Those companies meet a variety of criteria Buffett often prioritizes when deciding when opting for a total buyout, including high returns on equity, a fair price, minimal debt and strong management. To try to duplicate those qualities to see what he might buy next, Credit Suisse’s quantitative team screened a universe of stocks for characteristics like cash-flow return, income and leverage.
Those qualities are likely good proxies for the way Buffett thinks about investments, the Credit Suisse HOLT team said.
Here’s a list of some of the names Credit Suisse thinks Buffett could snap up next.
The Credit Suisse analysis comes less than two months after Buffett told shareholders that he’s been struggling to deploy Berkshire Hathaway’s $112 billion cash hoard thanks to inflated price tags.
“2019 will likely see us again expanding our holdings of marketable equities,” Buffett said in his letter to Berkshire shareholders. “We continue, nevertheless, to hope for an elephant-sized acquisition. Even at our ages of 88 and 95 – I’m the young one – that prospect is what causes my heart and Charlie’s to beat faster.”
Buffett’s long history as a successful stock picker includes bets on some of Wall Street’s flagship companies, including Apple, Bank of America and Coca-Cola. One dollar invested in Berkshire Hathaway in December 1964 would now be worth more than $10,000; the same dollar invested in the S&P 500 over the same period would now be worth just a few hundred dollars.
Buffett never comments on rumors or speculation about what he buys next and he has advised in the past that investors should not attempt this guessing game.
“I don’t think people should be buying stocks because they’re reading in the paper that we’re buying something,” Buffett said during his 1994 annual meeting according to the CNBC Warren Buffett Archive. “But if they do, they may get cured of it at some point.”
“So we will never comment on those stories, no matter how ridiculous they are,” he added.
For full access to Buffett’s annual meetings and CNBC appearances going back the last three decades, see CNBC’s Warren Buffett Archive.