Warren Buffett's Berkshire Hathaway conglomerate has more than US$50 billion in the bank, the highest level it has ever finished a quarter, in more than four decades.
Buffett is of course famous for patiently waiting for the 'fat pitch', a company with plenty of potential trading at what he considers bargain basement prices. With that in mind, we set off to see what Warren could buy with US$50 billion.
Knowing that the legendary investor likes to have at least US$20 billion in cash at all times, that leaves us with around US$30 billion or A$32.2 billion to spend.
Given his liking for insurance companies and their 'float', the first ASX-listed company on the list we think he might like is QBE Insurance Group Ltd (ASX: QBE). Shares in QBE have halved since late 2009, as the company's complexity thanks to years of numerous acquisitions, starts to bite back. Integrating those businesses into Berkshire Hathaway's already enormous insurance operation would take some time, but would add more float, and bring more diversity to the insurance business. With a market cap of $13.5 billion, after buying QBE, that leaves us with around $18.7 billion in cash.
Now Buffett has always had a preference for boring businesses with operations consumers or other businesses simply can't live without. Add in a strong global market share and the company we arrive at is Brambles Limited (ASX: BXB). Having spun out its Recall information management solutions business into Recall Holdings Ltd (ASX: REC), Brambles is now basically a pallet and containers business – products that most of the world's larger consumer-focused businesses can't do without.
With a market cap of $20.4 billion, it's more than the cash we have left, so Warren might have to borrow a couple of billion, which shouldn't be hard.
With more than 80 diversified businesses already in its stable, Berkshire Hathaway could quite easily add these two ASX companies. Good idea or what?
