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Buffett’s Berkshire Hathaway reported a record $122 billion of cash on its books last quarter, which the legendary investor has said is “far beyond” the level he prefers. In his most recent letter to shareholders, Buffett told investors he was looking for an “elephant-sized acquisition,” but that things were too expensive for his liking.
“In the years ahead, we hope to move much of our excess liquidity into businesses that Berkshire will permanently own," he wrote. "The immediate prospects for that, however, are not good: Prices are sky-high for businesses possessing decent long-term prospects."
Buffett is a value investor, meaning he likes to invest in companies with strong balance sheets which he believes are trading below their market value, and that he can hold for the long-run.
In a Friday note to clients, Wells Fargo Senior Analyst Colleen Hansen crunched the numbers and determined that based on current valuations there are eight companies that Berkshire Hathaway may be looking to buy:
- CNX Midstream Partners
- Cognizant Technology Solutions
- EQM Midstream Partners
- Regeneron Pharmaceuticals
- Steve Madden
- Urban Outfitters
Berkshire owns a number of blue chip stocks in a portfolio that was valued at $198 billion at the end of the second quarter.
The conglomerate’s top holdings were Apple ($49.4 billion), Bank of America ($26.9 billion), Coca-Cola ($20.4 billion), Wells Fargo ($19.4 billion) and American Express ($18.7 billion).