What company should Berkshire buy?

[gfp]

I used to wonder about that one too.  The best I can come up with is that he doesn't love the financing side of the business, which results in $38 Billion of debt on the balance sheet.  I know he owned some stock at lower prices and sold out when it broke $100 per share or something like that.  Maybe he tried to buy it over the years and it wasn't available at his price.  Or maybe that wild-man Howie told him there wasn't durable competitive advantage and Warren wouldn't want to be 'banker to the farmers' when the shit hit the fan.  Cue John Deere / Berkshire buyout announcement tomorrow

 

John Deere. I can't beleive they have not yet.

[gfp]

Here's one that would be a good fit for Berkshire -

https://en.wikipedia.org/wiki/J.M._Huber_Corporation

 

Anyone who has passed a construction site in the last decade and seen Green sheathing and black tape is seeing a very popular Huber product called the Zip system.  It's an alternative to house wrap and it is very popular.  They also make a very popular subfloor that we use called Advantech.  It's particle board, but it has so much resin in it it basically comes out waterproof (at least for long enough to put a roof on something, which is also done with Huber decking in a rust color.

[Jurgis]

Chocoladefabriken Lindt & Spruengli

https://www.marketwatch.com/investing/stock/lisp?countrycode=ch

 

BRK should start selling real chocolate not the American-made crap.  8)

 

 

 

Yeah, I know the price reflects the quality of the chocolate.  8)

 

[bizaro86]

Chocoladefabriken Lindt & Spruengli

https://www.marketwatch.com/investing/stock/lisp?countrycode=ch

 

BRK should start selling real chocolate not the American-made crap.  8)

 

 

 

Yeah, I know the price reflects the quality of the chocolate.  8)

 

I'd love to see them start buying European companies in a bigger way. Lots of quality private businesses there.

 

One from me that fits that theme would be Medela. They make pumps for expressing breast milk for babies. That has become a common requirement, and it isn't something people scrimp on. They make the most common brand used by hospitals, and the pumps are intuitive, high quality, and high priced. The company is private, so would need to be a negotiated transaction.

[LC]

Easier said than done. Hasn't Berkshire been trying for years to increase acquisitions in Europe? Could it just be a culture thing? Two guys from the midwest vs business owners (and in many cases family businesses) in Europe?

[bizaro86]

Oh for sure. Not saying it would be easy or that I could do a better job. It just seems to me that they have become a top-of-mind destination for family business owners looking to sell in the USA, and I think Europe would be a good place to look to expand that. At a certain number of generations on some of these businesses you'd think liquidity might get attractive, but you could still honor the idea of a family business by finding it a permanent home.

[gfp]

Yeah, its always going to be tough.  Warren will be the first to advise against selling if a family has a well run, profitable, large business with durable competitive advantage and attractive, predictable long term economics.  Generation changes and liquidity needs (and sometimes capital raising needs) are the main reasons families sell.  The Pritzkers had their spoiled children suing them in a public way - that helped.  More and more, Berkshire will have to turn to public companies because of the need for very large companies to buy.  It's hard to negotiate a purchase of a desirable public company at a sensible price. 

 

- side note: maybe a side benefit of all the giving pledge networking meetings..  It's tricky to donate at least half your family fortune if you don't create liquidity for the family enterprise

[AdjustedEarnings]

KHC! It's got all the elements:

 

1. Cash cow but not growing... means good candidate for reinvestment of its profits elsewhere

2. Already own some of it, so premium need only be paid on the balance

3. A management team that excels in controlling costs and would probably be better able to do their thing "privately" than publicly.

4. A management team that wouldn't mind sending cash flows elsewhere

 

Problem of course is could Berkshire handle all that cash? I understand the feeling that in the next "big one" Warren is supposed to put all of this to work, but if they get up to $150 or $200 billion, it may well be impossible and it'll just simply drag on returns. If they have to pay dividends then there's no point paying a premium for KHC and returning its cashflow along with others in dividends. KHC can just pay their own dividend and BRK won't have to pay a premium.

[Guest longinvestor]

KHC! It's got all the elements:

 

1. Cash cow but not growing... means good candidate for reinvestment of its profits elsewhere

2. Already own some of it, so premium need only be paid on the balance

3. A management team that excels in controlling costs and would probably be better able to do their thing "privately" than publicly.

4. A management team that wouldn't mind sending cash flows elsewhere

 

Problem of course is could Berkshire handle all that cash? I understand the feeling that in the next "big one" Warren is supposed to put all of this to work, but if they get up to $150 or $200 billion, it may well be impossible and it'll just simply drag on returns. If they have to pay dividends then there's no point paying a premium for KHC and returning its cashflow along with others in dividends. KHC can just pay their own dividend and BRK won't have to pay a premium.

 

+1. IMO the elephant will be familiar name, one in the fold already. Any 3G exit strategy most likely involves Berkshire. Kraft was Act I and there will likely be an Act II and III some day. In fact, Unilever was in play but was botched. The food industry needs consolidating and is in the circle of competence. 

[John Hjorth]

Honestly, right now I've given up speculating about it for now.

 

Right now, I feel that I'm - as an investor - like Moses the Red Sea. I.e.,I have absolutely no clue of the Berkshire AAPL position YE2018, as of now. I've just started to study all the FAANGs, beside AAPL. [Long time ago I started looking at AAPL.]  [i may loose some time on that, sure, but the entertainment & educational value is already not for my despise - absolutely fantastic stories.] All fantastic companies, with a fantastic [short?] story. None of that may make them fantastic investments, though.