What company should Berkshire buy?

[voyager]

If you had the opportunity to pitch Buffett an acquisition idea, which company would you pitch to him?

[Txvestor]

Thought he should have made a run on DE last year when it was trading in the 70s, but obviously he didn't and, i know it was on his radar cuz he had a stake in it, since sold. Felt like it was close to his agricultural roots, had a successful brand, a decent if not wide moat, a sizable financial arm, good management and was at a cyclical low. It has since doubled, but can't see it going anywhere in the next 25-30yrs. The agriculture economy is essential and its products indispensable. Its global foorprint can only grow from its home base.

[SlowAppreciation]

Costco fits the mold, but it never gets really cheap. I'd imagine if it ever got to <20x earnings...

[Zorrofan]

Well WEB owns trains and planes so why not autos?  I was really surprised by the move in to airline stocks. It seems to me that he used to hate cyclical businesses and what could be more cyclical than planes other than autos?  They own a stake in GM already but again I'm really struggling to wrap my head around the airline move, especially given his past comments about doing investors a favor and shooting down Orville Wright at Kitty Hawk.

 

[EricSchleien]

SiriusXM

 

Disclosure: I have a position in Liberty SiriusXM

[PhatKing]

Procter and Gamble. It was a large holding of Berkshire for a long time. It is well known and well understood by WEB. The company could use some serious cultural transformation, to allow some of its iconic Brands to perform better! Maybe a good 3G capital manager could be installed as CEO. Maybe it could be a new platform company for 3G with huge financing by Berkshire.

 

PepsiCo could be another target that could be of interest to Kraft Heinz, with most of the financing through Berkshire.

 

Perhaps buying all of PSX could soak up some of the cash. But this can happen only if PSX wants to sell. WEB has said nice things about CEO Greg Garland.

[Guest longinvestor]

The pond with their current investments is also one that holds the future wholly owned. Me thinks. They would have taken a good look at those, including talent, which is increasingly the principal rationale behind.

[Viking]

I think BRK is the company they should buy. Stock repurchases are such a no brainer, especially at the current price.

[Guest longinvestor]

I think BRK is the company they should buy. Stock repurchases are such a no brainer, especially at the current price.

+1. Munger last year said the same thing when answering a question about the $400B to be deployed over the next decade. "It is not some hopeless problem, buying stock back is there".

[John Hjorth]

I think BRK is the company they should buy. Stock repurchases are such a no brainer, especially at the current price.

 

I really hope that you do not get carried away too much here, Viking. [ : - ) ] I mean I would really miss your posts about the Big Four US banks going forward. [ : - ) ]

[Viking]

John, I still like the big US banks - they are my risk on favourite. I like FFH at current prices - my turn around favourite. I am warming to the idea of BRK at or below $200 - my ‘instead of holding a bond’  favourite (I think Buffett would approve of this logic for BRK given what he wrote in his letter yesterday.)

[EricSchleien]

Aren't there regulatory issues around buying a major bank? Would they have to become a bank holding company?

[ValueMaven]

Cheniere Energy (LNG) and fold it inside of BHE...

[matjone]

ADM?  As far as I know he's pretty much tapped out on utilities and railroads.  Like someone else said he can't buy a bank which is what I'd imagine he'd like to do.  ADM earns decent returns and I would imagine they can spend decent amounts there.

 

Berkshire is so big now it's getting to where there's not much to do.  I think when Buffett retires I'd probably rather they just dividend out the money than try to make any more big acquisitions unless they have an opportunity for something really special.

[StevieV]

DIS.  Somewhere just under $200B.

 

How large of a bond offering could BRK pull off?  Largest ever is Verizon at $49B.

[sleepydragon]

Another railroad. maybe csx? or MKL? DVA. or even KHC

[dutchman]

they could fix aig

[Spekulatius]

Another railroad. maybe csx? or MKL? DVA. or even KHC

 

Another railroad in the US is not likely since they would cause antitrust issues. I don’t think that AIG fits what they are looking for. I think they eventually need to purchase foreign companies, maybe from owner operators that want to sell out and put their company under a nice roof.

[nickenumbers]

Great conversation.  Very thought provoking!

 

Humm.. 

[sleepydragon]

Another railroad. maybe csx? or MKL? DVA. or even KHC

 

Another railroad in the US is not likely since they would cause antitrust issues. I don’t think that AIG fits what they are looking for. I think they eventually need to purchase foreign companies, maybe from owner operators that want to sell out and put their company under a nice roof.

 

https://www.reuters.com/article/us-berkshire-hatha-bnsf/cp-norfolk-merger-would-put-csx-in-crosshairs-bnsf-chairman-idUSKCN0US2BY20160114

 

[gfp]

Ferromex or Kansas City Southern might be possibilities for rails.  Don't think CSX deal would pass regulators.  They are far from tapped out on US utilities and they will continue to attempt to buy utilities if they are available for sensible prices.  They will also likely make huge investments in a nationwide high voltage grid.  Maybe AEP gets bought?  Or the California utility with wildfire liability problems?

 

Any of 3G's projects could come into the wholly owned subsidiary fold for Berkshire.  Anyone Byron Trott is working with on the private, family owned side (Pilot Flying J was most recent) could come to BRK at any moment.  Auto Dealership groups, more realtors, whatever PCP ends up buying..

 

The literal next company to close is probably MLMIC, the New York mutual medical malpractice liability insurer.  But that was already announced.

[Spekulatius]

I think BRK will do some sort of a deal with GE. There are just on many tangents- their insurance business, their leasing business (where cost of capital is important), pension management, equity injection, partnership in business (locomotives?) or a leading stake. The Buffet halo alone will be very valuable for GE, as it was for BofA.

[gfp]

you may be right.  They already bought their tank car leasing business and stuck it in UTLX.  There are pieces BRK would want at the right price but I don't see them buying the whole thing without new management

 

I think BRK will do some sort of a deal with GE. There are just on many tangents- their insurance business, their leasing business (where cost of capital is important), pension management, equity injection, partnership in business (locomotives?) or a leading stake. The Buffet halo alone will be very valuable for GE, as it was for BofA.

[rb]

Reckitt Benkiser would be a nice business in Berkshire. But I think there's zero chance in that. It would make sense to buy it with Kraft Heinz and there's zero chance that RB guys will agree to that.

 

As others said, they're far from tapped out in utilities. They may even buy a large foreign utility like National Grid.

 

I also don't see why they can't keep buying smaller (relatively) companies. I think that a company like Meggitt would do great inside of Berkshire.

 

I mentioned a few foreign name in here because I think in the future we'll see more foreign acquisitions.

[Eye4Valu]

L Brands Inc (LB) because it appears to be selling for a reasonable price, and you can have the Victoria's Secret Angels strut their stuff at the next annual meeting!  ;)