Warren Buffett of
. has made it clear
he wants to make his empire bigger
. But the "Wizard of Ohama" may pull a rabbit out of his hat
bigger than we ever imagined.
the most recent Berkshire Hathaway annual meeting, Buffett was
asked about the $44 billion
Burlington Northern Santa Fe
(BNSF) -- technically $34 billion if you exclude the debt BNSF
had -- and why Buffett chose to issue stock in order to make the
deal, rather than use cash or issue bonds.
It was a valid question. At the time, Berkshire Hathaway
issued roughly 5.5% more stock in order to complete the deal.
Buffett noted, in retrospect, "we probably shouldn't have used
equity for BNSF." He instead suggested it likely would've been a
better move to issue on more debt since interest rates both were
-- and are -- so low.
And while Berkshire Hathaway has had a number of major
acquisitions since BNSF, it still reigns as the biggest single
deal Buffett has undertaken, and an
good one too.
But the most surprising remark came from Buffett when he
concluded his discussion on the massive deal by noting:
If we see a really good $50 billion deal, we'll figure out a
way to do it, even if that requires debt.
The possible direction
Much speculation -- from those including
-- has been made about what the next possible acquisition from
Berkshire might be.
Buffett continuously says "we will
maintain supreme financial strength, operating with at least $20
billion of cash equivalents." At the end of 2013, there was $48
billion in cash and cash equivalents at Berkshire, it was easy to
expect a $30 billion acquisition was within reason.
But when Buffett admits $50 billion is possible?
That throws a whole new spectrum of companies into the
If you'd like to get ambitious, a $50 billion threshold would
mean giant companies like
are within reason since their market capitalization stands at $51
billion and $45 billion, respectively. Knowing Berkshire owns
stakes in both companies, it's not unreasonable to think they are
possible takeout candidates.
Add in the fact Charlie Munger called Costco "unbelievable,"
at the same time Buffett
it to one of his favorites in GEICO, it's easy to think Costco
especially would be considered.
And while Berkshire now owns less Phillips 66 than it once did
thanks to the exchange of its position into Phillips Specialty
Products at the end of 2013, it's critical to see Buffett himself
said, "I have long been impressed by the strength of the Phillips
66 business portfolio."
But there are more than 50 companies in the United States
alone to be added onto the list of possible targets by
The key takeaway
Just one year removed from the acquisition of BNSF Buffett said
We will need both good performance from our current
businesses and more
acquisitions. We're prepared. Our elephant gun has been
reloaded, and my trigger finger is itchy.
Whenever Buffett pulls that magic trigger next, it may been
the biggest bang of his career.
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Warren Buffett's $50 Billion Magic Trick
originally appeared on Fool.com.
owns shares of Berkshire Hathaway. The Motley Fool recommends
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