Too many investors get too excited about certain stocks, jumping in without comparing them to other possibilities. This is equally true for great investments and terrible ones. That's why I'm about to play devil's advocate.
In this series, I try to help investors see greater possibilities by highlighting a few other companies to consider before you take the plunge into a given stock.
Today's stock is Berkshire Hathaway (NYSE: BRK-B ) (NYSE: BRK-A ) . Led by greatest-investor-in-the-world Warren Buffett, it's a staple stock in the portfolios of value investors everywhere. I own shares myself. Some readers may feel it's sacrilege to even think about another company. But as a man who reads through just about every 10-K he comes across, Buffett would never object to considering the possibilities. So let's do so.
The Berkshire clones
The following two companies are frequently compared to Berkshire. They are each a fraction of the size of Berkshire Hathaway, so aren't as constrained by size as Buffett is these days.
Markel (NYSE: MKL ) -- Like Berkshire, this insurer invests a big portion of its insurance float in common stocks. Though its history as a public company is shorter than Berkshire's, its growth on book value since its 1986 IPO is quite impressive.
Leucadia National (NYSE: LUK ) -- Like Berkshire, Leucadia has grown book value by double digits for decades. Unlike Berkshire, it's not an insurance company. It owns investments across the spectrum, from manufacturing to gaming to oil and gas drilling. A feather in its cap is that Buffett will actually team up with Leucadia National on deals.
My colleague Alex Dumortier wrote about Markel and Leucadia as well as two other Berkshire-esque companies last week. Read his thoughts by clicking here.
The good news on Coca-Cola and Procter & Gamble is that they've been multi-baggers for Buffett. The bad news is that they're priced quite fairly right now. You won't likely go wrong buying either of these stocks, but you likely won't destroy the S&P 500 buying them at these prices.
Of the three, Wal-Mart's the one that looks most intriguing to me today. It's priced for low growth, but analysts expect almost 11% growth over the next 5 years.
The final reminder
As you decide between Berkshire Hathaway and these other alternatives (or none of the above), remember that I don't intend these companies as recommendations, nor as a criticism of Berkshire Hathaway. It's simply always a good idea to analyze many semi-related companies before you make any buy decision. If any of these strike your fancy, you can start your research by checking out what our CAPS community thinks. Good luck!
For more stock alternatives, I did the same exercise for FedEx.