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General Category => Berkshire Hathaway => Topic started by: gfp on August 09, 2019, 06:23:13 AM

Title: Next Berkshire acquisition speculation
Post by: gfp on August 09, 2019, 06:23:13 AM
Not sure if there is already a thread discussing what the next material BRK acquisition will be (not including realtor offices and tiny crane operators here, just Billion dollar plus deals).

I'll posit a few whole company buyouts that Warren might consider -

CarMax, KMX
Philips 66, PSX
Home Depot, HD - although it is quite possible that he is completely done with retail
Coca-Cola, KO
DaVita, DVA - although he would probably rather steer clear of the healthcare industry entirely
Honeywell, HON
Boeing, BA
General Electric, GE - in whole or in parts
Mars, Inc - not likely that they would sell
Progressive, PGR - would this deal even be allowed by regulators?
Reyes Holdings - private company
Costco, COST - seriously doubt it at this price and above

Anyone know of some really large European private companies that would fit the bill?

Interested to hear other idea speculation.  Helps to pass the time between acquisitions - they are usually not the ones we speculate
Title: Re: Next Berkshire acquisition speculation
Post by: John Hjorth on August 09, 2019, 06:52:32 AM
Great idea with a recapitalization here, gfp,

CAT & DE - not now, but in the next severe downturn. I think CAT has done really well since the GFC. Mr. Gates owns CAT right now, if I remember correctly.

I'm not sure Mr. Buffett likes their financing arms though. Mr. Buffett could likely get better financing terms under the Berkshire umbrella for both compared to them as standalones, or provide group internal financing.

- - - o 0 o - - -

[J/K : Add to that : No need for an elephant gun to catch caterpillars and deers.]
Title: Re: Next Berkshire acquisition speculation
Post by: Dynamic on August 09, 2019, 07:01:24 AM
I suspect it could be something where there's a new insight and something has significantly and materially changed. For example BNSF railroad - things had dramatically changed and permitted returns and tax treatment made it a great investment but it took others a while to recognize the value.
Title: Re: Next Berkshire acquisition speculation
Post by: Castanza on August 09, 2019, 07:35:04 AM
I'd like to see something like Waste Management. It certainly is expensive right now, but it would branch them out a bit more.
Title: Re: Next Berkshire acquisition speculation
Post by: bizaro86 on August 09, 2019, 08:13:01 AM
One of the airlines seems plausible.

I'd prefer they buy Aercap, but they don't seem interested in airplane leasing.

On that I'd love to see in the next downturn would be DIS. At $250B market cap it would be big enough to move the needle, and the parks/hotels/cruise ships have plenty of opportunity to deploy capital at attractive returns
Title: Re: Next Berkshire acquisition speculation
Post by: longinvestor on August 09, 2019, 08:36:26 AM
AXP; especially if there’s a swoon again similar to the Salad Oil scandal.
Title: Re: Next Berkshire acquisition speculation
Post by: longinvestor on August 09, 2019, 08:39:53 AM
A large insurance biz.

Or big chunks of the insurance book from distressed companies. Just like AIG. There’re shoes likely to drop in the coming decade.
Title: Re: Next Berkshire acquisition speculation
Post by: gfp on August 09, 2019, 09:25:14 AM
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...
Title: Re: Next Berkshire acquisition speculation
Post by: Charlie on August 09, 2019, 10:05:12 AM
- Aldi
- Lidl
- Lindt & Sprüngli
- Ferrero
- Engel & Völkers
- Hannover Rück
- Ikea

 The strong US dollar would be a nice tailwind for European acquisitions.  :)
Title: Re: Next Berkshire acquisition speculation
Post by: rogermunibond on August 09, 2019, 10:17:11 AM
I'll take a stab here.  Howmet Aerospace by Precision Cast when it gets spun out of Arconic.
Title: Re: Next Berkshire acquisition speculation
Post by: bizaro86 on August 09, 2019, 10:36:30 AM
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...

Good point. Also, Amex probably wouldn't need it's bank charter to attract funds if it was part of Berkshire.
Title: Re: Next Berkshire acquisition speculation
Post by: thepupil on August 09, 2019, 01:50:40 PM
here's some heresy for ya. forget about adding any more managerial responsibility to the home office, even if Berkshire is famously decentralized.

Berkshire should buy Berkshire, and not mess around.

IPO 10% of BNSF and Berkshire Energy to increase the "public" portfolio by $130-$140 billion and put a more verifiable value on these.
Blow out of KHC at a 50% discount and lose $16 billion for tax purposes
Blow out of AAPL at market

Cash +$15 billion (IPO) + $4 billion (KHC) +$51 Billion = $70 billion

$122 billion at quarter end plus $70 billion from selling KHC, AAPL, and taking minority stakes in BNSF and BE public. = $190 billion pro-forma cash.

Tender for 27% of company ($150 billion) of stock at a 10% premium and highlight how freaking cheap and overcapitalized the company is, then we can talk about bringing more companies under the umbrella.








Use all cash flow to retire stock until the market assigns a proper value to Berkshire.
Title: Re: Next Berkshire acquisition speculation
Post by: Spekulatius on August 10, 2019, 05:27:20 AM
Likely sectors are chemicals (maybe DuPont, or LYB) or aerospace. They have already toeholds in both, so there would be a knowledge base in the company about what to buy. Both are durable business that will not go away.

Buffet sold of PSX, so I don’t think he will venture in the refinery sector.
Title: Re: Next Berkshire acquisition speculation
Post by: gfp on August 10, 2019, 06:45:13 AM
Yeah I agree on chemicals and aerospace.  Berkshire's preference has been for large business to business type industries for a while now.  It's hard to do well with consumer products and its hard to get consumer products companies of meaningful size.  Berkshire has probably learned its lessons with business to consumer stuff but we'll see.  I do think he would take Mars's call and he was willing to do a leveraged buyout of Unilever a few short years ago.

Likely sectors are chemicals (maybe DuPont, or LYB) or aerospace. They have already toeholds in both, so there would be a knowledge base in the company about what to buy. Both are durable business that will not go away.

Buffet sold of PSX, so I don’t think he will venture in the refinery sector.
Title: Re: Next Berkshire acquisition speculation
Post by: DooDiligence on August 10, 2019, 03:48:33 PM
FUL (smallish $2.3B mkt cap.)

MMM (largish $94B mkt cap.)

or a home builder?
Title: Re: Next Berkshire acquisition speculation
Post by: BargainValueHunter on August 12, 2019, 06:46:20 AM
State Street, Continental Building Products or the "Holy Grail"... Starbucks!
Title: Re: Next Berkshire acquisition speculation
Post by: BG2008 on August 12, 2019, 06:59:20 AM
Likely sectors are chemicals (maybe DuPont, or LYB) or aerospace. They have already toeholds in both, so there would be a knowledge base in the company about what to buy. Both are durable business that will not go away.

Buffet sold of PSX, so I don’t think he will venture in the refinery sector.

DuPont over LYB all day.  DuPont is actually a decent target IMO
Title: Re: Next Berkshire acquisition speculation
Post by: Spekulatius on August 12, 2019, 03:48:14 PM
State Street, Continental Building Products or the "Holy Grail"... Starbucks!

He bought a lot of bank stocks, but hasn’t touched the trust banks. I don’t think he has got much love for them.
Title: Re: Next Berkshire acquisition speculation
Post by: gfp on August 12, 2019, 03:52:57 PM
Well he has continued to add Bank of NY Mellon shares for several years.  Isn't that similar?  Either way, he's not going to own a too-big-to-fail bank outright. 

State Street, Continental Building Products or the "Holy Grail"... Starbucks!

He bought a lot of bank stocks, but hasn’t touched the trust banks. I don’t think he has got much love for them.
Title: Re: Next Berkshire acquisition speculation
Post by: CorpRaider on August 12, 2019, 06:24:50 PM
$LUV, $FIZZ
Title: Re: Next Berkshire acquisition speculation
Post by: LC on August 12, 2019, 06:49:52 PM
If Uncle Warren really cared he'd buy me out of my portfolio  ;D

SNAP could be a decent acquisition. Hell, he could buy NIKE if he wanted.
Title: Re: Next Berkshire acquisition speculation
Post by: gfp on August 13, 2019, 10:12:42 AM
Well they are not in negotiations to buyout GE at the moment, or Larry probably would refrain from buying his own stock -
https://www.sec.gov/Archives/edgar/data/40545/000123120519000160/xslF345X03/edgar.xml
Title: Re: Next Berkshire acquisition speculation
Post by: james22 on August 15, 2019, 07:57:22 AM
Fannie Mae and Freddie Mac, der.
Title: Re: Next Berkshire acquisition speculation
Post by: eatliftinvestgolf on August 21, 2019, 04:34:06 PM
Uber, at a much lower market cap.
Title: Re: Next Berkshire acquisition speculation
Post by: Castanza on September 12, 2019, 06:04:59 AM
Sheetz gas station chain.

- People love Sheetz food.
- Tesla Charging stations. Not unique but their atmosphere and food are arguably best in class giving them some advantage over competition to entice people to charge there. 
- 530ish locations (Flying J has 650ish)
Title: Re: Next Berkshire acquisition speculation
Post by: gfp on September 12, 2019, 06:28:50 AM
Its a great family business, not sure why the family would want to sell anytime soon but you never know.  I think they are at least to 580 locations now.  My wife's family lives in Virginia or I wouldn't even be aware of them.

(pilot flying J is over 750 locations now - time marches on)

Sheetz gas station chain.

- People love Sheetz food.
- Tesla Charging stations. Not unique but their atmosphere and food are arguably best in class giving them some advantage over competition to entice people to charge there. 
- 530ish locations (Flying J has 650ish)
Title: Re: Next Berkshire acquisition speculation
Post by: Okonomen on September 26, 2019, 04:18:46 AM
If it wasn't for the Murdoch family who owns 1/3 of the voting shares, I think Fox Corp could be an ideal M&A target. 20 bUSD market cap atm, very strong media franchise generating +30% ROIC, not that exposed to cord cutting due to focus on live sports and news, and they have a very promising broadcast segment where they more or less own all comedy cartoon entertainment (family guy, American dad, futurama, simpsons, bobs burger)

Trading at a conservative multiple right now and actually BRK could buy Fox and keep mgmt. like they always do, and the Murdochs could keep a 10% stake or similar
Title: Re: Next Berkshire acquisition speculation
Post by: DooDiligence on September 26, 2019, 06:07:13 AM
If it wasn't for the Murdoch family who owns 1/3 of the voting shares, I think Fox Corp could be an ideal M&A target. 20 bUSD market cap atm, very strong media franchise generating +30% ROIC, not that exposed to cord cutting due to focus on live sports and news, and they have a very promising broadcast segment where they more or less own all comedy cartoon entertainment (family guy, American dad, futurama, simpsons, bobs burger)

Trading at a conservative multiple right now and actually BRK could buy Fox and keep mgmt. like they always do, and the Murdochs could keep a 10% stake or similar

LOL

edit: I probably deserve a big horse laugh at some of my suggestions too.
Title: Re: Next Berkshire acquisition speculation
Post by: Spekulatius on September 27, 2019, 03:54:55 AM
If it wasn't for the Murdoch family who owns 1/3 of the voting shares, I think Fox Corp could be an ideal M&A target. 20 bUSD market cap atm, very strong media franchise generating +30% ROIC, not that exposed to cord cutting due to focus on live sports and news, and they have a very promising broadcast segment where they more or less own all comedy cartoon entertainment (family guy, American dad, futurama, simpsons, bobs burger)

Trading at a conservative multiple right now and actually BRK could buy Fox and keep mgmt. like they always do, and the Murdochs could keep a 10% stake or similar

I like FOX ( as a business, content is another matter), but don’t think that BRK want to be seen controlling a major media/news company. It‘s just too much headaches. I can see them buying a stake or a large position in DIS at the right price.

I think there are a lot of business that BRK would be interested in, but the question is more of a seller parting a price that Warren is comfortable with. That intersection is very very small apparently.
Title: Re: Next Berkshire acquisition speculation
Post by: bizaro86 on October 04, 2019, 11:00:29 AM
I can't see WEB wanting to own fox news. Economically, you'd have to leave the political perspective (or you'd lose your customers). But I'm not sure, "owner of Fox News" plays well for him socially.
Title: Re: Next Berkshire acquisition speculation
Post by: Casey on October 04, 2019, 11:42:43 AM
Probably some gas station chain or industrial parts company I've never heard of.
Title: Re: Next Berkshire acquisition speculation
Post by: mjm on October 04, 2019, 04:52:46 PM
bought  portion of flying j
Title: Re: Next Berkshire acquisition speculation
Post by: sleepydragon on October 04, 2019, 07:37:34 PM
GE, rolls Royce, FAST?
Rolex or some scotch maker?
A bank?
Altria ( Web bought airline stocks after all)
Title: Re: Next Berkshire acquisition speculation
Post by: DooDiligence on October 04, 2019, 08:49:52 PM
Altria ( Web bought airline stocks after all)

 :o

IDK, airlines kill people by accident, occasionally, but Altria does it on purpose every day.

---

I still think Bucees would be a nice little purchase that could be expanded on.

The one that just opened at the Baldwin Beach Express, near Loxley, AL, is huge.
They prohibit 18 wheelers & they're mobbed up every time I've stopped in.

https://www.buc-ees.com/index.php

---

Too bad he didn't get WhatABurger.
I never see discount coupons for them.
They don't need to run specials.

https://www.nytimes.com/2019/06/20/us/texas-whataburger-chicago.html

https://fortune.com/2014/12/29/byron-trott-billionaires-banker/
Title: Re: Next Berkshire acquisition speculation
Post by: sleepydragon on October 05, 2019, 08:58:24 AM
Altria ( Web bought airline stocks after all)

 :o

IDK, airlines kill people by accident, occasionally, but Altria does it on purpose every day.

---

I still think Bucees would be a nice little purchase that could be expanded on.

The one that just opened at the Baldwin Beach Express, near Loxley, AL, is huge.
They prohibit 18 wheelers & they're mobbed up every time I've stopped in.

https://www.buc-ees.com/index.php

---

Too bad he didn't get WhatABurger.
I never see discount coupons for them.
They don't need to run specials.

https://www.nytimes.com/2019/06/20/us/texas-whataburger-chicago.html

https://fortune.com/2014/12/29/byron-trott-billionaires-banker/

But you own MO?
(I just bought 1.5% positions of MO last week)
Title: Re: Next Berkshire acquisition speculation
Post by: DooDiligence on October 05, 2019, 10:33:06 AM
Altria ( Web bought airline stocks after all)

 :o

IDK, airlines kill people by accident, occasionally, but Altria does it on purpose every day.

---

I still think Bucees would be a nice little purchase that could be expanded on.

The one that just opened at the Baldwin Beach Express, near Loxley, AL, is huge.
They prohibit 18 wheelers & they're mobbed up every time I've stopped in.

https://www.buc-ees.com/index.php

---

Too bad he didn't get WhatABurger.
I never see discount coupons for them.
They don't need to run specials.

https://www.nytimes.com/2019/06/20/us/texas-whataburger-chicago.html

https://fortune.com/2014/12/29/byron-trott-billionaires-banker/

But you own MO?
(I just bought 1.5% positions of MO last week)

I do & as it says in my signature "I trumpet my ignorance"  :D
Title: Re: Next Berkshire acquisition speculation
Post by: CorpRaider on October 28, 2019, 07:26:46 AM
I got one.  Have AXP spin off or sell the "bank" and BRK acquires the remainder of the payments network it doesn't own. Then open up both sides of the network (to all/other issuers) and mark it to a MA multiple on the books by floating 5% back out in 2023 (like John Malone or some such).  Where mah fees at?
Title: Re: Next Berkshire acquisition speculation
Post by: rogermunibond on October 28, 2019, 09:58:54 AM
Newsom wants BRK to bid on PCG.  But he doesn't know that WEB doesn't do auctions.

https://finance.yahoo.com/news/california-governor-wants-berkshire-bid-235301474.html
Title: Re: Next Berkshire acquisition speculation
Post by: rkbabang on October 28, 2019, 11:06:17 AM
Altria ( Web bought airline stocks after all)

 :o

IDK, airlines kill people by accident, occasionally, but Altria does it on purpose every day.

---

I still think Bucees would be a nice little purchase that could be expanded on.

The one that just opened at the Baldwin Beach Express, near Loxley, AL, is huge.
They prohibit 18 wheelers & they're mobbed up every time I've stopped in.

https://www.buc-ees.com/index.php

---

Too bad he didn't get WhatABurger.
I never see discount coupons for them.
They don't need to run specials.

https://www.nytimes.com/2019/06/20/us/texas-whataburger-chicago.html

https://fortune.com/2014/12/29/byron-trott-billionaires-banker/

Correction: Altria provides the substances needed for people who choose to kill themselves to do so everyday.
It might seem like a small distinction, but it makes all of the difference.  Anyone can choose to not be in danger of being killed by Altria.

(I recently bought MO at $40.)


Title: Re: Next Berkshire acquisition speculation
Post by: wabuffo on October 28, 2019, 11:07:54 AM
But he doesn't know that WEB doesn't do auctions.

WEB is also not crazy about buying assets inside a bankruptcy process. 

He's had some disagreements with Bankruptcy judges about the miniscule size of the deal break-up fees imposed by Courts.  Buffett views it like he is being forced to offer a put option and isn't being adequately compensated for it.

wabuffo
Title: Re: Next Berkshire acquisition speculation
Post by: sleepydragon on October 28, 2019, 12:02:59 PM
Altria ( Web bought airline stocks after all)

 :o

IDK, airlines kill people by accident, occasionally, but Altria does it on purpose every day.

---

I still think Bucees would be a nice little purchase that could be expanded on.

The one that just opened at the Baldwin Beach Express, near Loxley, AL, is huge.
They prohibit 18 wheelers & they're mobbed up every time I've stopped in.

https://www.buc-ees.com/index.php

---

Too bad he didn't get WhatABurger.
I never see discount coupons for them.
They don't need to run specials.

https://www.nytimes.com/2019/06/20/us/texas-whataburger-chicago.html

https://fortune.com/2014/12/29/byron-trott-billionaires-banker/

Correction: Altria provides the substances needed for people who choose to kill themselves to do so everyday.
It might seem like a small distinction, but it makes all of the difference.  Anyone can choose to not be in danger of being killed by Altria.

(I recently bought MO at $40.)

It amazes me that WFC is under so much pressure from legislators for opening some checking accounts with 0 balances, yet cigarettes companies selling an addictive product that kills people are allowed to exist.
(Also bought MO at 40 and doubled at 43. But is still trying to convince my conscience that I shall double again my holdings)


Title: Re: Next Berkshire acquisition speculation
Post by: rkbabang on October 28, 2019, 12:14:07 PM
Altria ( Web bought airline stocks after all)

 :o

IDK, airlines kill people by accident, occasionally, but Altria does it on purpose every day.

---

I still think Bucees would be a nice little purchase that could be expanded on.

The one that just opened at the Baldwin Beach Express, near Loxley, AL, is huge.
They prohibit 18 wheelers & they're mobbed up every time I've stopped in.

https://www.buc-ees.com/index.php

---

Too bad he didn't get WhatABurger.
I never see discount coupons for them.
They don't need to run specials.

https://www.nytimes.com/2019/06/20/us/texas-whataburger-chicago.html

https://fortune.com/2014/12/29/byron-trott-billionaires-banker/

Correction: Altria provides the substances needed for people who choose to kill themselves to do so everyday.
It might seem like a small distinction, but it makes all of the difference.  Anyone can choose to not be in danger of being killed by Altria.

(I recently bought MO at $40.)

It amazes me that WFC is under so much pressure from legislators for opening some checking accounts with 0 balances, yet cigarettes companies selling an addictive product that kills people are allowed to exist.
(Also bought MO at 40 and doubled at 43. But is still trying to convince my conscience that I shall double again my holdings)

Whatever the distant past was like, everyone knows what the deal is with tobacco today.  No one is buying it and using it thinking that it is healthy.   That's why I have no problem owning it.   Also they should leave WFC (which I also own) alone.
Title: Re: Next Berkshire acquisition speculation
Post by: DooDiligence on October 28, 2019, 12:48:41 PM
Altria ( Web bought airline stocks after all)

 :o

IDK, airlines kill people by accident, occasionally, but Altria does it on purpose every day.

---

I still think Bucees would be a nice little purchase that could be expanded on.

The one that just opened at the Baldwin Beach Express, near Loxley, AL, is huge.
They prohibit 18 wheelers & they're mobbed up every time I've stopped in.

https://www.buc-ees.com/index.php

---

Too bad he didn't get WhatABurger.
I never see discount coupons for them.
They don't need to run specials.

https://www.nytimes.com/2019/06/20/us/texas-whataburger-chicago.html

https://fortune.com/2014/12/29/byron-trott-billionaires-banker/

Correction: Altria provides the substances needed for people who choose to kill themselves to do so everyday.
It might seem like a small distinction, but it makes all of the difference.  Anyone can choose to not be in danger of being killed by Altria.

(I recently bought MO at $40.)

It amazes me that WFC is under so much pressure from legislators for opening some checking accounts with 0 balances, yet cigarettes companies selling an addictive product that kills people are allowed to exist.
(Also bought MO at 40 and doubled at 43. But is still trying to convince my conscience that I shall double again my holdings)

Whatever the distant past was like, everyone knows what the deal is with tobacco today.  No one is buying it and using it thinking that it is healthy.   That's why I have no problem owning it.   Also they should leave WFC (which I also own) alone.

I don't have a problem with the burnable business as the dangers are known (like you said).

My problem with MO is their decision to extend themselves into the vaping business.

I'm probably wrong about the negative outcomes that I believe will result.

TBF, they survived cig litigation & resulting payouts, & still maintained
massive FCF, so this may be a business that any idiot could run.
Title: Re: Next Berkshire acquisition speculation
Post by: sleepydragon on October 28, 2019, 12:57:12 PM
My problem with MO get into vaping is that it’s a business with no moat, and they paid a huge price.

Title: Re: Next Berkshire acquisition speculation
Post by: John Hjorth on October 28, 2019, 03:00:11 PM
... Also they should leave WFC (which I also own) alone.

Ohh come-on, rkbabang,

Nowadays, even WFC has a CEO [as for any decent US bank with just any part left of self-esteem] [ ; - ) ]
Title: Re: Next Berkshire acquisition speculation
Post by: DooDiligence on October 28, 2019, 04:08:16 PM
Whatever the distant past was like, everyone knows what the deal is with tobacco today.  No one is buying it and using it thinking that it is healthy.   That's why I have no problem owning it.   Also they should leave WFC (which I also own) alone.

I don't have a problem with the burnable business as the dangers are known (like you said).

My problem with MO is their decision to extend themselves into the vaping business.

I'm probably wrong about the negative outcomes that I believe will result.

TBF, they survived cig litigation & resulting payouts, & still maintained
massive FCF, so this may be a business that any idiot could run.

RK, I hope you didn't take my response the wrong way.
(Online posts can be easily misinterpreted.)

My reference to "any idiot" referred to Howard A. Willard III.

I strongly believe that the health risks of vaping are going to be as obvious, in hindsight, as the risks are now to cigs.

I also believe that at $40ish, you'll make money.

Not a long term hold for me any more though,
and I'll dump MO if it gets into the high $60's & never look back.

That said, I don't know if you've seen this guys posts but he makes a good case for owning Altria,

https://twitter.com/SuperMugatu/status/1179871479628009485?s=20
Title: Re: Next Berkshire acquisition speculation
Post by: CorpRaider on October 28, 2019, 04:16:05 PM
My problem with MO get into vaping is that it’s a business with no moat, and they paid a huge price.

They seem to have top ticked it in marijuana and vaping and didn't even get control (probably a good idea...not controlling).  Impressive. 
Title: Re: Next Berkshire acquisition speculation
Post by: sleepydragon on October 28, 2019, 04:27:39 PM
My father in law was a smoker for 20 years. Then my wife educated him on the health effects. One day he just quit cold turkey. So it’s not that you can’t quit because it’s addictive.
Title: Re: Next Berkshire acquisition speculation
Post by: John Hjorth on October 28, 2019, 04:46:06 PM
My father in law was a smoker for 20 years. Then my wife educated him on the health effects. One day he just quit cold turkey. So it’s not that you can’t quit because it’s addictive.

Personally, I would be surprised - very - to see Berkshire investing its cash this way going forward. I don't know exactly when it popped up on the Berkshire Website, but here it is : Sustainability (http://berkshirehathaway.com/sustainability/sustainability.html) - likely for starters.
Title: Re: Next Berkshire acquisition speculation
Post by: Spekulatius on October 28, 2019, 05:46:28 PM
No drugs, booze or tobacco in Berkshire’s portfolio unfortunately. The most profitable business or those that kill people slowly.
Title: Re: Next Berkshire acquisition speculation
Post by: Dynamic on October 29, 2019, 01:40:03 AM
There IS a very small position in Diageo (DEO), which is alcohol brands, 227 thousand ADRs worth $36 million only at present, but that's not widely known because it's within the part of the Gen Re portfolio held via New England Asset Management's 13F filings.
Title: Re: Next Berkshire acquisition speculation
Post by: rkbabang on October 29, 2019, 04:36:59 AM
My father in law was a smoker for 20 years. Then my wife educated him on the health effects. One day he just quit cold turkey. So it’s not that you can’t quit because it’s addictive.

Both of my parents quit cold turkey when I was young and my father was smoking 3 packs per day. My wife quit cold turkey as well before we had kids.  Although she only smoked for 4 years or so before quitting.  It is possible to quit.
Title: Re: Next Berkshire acquisition speculation
Post by: sleepydragon on October 29, 2019, 07:04:57 AM
There IS a very small position in Diageo (DEO), which is alcohol brands, 227 thousand ADRs worth $36 million only at present, but that's not widely known because it's within the part of the Gen Re portfolio held via New England Asset Management's 13F filings.

DEO’s headquarter, which is in CT, is not far from the town I live.
A couple of times I drove by, and saw helicopter was flying and parked on the rooftop. Seem they have a lot of money but possibly a wasteful culture.
Title: Re: Next Berkshire acquisition speculation
Post by: rogermunibond on October 29, 2019, 07:07:28 AM
Different types of nicotine/smoking addiction.  For some it's more psychological and others it is neurochemical.

Those that have a really hard time are more wired - genetically - in their brain receptors to grab hold of nicotine.

They suffer the worst withdrawal symptoms.
Title: Re: Next Berkshire acquisition speculation
Post by: rkbabang on October 29, 2019, 07:38:58 AM
Different types of nicotine/smoking addiction.  For some it's more psychological and others it is neurochemical.

Those that have a really hard time are more wired - genetically - in their brain receptors to grab hold of nicotine.

They suffer the worst withdrawal symptoms.

This could be true.  But what I've found personally is that it is really really easy to just never start smoking at all.  I mean, I've been not starting smoking my entire life and it's taken me literally zero effort.
Title: Re: Next Berkshire acquisition speculation
Post by: DooDiligence on December 06, 2019, 08:50:22 AM
Could Pilot / Flying J buy Applegreen?

What are the chances that WEB starts kicking cash down to subs for acquisitions?

I mean, who knows their industry best?
(Including all private competitors...)
Title: Re: Next Berkshire acquisition speculation
Post by: longinvestor on December 06, 2019, 02:50:32 PM
Could Pilot / Flying J buy Applegreen?

What are the chances that WEB starts kicking cash down to subs for acquisitions?

I mean, who knows their industry best?
(Including all private competitors...)

I believe that this is the most likely model for deploying capital over the coming decades. Many of the current heads of sub could serve this role with Jain/Abel playing Buffett. Besides the obvious micro domain depth, this will truly take care of the optics and paraphernalia associated with Buffett’s involvement in deal making. Fly under the radar deals. Todd &Ted are involved in such deal making we’re told by Buffett. I can see this being the default model. Could work well too.
Title: Re: Next Berkshire acquisition speculation
Post by: John Hjorth on December 06, 2019, 03:04:04 PM
Heck, it's all about patience. ATH today, and still cheap.
Title: Re: Next Berkshire acquisition speculation
Post by: Dynamic on December 06, 2019, 03:47:20 PM
Or if not an all time high, within a hair's breadth. I think it peaked higher and closed higher on 9th October 2018 but only by about 0.5%.

I think there's a strong chance that today's price will look pretty unusually cheap after the 10-K comes out by any of the usual measures.
Title: Re: Next Berkshire acquisition speculation
Post by: gfp on December 06, 2019, 05:35:46 PM
technically I suppose Berkshire sold another company today (or Marmon did, more specifically) - Owl Wire & Cable

with applied underwriters we've got a certified selling spree...

https://www.marketwatch.com/press-release/international-wire-group-acquires-owl-wire-and-cable-2019-12-06?siteid=bigcharts&dist=bigcharts
Title: Re: Next Berkshire acquisition speculation
Post by: Cigarbutt on December 07, 2019, 08:10:39 AM
technically I suppose Berkshire sold another company today (or Marmon did, more specifically) - Owl Wire & Cable

with applied underwriters we've got a certified selling spree...

https://www.marketwatch.com/press-release/international-wire-group-acquires-owl-wire-and-cable-2019-12-06?siteid=bigcharts&dist=bigcharts
FWIW, I think this divestiture should not be regretted.
In addition to the regulatory challenges associated with their aggressive style, there was another aspect which was questionable and for which recent work suggests that a large part of their clients would be better served by another option.

In my jurisdiction, the workers comp insurance market is 100% funded (premiums and payouts) by the government. However, private parties can get 'involved' in the claims handling part and a way to do this is to 'mutualize' the costs and benefits that result from this activity. I have been peripherally 'involved' in this market. California (the main market for Applied) has a large self-insured workers comp market. The advantage of the products sold (aggressively) by Applied implied 1-savings on the administrative costs due to scale, 2-lower premiums by sharing the savings coming from the built-in incentive to self-improve practices and 3-the bright and effective use of reinsurance to deal with the excess of loss component. An essential ingredient was the trust necessary to outsource this aspect of the insurance transaction. It seems that self-insured groups can do a better job at cost savings and how to share the NPV effort. The report has been sponsored by a self-insured group but results correlate with what I've seen in my neck of the woods.

For those interested:
https://www.dir.ca.gov/osip/AppRequirements.htm
https://www.securityfund.org/assets/docs/Bickmore%20Comparision%20Self-Insurance%20v%20Insurance%20-%20FINAL.pdf

Note: This is not to say that self-insured groups will take over the traditional private insurance market, it is only to say that many clients presently under the Applied umbrella could get a better (and more transparent) deal elsewhere. I doubt Mr. Buffett wastes his time on such technical details but would not be surprised if he showed an unusual lack of concern (after a discussion with Mr. Jain) when the black sheep offered to fly on his own.
Title: Re: Next Berkshire acquisition speculation
Post by: bennycx on December 30, 2019, 08:36:01 PM
A merger with Microsoft would be great :)
Title: Re: Next Berkshire acquisition speculation
Post by: rogermunibond on January 02, 2020, 09:59:59 AM
TRUMPF Group - the kind of business that would be great for Berkshire to acquire.  Also an area where Iscar is under threat from laser cutting tools for industry.

https://www.nytimes.com/2009/07/12/business/global/12german.html

Another such private company - formerly Swiss now domiciled in Liechtenstein - Hilti Group - construction tools/systems, fire prevention systems, construction services

https://www.hilti.group/content/dam/documents/Media-Release/2019/march/Hilti_Company-Report_2018_en.pdf
Title: Re: Next Berkshire acquisition speculation
Post by: John Hjorth on January 02, 2020, 12:28:40 PM
... Another such private company - formerly Swiss now domiciled in Liechtenstein - Hilti Group - construction tools/systems, fire prevention systems, construction services

https://www.hilti.group/content/dam/documents/Media-Release/2019/march/Hilti_Company-Report_2018_en.pdf (https://www.hilti.group/content/dam/documents/Media-Release/2019/march/Hilti_Company-Report_2018_en.pdf)

roger,

Yes, Hilti is a wonderful company with wonderful products. Here, it's highly respected for the quality of its products within the construction industry.
Title: Re: Next Berkshire acquisition speculation
Post by: Spekulatius on January 02, 2020, 02:42:19 PM
TRUMPF Group - the kind of business that would be great for Berkshire to acquire.  Also an area where Iscar is under threat from laser cutting tools for industry.

https://www.nytimes.com/2009/07/12/business/global/12german.html

Another such private company - formerly Swiss now domiciled in Liechtenstein - Hilti Group - construction tools/systems, fire prevention systems, construction services

https://www.hilti.group/content/dam/documents/Media-Release/2019/march/Hilti_Company-Report_2018_en.pdf

Hilti used to be a public company and traded on the Swiss exchange. Trumpf is a Family owned business with a very long term focus. They developed their own photonics Technology for their lasers (the modules are build in NJ/US) in order to control the whole value chain. I don’t think they are likely to sell out.
Title: Re: Next Berkshire acquisition speculation
Post by: Jurgis on January 02, 2020, 02:55:03 PM
TRUMPF Group - the kind of business that would be great for Berkshire to acquire.  Also an area where Iscar is under threat from laser cutting tools for industry.

https://www.nytimes.com/2009/07/12/business/global/12german.html

Another such private company - formerly Swiss now domiciled in Liechtenstein - Hilti Group - construction tools/systems, fire prevention systems, construction services

https://www.hilti.group/content/dam/documents/Media-Release/2019/march/Hilti_Company-Report_2018_en.pdf

Hilti used to be a public company and traded on the Swiss exchange. Trumpf is a Family owned business with a very long term focus. They developed their own photonics Technology for their lasers (the modules are build in NJ/US) in order to control the whole value chain. I don’t think they are likely to sell out.

Well, BRK could buy IPGP.  ;)
Title: Re: Next Berkshire acquisition speculation
Post by: Spekulatius on January 02, 2020, 04:45:09 PM
TRUMPF Group - the kind of business that would be great for Berkshire to acquire.  Also an area where Iscar is under threat from laser cutting tools for industry.

https://www.nytimes.com/2009/07/12/business/global/12german.html

Another such private company - formerly Swiss now domiciled in Liechtenstein - Hilti Group - construction tools/systems, fire prevention systems, construction services

https://www.hilti.group/content/dam/documents/Media-Release/2019/march/Hilti_Company-Report_2018_en.pdf

Hilti used to be a public company and traded on the Swiss exchange. Trumpf is a Family owned business with a very long term focus. They developed their own photonics Technology for their lasers (the modules are build in NJ/US) in order to control the whole value chain. I don’t think they are likely to sell out.

Well, BRK could buy IPGP.  ;)

Yes, that would be a great company for Buffet to look at. I am guessing there are folks within Berkshire’s operations that understand IPGP’s  market position and moat. I have no idea if IPGP’s board would entertain a sale - the company is still founder driven to some extent.
Title: Re: Next Berkshire acquisition speculation
Post by: Jurgis on January 02, 2020, 10:32:40 PM
TRUMPF Group - the kind of business that would be great for Berkshire to acquire.  Also an area where Iscar is under threat from laser cutting tools for industry.

https://www.nytimes.com/2009/07/12/business/global/12german.html

Another such private company - formerly Swiss now domiciled in Liechtenstein - Hilti Group - construction tools/systems, fire prevention systems, construction services

https://www.hilti.group/content/dam/documents/Media-Release/2019/march/Hilti_Company-Report_2018_en.pdf

Hilti used to be a public company and traded on the Swiss exchange. Trumpf is a Family owned business with a very long term focus. They developed their own photonics Technology for their lasers (the modules are build in NJ/US) in order to control the whole value chain. I don’t think they are likely to sell out.

Well, BRK could buy IPGP.  ;)

Yes, that would be a great company for Buffet to look at. I am guessing there are folks within Berkshire’s operations that understand IPGP’s  market position and moat. I have no idea if IPGP’s board would entertain a sale - the company is still founder driven to some extent.

They won't sell at current valuation I'd think, while Buffett won't pay a large premium.
And maybe the company is a bit too tech for Buffett.
Title: Re: Next Berkshire acquisition speculation
Post by: meiroy on January 03, 2020, 02:16:57 AM
Greenland.

Why is it that BRK has to buy all these huge companies? Why don't they acquire a mass of smaller companies?

Buying good small companies that can turn into multi-baggers, might actually improve BRK's pricing.

How much of the cash amount is actually beyond the float?
Title: Re: Next Berkshire acquisition speculation
Post by: DooDiligence on January 03, 2020, 07:09:01 AM
Greenland.

Why is it that BRK has to buy all these huge companies? Why don't they acquire a mass of smaller companies?

Buying good small companies that can turn into multi-baggers, might actually improve BRK's pricing.

How much of the cash amount is actually beyond the float?

Let BRK subs do the sleuthing, negotiating & closings.
I'm sure many of them have wish lists.

---

At 1st I thought you were suggesting he buy Greenland  :o
Title: Re: Next Berkshire acquisition speculation
Post by: Jurgis on January 03, 2020, 07:11:49 AM
I think BRK should buy Canada.  8)
There's definitely a match in terms of culture.  ;)
Title: Re: Next Berkshire acquisition speculation
Post by: rogermunibond on January 03, 2020, 07:44:01 AM
Or Denmark  ;)

I think BRK should buy Canada.  8)
There's definitely a match in terms of culture.  ;)
Title: Re: Next Berkshire acquisition speculation
Post by: bizaro86 on January 03, 2020, 08:26:04 AM
Or Denmark  ;)

I think BRK should buy Canada.  8)
There's definitely a match in terms of culture.  ;)

Might be able to get a 0% mortgage on Denmark :)
Title: Re: Next Berkshire acquisition speculation
Post by: AzCactus on January 03, 2020, 08:47:09 AM
I've always thought a company like Fastenal would plug in well with Berkshire. 
Title: Re: Next Berkshire acquisition speculation
Post by: omagh on January 03, 2020, 10:34:21 AM
I've always thought a company like Fastenal would plug in well with Berkshire.
I've always thought that middleman Express Scripts was a Berkshire acquisition in waiting as well as Fastenal.  Cigna bought them last year for $52B.
Title: Re: Next Berkshire acquisition speculation
Post by: Jurgis on January 03, 2020, 10:51:06 AM
With Buffett's and Munger's views on healthcare in US, I would be surprised if they would buy anything healthcare related.
Title: Re: Next Berkshire acquisition speculation
Post by: SwedishValue on January 08, 2020, 01:13:07 PM
How big can Buffett go? I have my thoughts but would love some feedback.
Title: Re: Next Berkshire acquisition speculation
Post by: longinvestor on January 08, 2020, 04:59:24 PM
How big can Buffett go? I have my thoughts but would love some feedback.
I’ll bite...an Apple?
Title: Re: Next Berkshire acquisition speculation
Post by: gfp on January 08, 2020, 05:10:26 PM
I've been saying he could pull off a deal for ExxonMobil by the time the deal would close.  I think that's a realistic 'stretch' goal.  Boeing is possible but unlikely at current valuation (but I would be happy to be proven wrong next month..)

How big can Buffett go? I have my thoughts but would love some feedback.
Title: Re: Next Berkshire acquisition speculation
Post by: rkbabang on January 09, 2020, 06:00:55 AM
How big can Buffett go? I have my thoughts but would love some feedback.

MSFT maybe?  Gates taking over as Chairman of the Board and Buffet remaining CEO until is no longer able then use whatever succession plan is already in place. And Nadella still running Microsoft.


Title: Re: Next Berkshire acquisition speculation
Post by: gfp on January 09, 2020, 06:58:36 AM
returning to the topic of sub-trillion-dollar acquisition speculation - Berkshire and/or Berkshire with 3G would be realistic buyers of Thyssenkrupp's Elevator business [ 8 Billion Euros in revenue, 50,000 employees, speculated $20B USD market cap ].  But, of course, the usual consortiums of private equity folks will likely be willing to bid higher. 

https://www.ft.com/content/490b7c12-1846-11ea-9ee4-11f260415385
Title: Re: Next Berkshire acquisition speculation
Post by: John Hjorth on January 09, 2020, 11:56:09 AM
How many years is it, since Mr. Buffet & Mr. Munger had an exchange at the AGM about the size of the next large acquisition? [Two years, three years, or perhaps even more?] What were those gents then talking about? [If I remember correctly the talk was in the triple digits of USD B by Mr. Munger, combined with a good deal of speculative ramblings, based on "Who knows what we'll do!" - [& mind you!]] - If I remember correctly, Mr. Munger implied something in the three digit range of USD B.

Where are we now? -Please put away those something USD ~20 B for potentiential insurance claims in a stressed situation, which leaves you around USD ~100B in acquisition capacity.

- - - o 0 o o - - -

What is there not to like, if you're patient? [patience certainly required!]

- - - o 0 o - - -

Somehow, I think of it as a geriatric at the age ~90, surveilling and scouting an African Savannah, dressed [naturally] in Khaki Safari dress [with a Khaki hat to provide shadow for the face], scouting the area ..., - moving the sunglasses up on the hat, lips tight, stone face & snake eyed - just pretty un-emotional, & just waiting ... .

-You better stay out the line behind him, because his gear is not really [any longer] an elephant gun, more like a Bazooka! No need to get smoked and burned while standing behind him!
Title: Re: Next Berkshire acquisition speculation
Post by: cubsfan on January 09, 2020, 12:33:01 PM
And I believe  - it was mentioned during that discussion - that for the right situation, use of debt might be used.. so for that reason, I thought the
acquisition figure could be in the area of $150B.
Title: Re: Next Berkshire acquisition speculation
Post by: CassiusKing1 on January 10, 2020, 06:29:45 AM
Would love to see Buffett and Munger buy Costco.

Title: Re: Next Berkshire acquisition speculation
Post by: rogermunibond on January 10, 2020, 06:50:47 AM
Cassius - when Carrefour was selling its 10% (?) stake in Costco back in the 1990s, Berkshire had the opportunity and passed due to Buffett's aversion to retail, despite Charlie's support for it.

File that in the errors of omission stack.
Title: Re: Next Berkshire acquisition speculation
Post by: CassiusKing1 on January 10, 2020, 09:45:52 AM
Agreed.  The revenue from membership dues, margins on the Kirkland Brand and the very sticky, loyalty of members makes this attractive to me.
Title: Re: Next Berkshire acquisition speculation
Post by: gfp on January 14, 2020, 07:20:26 AM
This is probably bad advice, but could help Berkshire if any of these families actually takes it
https://www.bloomberg.com/news/articles/2020-01-14/rich-families-urged-to-sell-their-businesses-before-party-ends?srnd=premium
Title: Re: Next Berkshire acquisition speculation
Post by: Castanza on January 31, 2020, 10:15:28 AM
Wegmans (grocery store chain)
Title: Re: Next Berkshire acquisition speculation
Post by: rb on January 31, 2020, 10:47:41 AM
Cassius - when Carrefour was selling its 10% (?) stake in Costco back in the 1990s, Berkshire had the opportunity and passed due to Buffett's aversion to retail, despite Charlie's support for it.

File that in the errors of omission stack.
LOL 10% of Costo's market cap is just shy of Carrefour's market cap.

File that under boneheaded moves.
Title: Re: Next Berkshire acquisition speculation
Post by: Gregmal on February 27, 2020, 02:47:49 PM
Now would be a pretty darn sneaky time to snap up an airline.
Title: Re: Next Berkshire acquisition speculation
Post by: Jurgis on February 27, 2020, 03:09:08 PM
Buffett directly said that he won't acquire an airline. But hey...
Title: Re: Next Berkshire acquisition speculation
Post by: whiterose on March 05, 2020, 09:24:58 PM
GM?
Title: Re: Next Berkshire acquisition speculation
Post by: compoundinglife on March 05, 2020, 10:28:47 PM
Cassius - when Carrefour was selling its 10% (?) stake in Costco back in the 1990s, Berkshire had the opportunity and passed due to Buffett's aversion to retail, despite Charlie's support for it.

File that in the errors of omission stack.
LOL 10% of Costo's market cap is just shy of Carrefour's market cap.

File that under boneheaded moves.

Just peak to trough from the financial crisis to date, COST is almost 20% annualized not including dividends. Sigh....
Title: Re: Next Berkshire acquisition speculation
Post by: compoundinglife on March 05, 2020, 10:33:55 PM
GM?

I don't see it. GM is a value trade for Berkshire IMO. Do we know if its a Ted/Todd or Warren pick? At 2B it could be either?  Additionally there might be some conflict of interest issues with the fact that they own dealerships.
Title: Re: Next Berkshire acquisition speculation
Post by: Dynamic on March 06, 2020, 05:39:51 AM
Of the 75,000,000 shares of GM held:
26,994,000 shares are pension fund holdings.
48,006,000 are for the benefit of BRK shareholders.

Source: 13G/A filing: https://www.sec.gov/Archives/edgar/data/1067983/000119312520038354/0001193125-20-038354-index.htm

We can presume that when the newspapers transfer to Lee, a number of the pension plan holdings will move with them and a new SC 13G/A will be filed.
Title: Re: Next Berkshire acquisition speculation
Post by: Castanza on March 06, 2020, 05:52:40 AM
That Union and subsequent pension are enough to make me think it's a bad long-term investment.
Title: Re: Next Berkshire acquisition speculation
Post by: nspo on March 12, 2020, 08:45:29 AM
Dis- Brand loyalty, pricing power, diverse asset base
Costco- sticky business, recurring member fees, perpetual growth from giving value back to customers
Just speculation  ;)
Title: Re: Next Berkshire acquisition speculation
Post by: Aberhound on March 12, 2020, 08:59:07 AM
I suggest he comes forward with a convertible preferred share deal for Boeing as he wears the flag. Meanwhile he tells the government that the financing is conditional on letting Boeing use its Ion engines. It is a good time to crush your competitors.
Title: Re: Next Berkshire acquisition speculation
Post by: Uccmal on March 12, 2020, 09:55:52 AM
My bet is that he extorts one or all of the airlines they hold to “save” them.  Same terms as GS and GE 10 years ago.
Title: Re: Next Berkshire acquisition speculation
Post by: Castanza on March 12, 2020, 10:05:50 AM
My bet is that he extorts one or all of the airlines they hold to “save” them.  Same terms as GS and GE 10 years ago.

He should buy SAVE  :P
Title: Re: Next Berkshire acquisition speculation
Post by: Gregmal on March 12, 2020, 10:07:43 AM
Why not just quietly accumulate GOOG and MSFT?
Title: Re: Next Berkshire acquisition speculation
Post by: rb on March 12, 2020, 10:16:01 AM
They won't buy MSFT because of Gates. But at this point they may as well buy OXY. Chump change.
Title: Re: Next Berkshire acquisition speculation
Post by: Jurgis on March 12, 2020, 10:17:36 AM
They won't buy MSFT because of Gates. But at this point they may as well buy OXY. Chump change.

You think Buffett would buy E&P even if it is cheap? I'd think it's too commodity and too future-uncertain.

BTW, I think he might buy OXY notes or prefs or even stock as a trade. But not whole co.
Title: Re: Next Berkshire acquisition speculation
Post by: Mephistopheles on March 12, 2020, 10:21:58 AM
If airlines I bet he takes out Southwest
Super clean balance sheet, great culture, happy employees, happy customers, and he was friends with Herb Kellehar the founder
Title: Re: Next Berkshire acquisition speculation
Post by: Jurgis on March 12, 2020, 10:24:19 AM
He explicitly said he won't buy an airline.
Title: Re: Next Berkshire acquisition speculation
Post by: Mephistopheles on March 12, 2020, 10:26:06 AM
He explicitly said he won't buy an airline.

Yes he gave an example of problems with the amex card and buying delta but I think southwest is different. He also said he'd never invest in airline (stocks) again.

Never say never.
Title: Re: Next Berkshire acquisition speculation
Post by: compoundinglife on March 12, 2020, 10:28:17 AM
He explicitly said he won't buy an airline.

He said it was unlikely and cited the reasons why its complicate for BRK to buy one. I left with the impression that he might consider it in extraordinary circumstances.

Quote
"It'd be very unlikely we would do that," Buffett said. "I'm not saying it's impossible, but, it's complicated. There's a lot of complications because it's a regulated industry. Anytime you get into a regulated industry, you have more complications in transactions."
Title: Re: Next Berkshire acquisition speculation
Post by: Castanza on March 12, 2020, 10:37:21 AM
SAVE is a 3.9B EV...that's chump change.

Never say never is right.
Title: Re: Next Berkshire acquisition speculation
Post by: gfp on March 12, 2020, 10:38:09 AM
Yeah he really only addressed the issue with buying Delta and Delta seems like his favorite.  Nothing to stop him from buying Southwest if he wanted it and they agreed.  He would then likely sell all the other positions similar to how the train deal went down.
Title: Re: Next Berkshire acquisition speculation
Post by: Jurgis on March 12, 2020, 10:40:17 AM
He explicitly said he won't buy an airline.

He said it was unlikely and cited the reasons why its complicate for BRK to buy one. I left with the impression that he might consider it in extraordinary circumstances.

Quote
"It'd be very unlikely we would do that," Buffett said. "I'm not saying it's impossible, but, it's complicated. There's a lot of complications because it's a regulated industry. Anytime you get into a regulated industry, you have more complications in transactions."

Yeah, he's too smart to not leave himself an out.

I'll bet that he won't.

See him buy airline tomorrow.  8)
Title: Re: Next Berkshire acquisition speculation
Post by: compoundinglife on March 12, 2020, 10:59:36 AM
He explicitly said he won't buy an airline.

He said it was unlikely and cited the reasons why its complicate for BRK to buy one. I left with the impression that he might consider it in extraordinary circumstances.

Quote
"It'd be very unlikely we would do that," Buffett said. "I'm not saying it's impossible, but, it's complicated. There's a lot of complications because it's a regulated industry. Anytime you get into a regulated industry, you have more complications in transactions."

Yeah, he's too smart to not leave himself an out.

I'll bet that he won't.

See him buy airline tomorrow.  8)

Agreed. I think a pref + warrant deal is more likely with the airlines. On the flip side, there must be some advantages to owning NetJets and major airline. For example a loyalty program that spanned both. Efficiency improvements? Speculating, I don't know enough about the businesses to know if it impact returns.
Title: Re: Next Berkshire acquisition speculation
Post by: Jurgis on March 12, 2020, 11:46:52 AM
Agreed. I think a pref + warrant deal is more likely with the airlines. On the flip side, there must be some advantages to owning NetJets and major airline. For example a loyalty program that spanned both. Efficiency improvements? Speculating, I don't know enough about the businesses to know if it impact returns.

Hmm, is NetJets a success currently? I remember it was not doing great at some point. I think it's too small to be mentioned anymore, so probably we can't know how it is doing.
Title: Re: Next Berkshire acquisition speculation
Post by: compoundinglife on March 12, 2020, 01:12:22 PM
Agreed. I think a pref + warrant deal is more likely with the airlines. On the flip side, there must be some advantages to owning NetJets and major airline. For example a loyalty program that spanned both. Efficiency improvements? Speculating, I don't know enough about the businesses to know if it impact returns.

Hmm, is NetJets a success currently? I remember it was not doing great at some point. I think it's too small to be mentioned anymore, so probably we can't know how it is doing.

Your right. It’s just a blip. Internet estimates put it around 300M top line in 2019.
Title: Re: Next Berkshire acquisition speculation
Post by: CassiusKing1 on March 12, 2020, 05:52:50 PM
Caterpillar pretty easily or Coca Cola for a stretch.
Title: Re: Next Berkshire acquisition speculation
Post by: alpha on March 12, 2020, 09:42:48 PM
Agreed. I think a pref + warrant deal is more likely with the airlines. On the flip side, there must be some advantages to owning NetJets and major airline. For example a loyalty program that spanned both. Efficiency improvements? Speculating, I don't know enough about the businesses to know if it impact returns.

Hmm, is NetJets a success currently? I remember it was not doing great at some point. I think it's too small to be mentioned anymore, so probably we can't know how it is doing.

I think it's not mentioned anymore because WEB parroted the excellent management in place at Netjets for years in the annual letters, promising profit was just around the corner until losses mounted and he turfed the CEO. I don't believe it was ever mentioned again after the management transition was announced.
Title: Re: Next Berkshire acquisition speculation
Post by: whiterose on March 18, 2020, 08:43:29 AM
maybe too small, but AER?
Title: Re: Next Berkshire acquisition speculation
Post by: Castanza on March 18, 2020, 10:57:21 AM
So much for the DAL floor at 45  :P
Title: Re: Next Berkshire acquisition speculation
Post by: longterminvestor on March 18, 2020, 12:15:06 PM
Regarding Delta - only spent $45MM on shares at $45.  Not the end of the world.  I remembered an interview and watched it again for some "words of wisdom" in turbulent times.  Quoting his words he was a little early in '08.  Not even Warren Buffett can catch "the bottom" however LETS HOPE HE IS WAITING FOR HIS PITCH ON THE BIG BUY!!!

Excerpt from Buffett's interview with Andrew Sorkin regarding 2008 financial crisis (https://www.cnbc.com/video/2018/09/10/warren-buffett-talks-to-cnbcs-andrew-sorkin-2008-financial-crisis.html):

Sorkin: "When you look back in retrospect, is there any thing you wish you had done that you didn’t do? Any investments that you wish you could have made?"

Mr. Buffett: "I can look back on any week and come up with that.  The situation, ah, we’d have been better off, considerably better off at Berkshire if we had waited 4 of 5 months to buy anything.  I mean, the low was set in March, and it was much lower…I wrote that Op’Ed for the NY Times in late October while it was right on a long term basis but it was way off for 3 or 4..4 or 5 months at least."

Title: Re: Next Berkshire acquisition speculation
Post by: jhcap on March 18, 2020, 05:22:36 PM
What about Petro China - $PTR? He has owned it before and made a lot of money. He has publicly said he would buy it again at the right price. It is both China and energy so the ultimate contrarian bet.
Title: Re: Next Berkshire acquisition speculation
Post by: Stuart D on March 18, 2020, 09:45:02 PM
By my calcs. in 2001 Buffet bought Petro china at a price of:
$2.2 (not including leverage) per Barrel of Oil equivalent (proven), or
$3.3 (including leverage) per Barrel of Oil equivalent (proven).

However, if we take inflation into consideration the 2001 prices equate to the following 2020 prices:
$3.49 (no leverage) / BOE proven
$5.24 (including leverage) / BOE proven


Today's prices are very similar:
$2.6 (no leverage) / BOE proven. (cheaper today than 2001)
$6.0 (including leverage) / BOE proven. (more expensive today than 2001)


note: This is just looking at the price to purchase Petro China's proven reserves.

All feedback welcome (the more brutal the better). Keen to learn more about oil companies.
Title: Re: Next Berkshire acquisition speculation
Post by: Xerxes on March 19, 2020, 05:13:34 AM
He bought Petrochina ahead of an era of unprecedented demand for oil.
No such thing today
Title: Re: Next Berkshire acquisition speculation
Post by: longterminvestor 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.
Title: Re: Next Berkshire acquisition speculation
Post by: longinvestor 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!
Title: Re: Next Berkshire acquisition speculation
Post by: longterminvestor 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.
Title: Re: Next Berkshire acquisition speculation
Post by: rb 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.
Title: Re: Next Berkshire acquisition speculation
Post by: Spekulatius 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.
Title: Re: Next Berkshire acquisition speculation
Post by: calonego 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.


Stuck in a relative’s basement with Disney+ (National Geographic) on for the kids...
Title: Re: Next Berkshire acquisition speculation
Post by: ERICOPOLY 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?
Title: Re: Next Berkshire acquisition speculation
Post by: Spekulatius 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.
Title: Re: Next Berkshire acquisition speculation
Post by: Jurgis 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 
;D
Title: Re: Next Berkshire acquisition speculation
Post by: fareastwarriors on July 05, 2020, 12:14:37 PM

Warren Buffett’s Berkshire buys Dominion Energy natural gas assets in $10 billion deal

https://www.cnbc.com/2020/07/05/warren-buffetts-berkshire-buys-dominion-energy-natural-gas-assets-in-10-billion-deal.html
Title: Re: Next Berkshire acquisition speculation
Post by: AzCactus on July 05, 2020, 12:35:15 PM
Thank god and about time :)
Title: Re: Next Berkshire acquisition speculation
Post by: LC on July 05, 2020, 12:37:22 PM
Thank god and about time :)

Hear hear!
Title: Re: Next Berkshire acquisition speculation
Post by: Spekulatius on July 05, 2020, 12:37:24 PM

Warren Buffett’s Berkshire buys Dominion Energy natural gas assets in $10 billion deal

https://www.cnbc.com/2020/07/05/warren-buffetts-berkshire-buys-dominion-energy-natural-gas-assets-in-10-billion-deal.html

Based on  Dominions roughly ~900M negative earnings revision due to the deal, Berkshire got the assets fairly cheap.
Title: Re: Next Berkshire acquisition speculation
Post by: StubbleJumper on July 05, 2020, 01:18:25 PM
Thank god and about time :)


That's barely a dent!  Is $10 billion about six months of cash accumulation?


SJ
Title: Re: Next Berkshire acquisition speculation
Post by: ander on July 05, 2020, 01:20:06 PM
Anyone familiar with this asset? Obviously he's betting on volumes / continued demand of natural gas that's transport across state lines. Wondering if anyone has any more insights on long-term drivers? anything else that's attractive about the business? (maybe that since it's difficult to build new pipelines, its an even more attractive asset?).
Title: Re: Next Berkshire acquisition speculation
Post by: gfp on July 05, 2020, 02:51:20 PM
Berkshire Energy's press release is a good place to start.  Sounds like a sensible price and a good fit for BRK Energy.  Ought to be very accretive if they borrow most of their $4 Billion cash consideration.  Doesn't really do anything to help reduce Berkshire's cash position.  I doubt Berkshire even makes a capital contribution to BRK_energy for this.

https://www.brkenergy.com/news/berkshire-hathaway-inc--energy-company-to-acquire-dominion-energy-gas-transmission-and-storage-business
Title: Re: Next Berkshire acquisition speculation
Post by: John Hjorth on July 05, 2020, 02:55:20 PM
Berkshire Energy's press release is a good place to start. ...

Thanks gfp,

Always go to the primary source as the first thing.
Title: Re: Next Berkshire acquisition speculation
Post by: cubsfan on July 05, 2020, 03:34:43 PM
Berkshire Energy's press release is a good place to start.  Sounds like a sensible price and a good fit for BRK Energy.  Ought to be very accretive if they borrow most of their $4 Billion cash consideration.  Doesn't really do anything to help reduce Berkshire's cash position.  I doubt Berkshire even makes a capital contribution to BRK_energy for this.

https://www.brkenergy.com/news/berkshire-hathaway-inc--energy-company-to-acquire-dominion-energy-gas-transmission-and-storage-business

Excellent - thanks for the comments too!
Title: Re: Next Berkshire acquisition speculation
Post by: lnofeisone on July 05, 2020, 09:06:06 PM
Berkshire Energy's press release is a good place to start.  Sounds like a sensible price and a good fit for BRK Energy.  Ought to be very accretive if they borrow most of their $4 Billion cash consideration.  Doesn't really do anything to help reduce Berkshire's cash position.  I doubt Berkshire even makes a capital contribution to BRK_energy for this.

https://www.brkenergy.com/news/berkshire-hathaway-inc--energy-company-to-acquire-dominion-energy-gas-transmission-and-storage-business

BRK's press release is a good start though I think it could be better written. For example, the press release lists that BRK is buying Questar Pipeline but what I think they meant by it was Questar Pipeline LLC which in turn owns Questar Pipeline (UT-CO), Overthrust Pipeline (WY), and Southern Trails (CA, AZ, NM). The press release also says that the deal doesn't include the acquisition of the Atlantic Coast Pipeline which technically doesn't exist.

Short version: D is getting out of mid-west entirely and focusing on retail in midwest and east coast + LNG. BRK is getting regional pipelines in the mountain west and some good assets on the east coast. The most curious part about this is that BRK will be the one operating the Cove Point export terminal. I don't think they have any expertise in the area and are buying it in this transaction. Given where LNG prices are globally, they are probably not paying much premium for the Cove Point.  I think once they get comfortable here they can go after LNG (for growth?) or WMB (to complement their assets?).

Long version - D's nat gas profile is very fragmented with presence in the mountain west (UT, WY, CO), a little bit of midwest (OH, WV, PA [I realize WV and PA aren't really mid-west but I don't view them as east coast because they aren't on the coast and it will make this example a tad bit easier]), and east coast (SC, NC, NY). These fragments are not connected by D-owned pipeline. I always look at each fragment two types of operations: pipelines & storage and distribution (to retail/industrial customers). Currently, D performs both operations for every fragment. After the deal, it looks like BRK will own:
1) Pipelines & storage and distribution in the mountain west
2) Pipelines & storage in midwest - I think this is the crown jewel of this transaction as pipelines here move more nat gas than all others combined and it sits in a low break-even zone of marcellus/utica basin
3) Pipelines & storage on east coast



Title: Re: Next Berkshire acquisition speculation
Post by: JPerez on July 06, 2020, 03:05:50 AM
$D going up 10% in premarket.
Dominion has a 70 billion market  cap  and 37 billion in debt so a 107 billion EV utility increasing its value 7 billion on the news that they are selling a quarter of their cash flow for 10 billion.
This market is really something else.
I get that the regulated utility cash flows are worth more than the pipeline ones and 0% rates and all the rest but a well over 100 billion EV for a utility with 3 billion in adjusted earnings?
Title: Re: Next Berkshire acquisition speculation
Post by: aws on July 06, 2020, 04:20:53 AM
It's given all the gain back now.  It actually traded for $100 when premarket trading opened.  Would have been nice to be up early enough in the morning to short that.
Title: Re: Next Berkshire acquisition speculation
Post by: lnofeisone on July 06, 2020, 05:47:53 AM
It's given all the gain back now.  It actually traded for $100 when premarket trading opened.  Would have been nice to be up early enough in the morning to short that.

It wouldn't surprise me if D trades down a bit more. Looks like they sold decent assets cheap and they are cutting the dividend but this is for the D board. I think BRK got them this cheap because they were willing to buy the entire portfolio. There are more natural buyers for the pipelines (e.g., EPD for Questar and TC for Iroquois)  but that would require a lot more work/time/regulatory hurdles.
Title: Re: Next Berkshire acquisition speculation
Post by: Spekulatius on July 06, 2020, 05:52:06 AM
It's given all the gain back now.  It actually traded for $100 when premarket trading opened.  Would have been nice to be up early enough in the morning to short that.

It wouldn't surprise me if D trades down a bit more. Looks like they sold decent assets cheap and they are cutting the dividend but this is for the D board. I think BRK got them this cheap because they were willing to buy the entire portfolio. There are more natural buyers for the pipelines (e.g., EPD for Questar and TC for Iroquois)  but that would require a lot more work/time/regulatory hurdles.

I think Dominion was will to trade this asset cheaply in return for a better ESG rating. I think BRK got these assets for a really good price (11-12x post tax earnings unlevered).
Title: Re: Next Berkshire acquisition speculation
Post by: JPerez on July 06, 2020, 06:29:58 AM
It's given all the gain back now.  It actually traded for $100 when premarket trading opened.  Would have been nice to be up early enough in the morning to short that.
I thought about shorting it but in this market I am afraid to short even when, like on this case, on the face of it is overwhelmingly rational thing to do.
Title: Re: Next Berkshire acquisition speculation
Post by: gfp on July 06, 2020, 08:55:30 AM
Looks like the market came around to this view - at least for the time being. 

$D going up 10% in premarket.
Dominion has a 70 billion market  cap  and 37 billion in debt so a 107 billion EV utility increasing its value 7 billion on the news that they are selling a quarter of their cash flow for 10 billion.
This market is really something else.
I get that the regulated utility cash flows are worth more than the pipeline ones and 0% rates and all the rest but a well over 100 billion EV for a utility with 3 billion in adjusted earnings?
Title: Re: Next Berkshire acquisition speculation
Post by: Spekulatius on July 06, 2020, 09:25:16 AM
It's given all the gain back now.  It actually traded for $100 when premarket trading opened.  Would have been nice to be up early enough in the morning to short that.
I thought about shorting it but in this market I am afraid to short even when, like on this case, on the face of it is overwhelmingly rational thing to do.

The Price paid by Buffet for sure isn’t bullish for midstream companies ( OKE, WMB, EPD, ET, ENB etc). I think he paid less than any of the above is valued by the market with the possible exception of ET.
Title: Re: Next Berkshire acquisition speculation
Post by: Munger_Disciple on July 06, 2020, 10:08:02 AM
https://www.npr.org/2020/07/06/887593775/court-rules-that-dakota-access-pipeline-must-be-emptied-for-now

I am not sure this news is relevant to the Berkshire deal but it is scary that a US judge ordered an existing and flowing pipeline to be shut down.
Title: Re: Next Berkshire acquisition speculation
Post by: lnofeisone on July 06, 2020, 12:28:20 PM
https://www.npr.org/2020/07/06/887593775/court-rules-that-dakota-access-pipeline-must-be-emptied-for-now

I am not sure this news is relevant to the Berkshire deal but it is scary that a US judge ordered an existing and flowing pipeline to be shut down.

It probably helps the railroad side of BRK as now oil out of Bakken will not travel by pipeline. Statistically speaking, it's less safe for ND.

The decision isn't really surprising. Trump intervened on behalf of DAPL and the judge called them out on not having an environmental impact statement. There is another pipeline that runs along DAPL (Northern Border) and it's operating just fine. Not really the point the tribes were initially arguing but I think they will take any win.
Title: Re: Next Berkshire acquisition speculation
Post by: gfp on July 06, 2020, 01:59:26 PM
According to this presentation from Dominion, BHE has committed to de-leveraging the acquired gas assets after purchase.  Including not refinancing $1.2 Billion worth of maturities in the next 12 months (11-2020 and 6-2021).  So I guess that would require a capital contribution from Berkshire and, depending on if Scott family and Abel chip in, an increased ownership interest in BHE for Berkshire parent co.

So it could be $5.2 Billion -ish of cash that gets put to work here.  Or deleveraging DEGH could just mean BHE borrows at a higher level outside of this entity.  Who knows...

https://www.sec.gov/Archives/edgar/data/715957/000119312520187844/d939155dex992.htm

presentation page 15 shows deleveraging commitments over the next 12 months
Title: Re: Next Berkshire acquisition speculation
Post by: rb on July 06, 2020, 02:26:29 PM
This makes no sense to me. Why would they move to delver these assets given BRK's monster credit?
Title: Re: Next Berkshire acquisition speculation
Post by: Cigarbutt on July 06, 2020, 04:38:08 PM
This makes no sense to me. Why would they move to delver these assets given BRK's monster credit?
i don't see it that way. Let's say BRK buys a (re)insurance entity. They could boost reserves even if they have capital to support the business going forward. It may have to do with financial conservatism a building a goodwill account with regulators.
If you look at BH Energy (see below, page 21 and especially page 14). They are building while deleveraging and retaining capital. This may come handy if a consolidation (like railways, airlines (oups)) of the midstream energy sector is triggered somehow by a higher cost of capital. Building "partnerships" with regulators and credit rating agencies makes a lot of sense from a long term perspective.
https://www.brkenergy.com/assets/pdf/2019-eei-presentation.pdf
Title: Re: Next Berkshire acquisition speculation
Post by: rb on July 07, 2020, 06:57:39 AM
The problem with that is that while insurance regulators like reserves, utility regulators like leverage. If a wave of consolidation comes in the utility industry there's always that 140 billion bank account at the mothership.