Railroad & Utility Segment
In an earlier post, one smart person responded that they're ok with MidAmerican and BNSF being combined because these companies file separate financials and they get the data on their own. I understand why you say this because as a diligent investor you are better off. But here's why I disagree with the principle.
> Financial statements filed with the SEC stand on their own. Segment data is supposed to provide meaningful information about businesses that operate in the same general line of business. Whether a business files separate financial statements elsewhere has no bearing and isn't mentioned in the criteria for segment reporting. In fact, it specifically contravenes the purpose of these rules for a company to force investors to go look elsewhere for the information.
> It gives, or could give, a misleading impression to combine these businesses. The #s reported in Berkshire's results will be picked up by the press, they're the ones that will be used by most analysts. Say something weird happens at BNSF and because the two are combined it's considered "immaterial" to disclose. When the annual report and 10-K are released, a flood of commentary comes out and no one will know about the event. Later, when you and three other people find it in a railroad filing, you're not going to write a blog post about it, or if you do, it isn't going to be picked up by CNBC's Warren Watch or the Omaha World-Herald and be read by a million people across the Internet. (In a sense, this is good for diligent investors -- in fact, you are better off with things as they are -- but it defeats the purpose of segment reporting).
Shaw has disappeared as have most of the other individual businesses. Some of this is inevitable, but I would cut Berkshire up something like this:
> Retail & consumer businesses
> Industrial & wholesale businesses
> Insurance & other financial services
This would create some anomalies. But it's more logical to put BNSF with FlightSafety and NetJets than it is to put it with an electric company. Just because BNSF hauls coal does not make it an energy company. Just because it has regulated rates doesn't make its business similar to an electric utility. Also, in sheer size, lumping these two gigantic businesses together makes a mockery out of the segment disclosure process. NetJets and FlightSafety could go elsewhere and you can easily justify a separate segment for BNSF, given its size.
A degree of arbitrariness is a problem with all segment reporting (Shaw is not just a retail and consumer company, but that's the obvious place to put it). Still, there are alternatives that would be preferable to what we have now.