Author Topic: Next Berkshire acquisition speculation  (Read 32745 times)

Xerxes

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Re: Next Berkshire acquisition speculation
« Reply #120 on: March 19, 2020, 05:13:34 AM »
He bought Petrochina ahead of an era of unprecedented demand for oil.
No such thing today


longterminvestor

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Re: Next Berkshire acquisition speculation
« Reply #121 on: March 19, 2020, 07:56:46 PM »
Just saw news that Rent-a-Car company Enterprise is possibly seeking aide from Government. I know Mr. Buffett has coveted that business for a while and could never get owner to sell.

That would be a nice buy. Large, private, and great culture.

longinvestor

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Re: Next Berkshire acquisition speculation
« Reply #122 on: March 20, 2020, 09:18:47 AM »
The mother lode of capital allocation opportunity is likely going to be in the insurance segment. Lots of the "idiot capital" that went into it over the past decade will be shown up; the longer this crisis takes to blow over, the surer it becomes.

As close to the center of the circle center of competence for Berkshire as it can get!

longterminvestor

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Re: Next Berkshire acquisition speculation
« Reply #123 on: March 20, 2020, 11:01:26 AM »
Regarding a Boeing pref shares deal or complete take over, wouldnt Berk have to sell the airline stocks in that event?  Mr. Buffett is not a fan of conflicts of interest.  Owning Boeing and the airline customers would be difficult.

rb

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Re: Next Berkshire acquisition speculation
« Reply #124 on: March 20, 2020, 12:50:14 PM »
I don't think there will be deals. Government money will have significantly better terms than a Warren deal. Prices haven't even come down that much either. You take todays prices, add a control premium and the valuation sucks. If he didn't do the deal 1 or 2 yeas ago why would he do it now?

I think we'll see an expanded equity portfolio. The old man is probably buying bank stocks like crazy. And why not? The equity deals you can get right now are better than the deals you would get on the private market.

Spekulatius

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Re: Next Berkshire acquisition speculation
« Reply #125 on: March 20, 2020, 01:35:21 PM »
I don't think there will be deals. Government money will have significantly better terms than a Warren deal. Prices haven't even come down that much either. You take todays prices, add a control premium and the valuation sucks. If he didn't do the deal 1 or 2 yeas ago why would he do it now?

I think we'll see an expanded equity portfolio. The old man is probably buying bank stocks like crazy. And why not? The equity deals you can get right now are better than the deals you would get on the private market.

I doubt there is much of a private market right now.
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calonego

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Re: Next Berkshire acquisition speculation
« Reply #126 on: March 21, 2020, 01:10:19 PM »
I doubt there’s interest in Boeing - that’s a real schmozzle. Much of it self-inflicted too. Think of all the negatives of that business (foreign competition that’s highly political, incredible leverage, low ROA, highly political without the built in regulated margin of the political businesses BRK owns, etc). Oil? Maybe some, but I can’t see them buying a whole oil company. Who knows.

Anything manufacturing they’ve bought has been highly specialized and with better embedded margins.

A) Tie-in acquisitions? Always happening. More likely pop up (think Marmon and the Auto dealers). Doesn’t tie up lots of cash though.

B) PIPE type deals (prefs/debt with a warrant, etc. Like ‘08). I would bet money the phone is ringing off the hook with deals like this.

C) Big Game. A generational buy - like ties up additional capital for a decade. BNSF/Berkshire Energy style.

I’d say 100% A happens (keeps happening, but doesn’t move the needle) and more volume than recently (less PE completion).
B almost certainly happens, hopefully enough deals to move the needle. The government handouts are complicated - there were tons of government handouts in ‘08 and BRK still did phenomenal deals of this type.
Fingers crossed they do a HUGE “C” type deal - I like DIS at some price. Almost too big - but rates are zero and maybe you can issue some stock for the best entertainment franchises on the planet.


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JC

ERICOPOLY

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Re: Next Berkshire acquisition speculation
« Reply #127 on: March 21, 2020, 06:22:46 PM »
AXP; especially if there’s a swoon again similar to the Salad Oil scandal.

I suppose if they were willing to give up their Bank charter.  And if they weren't a bank, it would free up Berkshire to acquire Delta without worrying about the Fed fretting over a very material commercial relationship...

The government wouldn't help Delta if Berkshire already owned them.  They'd tell Berkshire to help Delta.  So Delta would tie up Berkshire's capital in times like this.  So maybe it's worth more operating alone rather than being owned by deep pockets?

Spekulatius

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Re: Next Berkshire acquisition speculation
« Reply #128 on: March 21, 2020, 07:19:01 PM »
AXP; especially if there’s a swoon again similar to the Salad Oil scandal.

I suppose if they were willing to give up their Bank charter.  And if they weren't a bank, it would free up Berkshire to acquire Delta without worrying about the Fed fretting over a very material commercial relationship...

The government wouldn't help Delta if Berkshire already owned them.  They'd tell Berkshire to help Delta.  So Delta would tie up Berkshire's capital in times like this.  So maybe it's worth more operating alone rather than being owned by deep pockets?

Yes, that’s a pretty good argument against BRK ever to wholly own an airline. Airlines are inherently risky business, operationally levered, safety issues, labor relations, pandemics. BRK would assume a lot of tail risk.
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Jurgis

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Re: Next Berkshire acquisition speculation
« Reply #129 on: March 22, 2020, 06:17:52 AM »
Yes, that’s a pretty good argument against BRK ever to wholly own an airline. ... BRK would assume a lot of tail risk.

Tail section risk is not that high: https://en.wikipedia.org/wiki/List_of_aircraft_structural_failures 
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