On Wednesday March 2, this investor threw in his two cents worth (see:Serious Money: What Should Warren Buffett Do Next?) discussing possible acquisitions. Since all the "pro's", I use the term loosely, have had a say I thought I would give readers a chance to express some of their ideas too.
Among my ideas were three companies that I believe would be good opportunities and Berkshire Hathaway has a stake in one of them, American Express (AXP) and had owned Republic Services (RSG). The third stock I discussed was National Grid plc (NGG). Burlington Northern Santa Fe railroad was acquired last year after, Buffett accumulated shares until he was the largest shareholder and then negotiated a deal for rest of the company.
|American Express (AXP)||121 (40.5%)|
|National Grid (NGG)||108 (36.1%)|
|Republic Services (RSG)||70 (23.4%)|
Warren Buffett has not been a big fan of technology stocks, but if he were there are an abundance of opportunities out there. The following five stocks seem to be either unappreciated blue chips such as Cisco Systems (CSCO) Intel Corp (INTC), and Microsoft Corp (MSFT) or high flyer's with above market P/E ratios, but perhaps still under valued by cautious investors, think Apple Inc (AAPL) and Intuitive Surgical Inc (ISRG).
|Microsoft (MSFT)||82 (18.6%)|
|Intuitive Surgical (ISRG)||59 (13.3%)|
|Intel Corp (INTC)||88 (19.9%)|
|Cisco Systems (CSCO)||147 (33.3%)|
|Apple Inc. (APPL)||66 (14.9%)|
Berkshire Hathaway's largest holdings are in the insurance business. It would not be a surprise to anyone if Buffett had more of the same in his sights. Chubb Corp (CB) might be a good fit as a highly rated company with conservative underwriting standards. Hartford Financial (HIG) is a comeback story having dabbled too much in finance. MetLife (MET) was hit hard but is another comeback story and has tremendous potential with many competitors being weakened over the last few years. Progressive Insurance is a rapidly growing private company focusing on auto insurance competing directly against Berkshire's GEICO and could fold in nicely to that business. Travelers Companies Inc (TRV) is a very strong company taking advantage of the fall of American International (AIG). It was once under the umbrella of Citigroup, (C) but was luckily split off and is doing very well under it's own umbrella.
|Travelers Companies (TRV)||69 (25.7%)|
|Progress Auto Ins. (Private)||35 (13.0%)|
|MetLife (MET)||80 (29.7%)|
|Hartford Financial (HIG)||45 (16.7%)|
|Chubb Corp (CB)||40 (14.9%)|
I gave some thought to oil companies and banks, both of which are major parts of the Berkshire Hathaway portfolio, but I decided these are not the types of business that Buffett wants to own outright, although he may increase his shares.
There are certainly many more sectors that Buffett is examining to exploit, but for today I will leave the list at these selections and see where readers think Berkshire Hathaway might be or should be investing next. Feel free to offer additional ideas in the comments section, along with your rational for the choice.
Sheldon Liber is an architect and the CEO of Chasing Value™ Asset Management, Inc., a small private investment company. He writes the columns Chasing Value™ and Serious Money and is on twitter: @ChasingValue. Disclosure: Mr. Liber currently owns shares and/or options of BRK.B, C, CSCO, ISRG, MSFT, and NGG.