While their sizes are very different from one another, Berkshire Hathaway (BRK.A 1.18%) (BRK.B 1.30%), Markel (MKL 1.43%), and Boston Omaha (BOC 3.62%) all use a similar approach to building a conglomerate. In this Fool Live clip, recorded on July 16, longtime Fool contributor Matt Frankel, CFP, discusses all three of them with colleague Brian Withers and chief growth officer Anand Chokkavelu.

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Matt Frankel: Alright, so I have three conglomerates in my top 20, which I'm a Buffett fan. I quote Buffett more than anyone should. I own three companies, one is Berkshire Hathaway. One is Markel, which is often known as the Baby Berkshire, and then there's Boston Omaha, which you could call the infant Berkshire, I guess you would say. All three of these follow the same general rules. Buffett's rules for building a conglomerate and why he says most conglomerates fail is they're not willing to invest in minority stakes in businesses, which all three of these do. Think of like a GE, they prefer to be an acquirer. They're a conglomerate, they acquire. 3M -- they acquire. Berkshire, Markel, and Boston Omaha all have stock portfolios, for example. They all have minority stakes in businesses. You probably wouldn't have heard any of Boston Omaha's minority investments because they're all small because of the size of the company. But Berkshire Hathaway owns a stock portfolio, like 7% of Apple is part of their stock portfolio. A lot of conglomerates are not willing to invest in things they can't control.

I call the two other conglomerates because I want to tell you Berkshire Hathaway does that's Warren Buffett, everyone knows that. Geico, other businesses such like that, Markel's a baby Berkshire, it has more focused on insurance and Berkshire at this point. Buffett was much more focused on insurance back in the earlier days of Berkshire Hathaway, which is what Markel is doing now. They have a large insurance business, mostly focused on specialty and reinsurance. Reinsurance is a big part of Berkshire's portfolio. General Re, is a Berkshire company is one of the biggest reinsurance in the world. Think of that as insurance for insurance companies. Specialty insurance is things like risks that a normal insurance company won't touch, if you're in a very high-risk business, say like you own a demolitions business, indeed, liability insurance, most insurers won't touch you, so you get to specialty insurer. If you want to open a marijuana dispensary, most regular insurance companies wouldn't provide you with insurance, so you get to a specialty insurer, that's Markel's. Core business they also have a portfolio of stocks, and one of the big differentiators is they have a Markel Ventures division where they're actually like a venture capital fund. They invest in early stage businesses that are not public yet. Boston Omaha is a very small company. It's about 0.2% of Berkshire's size. Very baby Berkshire, Markel is about, I think 3% or 4% of Berkshire size is pretty small still.

Boston Omaha, it's named for its two co-CEOs who are from Boston and Omaha. One of the co-CEOs, and this helps the comparison is Warren Buffett's grand nephew. Alex B. Rozek the B stands for Buffett. They use Buffett's rules. If you read the recent shareholder letter, you could have heard it more in Buffett's voice. They follow his principles that closely, even what they write sounds like Buffett would write it. Three major businesses, billboard advertising, insurance, rural broadband and they also have several minority investments and they're SPAC sponsor. There are very few ways you can get on the sponsorship side of a SPAC as a smaller investor. I know Simon Property Group has a SPAC, but it wouldn't really be needle-moving it's such a big company. Boston Omaha's would be if they were able to find a target, it's still out there. It's called Yellowstone Acquisition Corp (YSAC). I was surprised to see that neither of you own either of these.

Brian Withers: I had owned Markel in the past and I think I sold it over the last couple of years as I trimmed down the number of holdings, I was actually impressed with Boston Omaha, although my score was not super high, I did like their diversity and approach and it was really small and the growth was probably not as much as I would like.

Anand Chokkavelu: I think anytime I talk to Nick Sciple I'm like, I need to look more into Boston Omaha. It's definitely a fan as you would expect, of many value type of investors. It's one I want to look into more at some point, I've got them ranked pretty decently.

Frankel: The idea with their businesses. They have a stock portfolio, as I mentioned, they sponsor a SPAC. The idea with those three major business lines is that they have great economics that as the business scales that should get better, which Brian is correct, the profitability looks terrible right now. Which was one of the things that I got dinged on in a score, the profit growth just isn't there. Rural broadband, for example, already has an 85% gross margin at their current scale. They recently partnered with a homebuilder called Dream Finder Homes, which they own five percent to install fiber optic broadband infrastructure in the homes at construction, which will then be paid for through the HOA. It's already there, very sticky customer base, it's free so people aren't going to switch. They're already paying for it, whether they use it or not. Little partnerships like that as it grows and scales, that could be a really lucrative and sticky business overtime. That's the one they're really prioritizing right now. I'm excited to see where that goes. That's my future 10 bagger, I guess, if I were to call one of these that.