NEW YORK (TheStreet) -- Given his legendary knack for picking out winning firms, it is no wonder that market professionals and do-it-yourself retail investors tend to keep a close watch on Warren Buffett to see what new companies he has his eyes on.
Buffett's acquisition preferences have received particularly heavy focus throughout 2011 in light of the investor's massive cash reserves as well as his words and actions.
In his annual letter to Berkshire Hathaway (BRK.A) shareholders, Buffett used his recognizable folksy charm in an attempt to portray to fans and followers his desire to find acquisition targets. In the document, the investor said he and partner Charlie Munger have their elephant gun reloaded and are prepared and anxious to pull the trigger when an attractive opportunity presents itself.
Despite that bit of bravado, Buffett's hunt for purchases has become progressively more difficult over the years.As I noted earlier this year, as Berkshire Hathaway has continued to grow, the investor has become increasingly unable to rely on small, undervalued companies to move the company's needle. Instead, he must shift his focus to larger, less explosive, long-term investments. A prime example of this is Buffett's decision to purchase Burlington Northern Santa Fe Railroad. Although the investor faces steep hurdles in his search for attractive acquisitions, he has still managed to find some suitable targets. In March investors learned that Buffett was at last able to pull the trigger when it was announced that Berkshire Hathaway would acquire chemical maker, Lubrizol (LZ) for $9 billion. In a recent interview with BloombergTV, the investor hinted that his trigger finger has become itchy once again. Although he was quick to note that there was nothing concrete in the works at this time, the billionaire investor pointed to three companies: Archer Daniels Midland (ADM), General Dynamic (GD) and Exelon (EXC) as being the types of companies Berkshire Hathaway would be interested in. Given their size and prominence within their respective industries, all three of these firms can be found representing notable slices of popular exchange traded funds. Investors with a desire to gain first hand exposure to the companies seemingly at the top of the Oracle of Omaha's watch list may want to keep a close watch on these products in the weeks and months ahead.
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