Progress Energy May Catch Buffett's Eye

Click here to read John Reese's take on Buffett's interest in Progress.

Warren Buffett's not that hard to game. He wants to buy utilities? You know he's not going to pay through the nose. You know he is going to use his great balance sheet to shore up -- read: refinance -- the bad ones, and you know that he's not fearful of strange substances, meaning nuclear, because he's comfortable with asbestos. If a guy is comfortable with asbestos, he has to love radioactivity.

He also doesn't like to do hostile things, so you have to figure that any young pup CEO isn't going to want to sellout. He doesn't fret regulation; PacifiCorp, the utility he bought from Scottish Power (SPI - commentary - Cramer's Take), is fully regulated -- thanks to Morgan Stanley for explaining that landscape in an excellent piece a month ago.

So what does that give us? What kind of funnel?

The first names that come to mind are the terrible balance sheet guys, Allegheny Energy (AYE - commentary - Cramer's Take), CMS Energy (CMS - commentary - Cramer's Take) and NRG Energy (NRG - commentary - Cramer's Take). All three of these companies pay no dividends, have a ton of debt and would benefit from a Buffett-led refinancing. The problem with these guys is that I don't like their companies. And I can't speculate on companies that I don't like on a takeover basis, it's against my rules, even though they all seem likely to me.

Oh, and put Calpine (CPN - commentary - Cramer's Take) in this class, too, although I can't believe the Oracle can handle them that toxic!

Second, I can give you what I'm hearing: Great Plains (GXP - commentary - Cramer's Take) seems to have attracted the attention of the Oracle of Omaha. But that comes under the "tips are for waiters" category -- if we really knew, we couldn't say, and if we didn't know, what are we talking about? Plus, with Great Plains' just OK BBB+-rated balance sheet and its 80% earnings payout, I can't say that dividend is all that safe.

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