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What Company Should Berkshire Hathaway Buy Next?

By Matthew Frankel, CFP® – Aug 19, 2021 at 6:26AM

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Here's what two of our experts think.

We certainly have no idea what companies, if any, Berkshire Hathaway (BRK.A -1.82%) (BRK.B -1.76%) is considering buying with its $144 billion cash hoard, but it can be fun to speculate. In this Fool Live video clip, recorded on Aug. 9, contributor Matt Frankel, CFP, and Industry Focus host Jason Moser discuss what they think Berkshire should buy next. 

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Matt Frankel: Hogfather said, can you think of your ideal company that you want Berkshire to buy outright?

Jason Moser: Yes. Well, we get that question, we've entertained that question a good deal.

Frankel: We have.

Moser: Chris Hill and I were talking about this a little bit earlier on MarketFoolery today and the one we always just go back and forth with, and it's become just an ongoing inside joke is McCormick (MKC -2.70%). That's always just because it seems like just the quintessential Buffett-style investment, McCormick's a spice maker. But it's obviously not just spices anymore you got French's and Frank's Red Hot, Cholula and all that stuff. It's just out on me, McCormick always struck me as a very Buffett style, Berkshire's type business that would work very well under their umbrella and it would be big enough to where it could be, at least somewhat meaningful. But they've just never been, so to speak.

Frankel: I like that, you gave them one that Berkshire actually might be interested in acquiring. I went the other way and what I thought they should acquire. I said fintech, I said they should acquire a Square (SQ -7.39%) or something like that.

Moser: Yeah. Well, I think when we were talking earlier on the show a little bit about the investment portfolio, that was one thing that stood out to me was like the old guard, Wells Fargo (WFC -4.96%), Bank of America (BAC -4.46%). As we pivot into the new guards, so to speak over the coming years, is it going to be a move away from the stereotypical financials, banks, insurance companies, to the newer fintech style financials like Square or SoFi (SOFI -3.62%) or something like that.

Frankel: Berkshire loves banks and insurance. I would love to see them really lean into that. We've mentioned earlier what's going to change after Buffett's no longer leading the charge. I'd like to see them acquire like a Lemonade (LMND -4.81%) and really throw their resources behind it. Lemonade has a lot of money in the bank, but they don't have $144 billion in the bank. I'd like to see Berkshire really acquire one of these fintech companies that has the potential to dominate its market and really lean into that.

Moser: Yeah, I agree. To me, it just seems like a lot of opportunities are out there and I just have a hard time believing that they just can't find one. It's weird to me, just weird. Maybe they're just really anchored to valuation. I don't know.

Bank of America is an advertising partner of The Ascent, a Motley Fool company. Wells Fargo is an advertising partner of The Ascent, a Motley Fool company. Matthew Frankel, CFP owns shares of Bank of America, Berkshire Hathaway (B shares), Lemonade, Inc., SoFi Technologies, Inc., Square, and Wells Fargo. The Motley Fool owns shares of and recommends Berkshire Hathaway (B shares), Lemonade, Inc., SoFi Technologies, Inc., and Square. The Motley Fool recommends McCormick and recommends the following options: long January 2023 $200 calls on Berkshire Hathaway (B shares), short January 2023 $200 puts on Berkshire Hathaway (B shares), and short January 2023 $265 calls on Berkshire Hathaway (B shares). The Motley Fool has a disclosure policy.

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