SOURCE: John Wasik

October 10, 2006 08:00 ET

Warren Buffett Is Buying Utility Stocks. Award-Winning Author and Bloomberg News Columnist Offers Insight as to Why in His New Book, "The Merchant of Power"

CHICAGO, IL -- (MARKET WIRE) -- October 10, 2006 -- Why is Warren Buffett buying utility stocks? Because "that's where the cash is," says award-winning author and Bloomberg News columnist John Wasik. Wasik's new book, "The Merchant of Power" (Palgrave, 2006), offers insight into the fascinating and evolving history of electrical-generating companies. Acclaimed by industry experts, "The Merchant of Power" delves into the history of the industry from Thomas Edison in the 1880s to the collapse of Edison protégé Sam Insull's powerful utility holding empire in 1932.

"Utilities have been cash generators for years, but unloved by the market in the wake of the Enron fiasco and industry consolidation," said Wasik, who doesn't pick stocks but can talk about industry history and growth. "Buffett is likely seeing utilities as palpable bargains. In addition, the recent repeal of a little-known Depression-era law -- the Public Utility Holding Company Act -- made it easier for utility-holding companies to buy other utilities. Buffett said that he would be buying more utilities if the law was repealed and made good on his word."

Buffett's legendary financial acumen has proven profitable time and time again and often sparks investing trends. In March of 2006, Buffett's Berkshire Hathaway-MidAmerican Energy Holdings Company bought Scottish Power Plc for $5.1 billion in cash. He's still shopping around and has told reporters: "My guess is that in the next 10 years we will buy one or two or three good-sized ones." Wasik noted, "The Oracle of Omaha typically buys solid businesses that are good values, generate high cash flow, often pay dividends and feature nearly exclusive franchises. The best-run utilities fit that bill now."

Wasik's insights into the history of the industry have won him praise and an influential following. "One of the most magnetic and powerful con artists of the Great Depression was Sam Insull," said Pulitzer Prize winner Studs Terkel. "Patron of the arts, philanthropist and Thomas Edison's right hand, he shafted thousands of investors large and small. My mother, one of the latter, lost her bundle during his adventures. I found the work of John Wasik not only personally enthralling but an informal history of that traumatic time."


Wasik, who was awarded the National Press Club Award for Consumer Journalism and 17 other awards, researched the book for 10 years and had unprecedented access to industry archives. His column for Bloomberg News, the world's third-largest news service, is distributed to more than 400 newspapers on five continents. Wasik is available for interviews. For more background on the author, his books and his work:

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