|Which companies do you think Berkshire Hathaway will acquire? |
At Stockpickr we keep track of Who Will Berkshire Buy Next?, a list of companies that could offer a nice fit for the acquisitive holding company. Warren Buffett, the chairman and CEO of Berkshire Hathaway ( BRK.A), has indicated he wants to make some large acquisitions, and the names on this list -- which represent both large and small companies -- each exhibit several characteristics that the investor has found attractive in the past. There are two names in particular that I believe are attractive not only because of their strong growth potential, but also because they have potential successors to Buffett in their management teams. First is Markel ( MKL), a niche insurance company that focuses on specialty markets. It is somewhat similar to Berkshire Hathaway, although on a much smaller scale. Markel has a $4 billion market cap vs. Berkshire's $160 billion market cap. Before I explain why Markel is a great company, worthy of Berkshire's attentions as a suitor, it's worth giving a brief overview of how the insurance company works. Basically, insurance companies take in money (the premiums) and invest that cash with the fervent hope that they can hold on to it before all of their customers want their money back. Why would someone want the money back? They don't really -- that's the beauty of it. But if a customer of an auto insurance company, for instance, gets into a car accident, then the insurance company owes money to that customer.