Nobody can really argue with the success that Berkshire Hathaway has had with investing over the years. Warren Buffet’s various funds keep going strong. His annual meeting alone is one of the most sought after tickets there is for such an event. Every investor wants to be like Berkshire Hathaway, and there are some companies that may just be coming close to accomplishing that objective. Here are five companies that are slated to potentially become mini Berkshire Hathaways in the near future.
This is actually an insurer of specialty property. They have developed an investment portfolio that is managed by Tom Gayner. In his own right, Gayner has become a value investor who is well respected across the markets. He has become so well respected, in fact, that many people suspect that he is the one who will one day succeed Warren Buffett as the Chief Investment Manager at Berkshire Hathaway. That is quite an undertaking in itself and speaks to the reason why Markel might just become the next mini Berkshire Hathaway. Under his 21 years at the helm, the company has compounded its earnings at a rate of 11.7%. This is roughly 2.5% over the S & P 500. As they are in the insurance industry, Markel underwrites various policies for niche companies that are otherwise difficult to find coverage for. They have grown by an estimated 19% annually.
Allegheny is also a company that specializes in property and casualty insurance but has also branched out into other areas of investment as well. Among these are land and oil and gas exploration. The investment portfolio that they have assembled to this point is heavily weighted in the direction of energy. They have focused largely on the major multinational companies of Exxon, Hess, and ConocoPhillips. The company is known for splitting its shares. It will do so in strange ratios, the most common of which are 50:49 or 102:100. This is seen as a way to get very small shareholders to end up selling their shares in the portfolio directly back to Allegheny.
Ian Cumming and Joe Steinberg are at the helm of Leucadia National. Combined, these two individuals have assembled a stellar record of being able to find value in the strangest of scenarios, leading their way to negotiate large streams of profit. They have assembled companies from a variety of different industries in their investment portfolio. The most notable of these include mines, wineries, and financial service and insurance companies. They have actually completed two separate deals directly with Berkshire Hathaway. The first of those when they went and bought Finova. Later, they would purchase Capmark. The company has recently been known to be working with Warrant Buffet to purchase the oneMain division of CitiFinancial.
Seaboard has an interesting operating model. They only have 1.22 million shares outstanding on its books. This gives it a rather thin margin with which to float investments. Fidelity’s low-priced stock fund has actually purchased a 4% stake in Seaboard’s stock, which speaks of its potential. The stock is currently valued at over $2600 per share. For its part, Seaboard has sunk most of its money in the business of pork. They also own roughly 50% of Butterball. In addition, they have been known to operate shipping vessels around the world, and are involved in the processing of jalapeños among other things.
Brookfield Asset Management
This is the final company on our list of those that might become the next mini Berkshire Hathaway. This company is involved in the management of power generating facilities. They also own real estate and a variety of other hard assets. They were originally referred to as Brascan, and many claim that they are the Canadian version of Berkshire Hathaway already. They possess a $20 billion market cap and are already managing assets in excess of $150 billion in value.
Each of these companies has shown great signs of success. They each have managers who have been with them for quite some time, and they demonstrate an ability to effectively invest in assets that are currently undervalued. This is exactly the model that has made Berkshire Hathaway so effective over the years. It is certainly not a firm indicator of greater success to come, but the indicators are certainly there for these five companies.
Written by Garrett Parker
Read more posts by Garrett Parker