at that figure? I came up with a back-of-the-envelope figure of 2.5%-2.8% of the value of a Berkshire share.
mungofitch replies on Berkshire's declineThe main pessimistic assumption is that it's a total wipe-out, zero value to any equity or assets in any place Pacificorp operates.
The main optimistic assumption is that there is no spill-over to other operating units. The debt is non-recourse, but that isn't always the end of the story.
Jim
