In the early years of a Warren Buffett-owned Berkshire Hathaway
Let's go huntin'
Berkshire Hathaway has a wonderful problem of having too much money and not enough places to put it. When Buffett and his team go fishing, it isn't for trout, it's for sailfish. It's not that he wants to limit his playing field to large caps and megacaps -- Buffett has often said he would be able to produce annual returns in excess of 50% if he had a smaller capital pool to deal with. He's also mentioned he wished he could go around and buy a basket of single-family homes. But with around $40 billion in cash on the balance sheet, that's way too many open houses with cucumber sandwiches and ginger spritzers.
The last time Buffett fired the gun was at Burlington Northern. In a $34 billion acquisition during 2009, Berkshire became the owner of the largest rail transporter of coal and grain. The deal has paid off handsomely, as it usually does for the king of sweetheart deals. Using that $34 billion as a baseline, let's see what companies Buffett may be interested in buying.
Well, screening for public companies in the $25 billion-to-$50 billion range gives us more than 500 companies to choose from. But few represent the wide-moat, cash-generating businesses Buffett has flocked to in the past.
One interesting pick is General Mills
Shippin' and dippin'
Another wide-moat company potentially in Berkshire's crosshairs is FedEx
A private matter
Of course, in addition to the hundreds of public companies within range on the elephant gun, there are many, many more private companies. A company such as Mars, which Buffett has dealt with in the past in its acquisition of Wrigley, would be a natural fit for the Berkshire portfolio.
A major acquisition is on deck for Berkshire, have no doubts. Keep an eye on the Oracle's statements in the coming months. If you find a business you think he may be readying to purchase, it couldn't hurt to buy a few shares. And if he doesn't buy it, you now own shares of a conservative, cash-generating business that can only help your portfolio.
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Fool contributor Michael Lewis owns none of the stocks mentioned above. You can follow him on Twitter, @MikeyLewy. The Motley Fool owns shares of Berkshire Hathaway. Motley Fool newsletter services have recommended buying shares of Berkshire Hathaway and FedEx. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. Try any of our Foolish newsletter services free for 30 days. The Motley Fool has a disclosure policy.