The stock is Danaher (NYSE:DHR). It operates in very different industries, but a closer look reveals some deep similarities.

From mortgages to microscopes

Berkshire Hathaway began life as a struggling New England textile mill. It was bought by Buffett, who turned it into one of the greatest conglomerates of all time.

Danaher’s journey is a similar one. It began life as a Massachusetts real estate investment trust (REIT), before being bought by Mitch and Steve Rales in 1984.

Since then, the company’s been on an acquisition journey. It started with manufacturing, then shifted into instruments and, most recently, life sciences and diagnostics.

The crossover however, goes beyond origin stories. In 1985, the Rales brothers made a bid for Scott Fetzer Company – and lost out… to Berkshire Hathaway.

Disciples of the same religion

Nowadays, both companies are serial acquirers with decentralised business models. Neither can be accused of wasting money on office sofas or unnecessary support staff.

There are however, some meaningful differences. Beyond the industries they operate in, they have contrasting acquisition styles.

Buffett’s approach was to buy businesses and leave them alone. Danaher implements its own principles – the Danaher Business System – and looks to improve its subsidiaries.

Interestingly, I think this might be the direction Berkshire’s heading in. Chief exec Greg Abel’s known for being much more involved than Buffett, so change might be on the way.

Acquisitions

Acquisitions are a key part of Danaher’s growth story. But they inevitably bring risks, whether that’s overpaying or challenges with integration.

Last year, the firm recorded its largest asset impairment in over 20 years. This was the result of a $9.6bn deal to buy Aldevron during the 2021 mRNA euphoria.

Including Buffett, even the best investors have deals that don’t work. What separates the great from the good is what they do next. Danaher’s been disciplined in divesting businesses that don’t perform as anticipated. So in some ways, the write-down is a sign of a strong culture, not just a mistake.

What do the numbers say?

Danaher shares are unusually cheap right now. At a price-to-book (P/B) ratio of 2.5, the stock’s close to a 10-year low. 

Source: Fiscal.ai

A big reason for that is the decline in demand for bioprocessing equipment after the end of the pandemic. But signs of a recovery are on the way.

As they say in sports, form is temporary but class is permanent. And Danaher’s long-term strengths – its culture and strategy – seem firmly intact to me.

This is why I’ve had the company on my watchlist for some time. But is it finally time for me to make a move and buy the stock?

The next Berkshire Hathaway?

Berkshire Hathaway’s the largest single investment I own. And I don’t expect that to change any time soon.  I am however, always mindful of portfolio diversification. So the opportunity to add another company that shares a lot of Berkshire’s key strengths is an attractive one.

My price target for Danaher is around $163 – a 2.2 price-to-book multiple, in line with the 10-year lows. At that price, I’ll be looking to buy in July.

Should you invest £5,000 in Berkshire Hathaway right now?

When investing expert Mark Rogers and his team have a stock tip, it can pay to listen. After all, the flagship Twelfth Magpie Share Advisor newsletter he has run for nearly a decade has provided thousands of paying members with top stock recommendations from the UK and US markets.

And right now, Mark thinks there are 6 standout stocks that investors should consider buying. Want to see if Berkshire Hathaway made the list?

Stephen Wright owns shares in Berkshire Hathaway.

The post The company that almost beat Warren Buffett to one of his best deals appeared first on The Twelfth Magpie.

Investors are often keen to learn from some of his legendary investments. They include the stake in Apple and decades-old investments such as the stake in Coca-Cola that has turned into a passive income gusher, thanks to that company’s long run of annual dividend increases.

Such investments certainly offer some useful and interesting lessons. But Buffett is a smart enough investor to know that learning from your mistakes is at least as important in the stock market as learning from your successes.

Not the answer most people would guess!

So when asked what his biggest mistake was, Buffett did not even hesitate to answer: Berkshire Hathaway (NYSE: BRK.A) (NYSE: BRK.B)!

But wait, what on earth is he talking about? After all, Berkshire was a small, failing textile operation when he bought control of it. Now it is an insurance powerhouse with strong positions in other industries, and a market capitalisation north of $1trn. It is also sitting on a cash pile of hundreds of billions of dollars.

Why on earth would Buffett regard that as a mistake?

Think about omission not just commission

The error in judgement Buffett identified – in my view correctly – is that tying up capital in Berkshire’s original business came at a huge opportunity cost. Buffett spent years trying to improve the doomed textile operation. What if that time and capital had instead been put to more rewarding uses?

Berkshire Hathaway could probably have grown faster and now be a much larger company than it is.

As he explains when discussing why a cheap-looking but struggling business is rarely the bargain it seems, he said: “The original ‘bargain’ price probably will not turn out to be such a steal after all. In a difficult business, no sooner is one problem solved than another surfaces – never is there just one cockroach in the kitchen. Second, any initial advantage you secure will be quickly eroded by the low return that the business earns.”

This, then, was what Buffett calls a mistake of commission – something he did (that he then regretted). But he also warns about mistakes of omission. Those are opportunities he had the knowledge to assess and find attractive, but did not act on.

Buying Berkshire tied up a lot of capital in a bad business that could otherwise have been invested in good ones that were on Buffett’s radar.

This is a powerful, actionable insight!

This was an expensive lesson, but it was one that Buffett learned and took to heart. It can be tempting to look at businesses that have problems but look cheap and think of them as possible bargains.

Some of them are, but many turn out not to be. There is a name for this kind of investment: a value trap.

So Buffett changed his strategy to go hunting for brilliant businesses at attractive prices. That is not necessarily the same as a cheap price.

It is a lesson any investor can apply.

Should you invest £5,000 in Berkshire Hathaway right now?

When investing expert Mark Rogers and his team have a stock tip, it can pay to listen. After all, the flagship Twelfth Magpie Share Advisor newsletter he has run for nearly a decade has provided thousands of paying members with top stock recommendations from the UK and US markets.

And right now, Mark thinks there are 6 standout stocks that investors should consider buying. Want to see if Berkshire Hathaway made the list?

Christopher Ruane does not hold any positions in the companies mentioned.

The post Warren Buffett’s worst investment is surprising – but really instructive appeared first on The Twelfth Magpie.

The firm is executing a big capital reallocation, away from Apple and into Alphabet. This isn’t just a routine rebalancing – it’s a pivot towards artificial intelligence (AI).

Following the money

The latest and most dramatic move came just days ago. Berkshire committed $10bn in a private placement as part of Alphabet’s historic $80bn equity capital raise.

That marks a big shift from the firm’s focus on Apple, which Buffett viewed as a consumer products company. Greg Abel appears to have other ideas.

Berkshire has bought $5bn in Alphabet’s Class A shares and $5bn in Class C stock. In doing so, it’s made Google’s parent company a top equity holding.

This $10bn injection directly funds Alphabet’s huge data centre expansion. And this is something Apple has conspicuously avoided.

That’s not to say the iPhone company is doing nothing. At its Worldwide Developers Conference (WWDC) this week, the iPhone maker unveiled its latest AI products.

These included next-generation Apple Intelligence and a new Siri AI. This can understand on-screen context and execute actions across apps.

Despite Apple’s continued consumer focus, Berkshire has been selling. And Buffett’s firm has been focusing on the foundational AI infrastructure.

Berkshire’s advantage

AI companies are spending in a spectacular way. But all of that has to be funded somehow and there isn’t unlimited capital around.

SpaceX, Anthropic, and OpenAI are coming to the stock market. And there also looking for big money from investors. 

I’ve heard it suggested that Alphabet’s $85bn raise is an attempt to get ahead of this. Sooner or later, capital is going to be hard to find.

In that world, Berkshire’s position becomes hugely valuable. The firm has nearly $400bn in cash looking for opportunities.

Some of that is for guarding against potential insurance liabilities. A major disaster remains the biggest risk for the firm. 

Importantly, though, there’s a lot left for other things. And that could include AI companies looking for capital.

Warren Buffett has long talked about the value of having cash when others need it. And that might be starting to show up in the tech sector. 

The bottom line

Alphabet is investing heavily in AI, but at a huge cost to its balance sheet. Apple is protecting its financial position at the risk of missing out.

Berkshire Hathaway, however, offers the best of both worlds. It’s able to buy into AI companies at unique discounts while maintaining is unmatched financial strength.

A lot of investors have thought Berkshire was waiting for a stock market crash. Opportunities, however, might be closer at hand.

As tech companies shift from investing their own cash to raising funds, Buffett’s company is in a unique position. And I think it’s a strong one. 

That’s why Berkshire is still my largest stock investment. For anyone who doesn’t own it, I think it’s one to consider seriously.

Should you invest £5,000 in Berkshire Hathaway right now?

When investing expert Mark Rogers and his team have a stock tip, it can pay to listen. After all, the flagship Twelfth Magpie Share Advisor newsletter he has run for nearly a decade has provided thousands of paying members with top stock recommendations from the UK and US markets.

And right now, Mark thinks there are 6 standout stocks that investors should consider buying. Want to see if Berkshire Hathaway made the list?

Stephen Wright owns shares in Apple and Berkshire Hathaway.

The post Warren Buffett’s firm shifts to AI appeared first on The Twelfth Magpie.

The company has a mountain of cash and a reputation for getting deals done efficiently. And that gives it some big advantages.

Berkshire Hathaway

Berkshire Hathaway literally has more cash than it knows what to do with. So $10bn for some Alphabet shares is no big deal.

Google’s parent company has some big spending plans. So it’s looking to raise some cash in exchange for equity.  The firm is looking for $80bn in total, but finding enough buyers isn’t exactly straightforward. That’s where Berkshire comes in. 

Warren Buffett’s company has cash on hand ready to deploy. So it’s one of the first places Goldman Sachs asks when brokering this type of deal. 

Being the buyer of choice however, puts Berkshire in a strong position. And that unique status comes with certain advantages. 

What’s in it for Berkshire?

Berkshire’s cash reserves have been the subject of a lot of discussion. But Greg Abel’s been getting to work investing it. At its annual meeting in May, the new CEO described it as an opportunity. And it certainly looks like one at the moment.

In exchange for the cash, Berkshire got a discounted price. It bought Class A shares at $351.81 and Class C shares at $348.20. In both cases, that’s below where the stock was trading. That’s an advantage of being able to get deals done efficiently.

It might not be the only one. As well as a bargain price, Berkshire’s deal could come with other strategic benefits.

Energy opportunities 

Realistically, $10bn doesn’t touch the sides of the Berkshire cash reserves. But I wonder whether more opportunities might be on the way.

One of the biggest challenges for data centres at the moment is power, and Buffett’s firm has a large energy subsidiary. I’ve thought this might be a source of potential opportunities for some time. So I wonder whether there might be potential here. 

A direct investment is a bit different from an open market transaction. It makes Berkshire a strategic partner, not just a shareholder. Could this be mutually beneficial when it comes to powering Google’s data centres? Time will tell, but I’ll be watching with interest. 

Risks and rewards

Even with Buffett having vacated the CEO role, Berkshire still has a unique ability to do deals. And that’s why I’m still buying it.

There are risks. The firm’s insurance division underwrites some huge natural disaster policies and that involves risk by definition. The best way to deal with this is by maintaining a strong balance sheet. And I can’t think of a company that does this better than Berkshire.

The firm’s size means it can take a while for opportunities to show up. But they can be well worth the wait when they do appear.

The Alphabet investment is the latest example. And investing is a lot easier when you have access to deals others don’t.

Join the party?

Berkshire’s opportunities are unique. But investors like me can participate by buying the shares on the stock market.

Despite the change in leadership, the firm’s long-term strengths are still firmly intact. And that’s why I’m continuing to buy the stock.

Should you invest £5,000 in Berkshire Hathaway right now?

When investing expert Mark Rogers and his team have a stock tip, it can pay to listen. After all, the flagship Twelfth Magpie Share Advisor newsletter he has run for nearly a decade has provided thousands of paying members with top stock recommendations from the UK and US markets.

And right now, Mark thinks there are 6 standout stocks that investors should consider buying. Want to see if Berkshire Hathaway made the list?

Stephen Wright owns shares in Berkshire Hathaway.

The post How to buy growth stocks at below-market prices appeared first on The Twelfth Magpie.

New CEO Greg Abel’s approach might be frustrating onlookers. But, as a shareholder, it was exactly what I wanted to hear. 

Cash is… trash?

Berkshire’s cash reached around $380.2bn. And I sense that’s testing the patience of some investors. The S&P 500‘s up 27.96% in the last 12 months but Buffett’s firm has earned nothing like this on its excess cash reserves.

At the Annual Shareholder Meeting, Abel echoed the company’s recent view: it just doesn’t see opportunities right now.

Investors increasingly seem to be arguing for the firm to use its cash or return it to shareholders. But that isn’t what I want to hear. I don’t think Berkshire Hathaway’s a stock for most investors. But I also don’t see that as a bad thing. 

Average returns

JP Morgan used to publish a chart of an average investor’s 10-year returns. And they were a lot lower than you might think.

Source: JP Morgan Guide to the Markets Q4 2022

The average investor handily underperforms the S&P 500 over time. The biggest reason for this is psychological. Put simply, most investors just don’t have the patience to wait for opportunities. Instead, they chase quick returns. 

The result is poorly-judged moves that ultimately lead to underperformance. But Berkshire Hathaway is (I hope) built differently. The average investor might want to see Berkshire make a big move. But given their returns, why would I want Abel to listen? 

AI conundrum

The stock market theme of the last 12 months has been artificial intelligence (AI). And Berkshire Hathaway’s stayed well away.

There’s a good reason for this. In the 1994 shareholder letter, Buffett said:

“Just because Charlie and I can clearly see dramatic growth ahead for an industry does not mean we can judge what its profit margins and returns on capital will be as a host of competitors battle for supremacy.”

Even if AI’s here to stay, it’s not necessarily an opportunity. There’s still a question of who makes money from it.  The big winner might be a company that doesn’t exist yet. Or, more worryingly, it might not be any companies at all.

Flight of fantasy

Buffett often cites the airline industry as a case study. It’s a technology that changed the world, but was a disaster for investors. This is because high fixed costs and value-focused customers forced down prices. And that’s true across the industry.

The big question is whether AI will be the same. And Berkshire’s view is that it isn’t in a position to rule this out. If they’re honest with themselves, I don’t think many investors are. But they’re willing to bet on the new technology anyway.

That’s the kind of strategy that leads to low returns. And I’m pleased to see that isn’t a road Berkshire’s going down.

Berkshire and AI

The rise of AI isn’t lost on Buffett’s firm. It increases the threat of a cybersecurity attack, which is a major risk.

Overall though, it’s largely ‘business as usual’ for Berkshire Hathaway. And I see that as a very good thing. Abel reiterated that Berkshire’s cash is an opportunity, but impatient investors will need to look elsewhere.

The post Should I keep buying Berkshire Hathaway shares in the post-Warren Buffett era? appeared first on The Twelfth Magpie.

I think it is. But in terms of diversification, not every stock is the same.

Why diversify?

Investing always comes with risk. Even the best in the business can’t always see everything that’s going to happen in the future. The most effective way to protect against this is by building a diversified portfolio. That limits the impact of any individual threat.

There is, however, an obvious downside to this. Having more investments increases the number of risk factors a portfolio is exposed to. For example, adding some bank stocks to a tech-focused portfolio limits the impact of rising interest rates. But it makes a recession a bigger threat.

So how do investors know whether diversification is making things better or worse? I think there’s an important rule they can use.  

Warren Buffett

One of Warren Buffett’s principles is that risk doesn’t come from volatility. It’s the result of not knowing what you’re doing. 

I think this is right. Nobody – including Buffett – knows everything that’s going to happen, so some risk is inevitable. Diversification limits the impact of these things we can’t foresee. But if it creates more than it replaces, that’s not really helpful.

That means investors shouldn’t buy things they don’t understand just for diversification. I think that’s counterproductive.

Investors can, however, have a clear sense of what they don’t know. And some stocks offer better protection than others.

Ready-made diversification

Buffett’s own Berkshire Hathaway (NYSE:BRK.B) is a good example. It has subsidiaries in insurance, energy, retail, and more.

The firm’s stock portfolio is relatively concentrated, with a handful of major holdings. But firm is much more than these investments. 

This doesn’t entirely eliminate risks. A major natural disaster or cyber incident could end up costing the company a lot. That’s inevitable in the insurance industry. But the aim in both insurance and investing is to manage risk, not eliminate it.

Berkshire does this with a strong balance sheet and a disciplined approach to underwriting. And I expect this to continue now that he’s retired.

Outlook

Berkshire Hathaway offers a lot in terms of diversification for my portfolio from one stock. But that’s not the only reason I own it. 

The firm’s financial position gives all of its subsidiaries a big advantage. The rail and energy divisions are good examples. In both cases, their competitors have high debt levels. By itself, this isn’t a huge issue given the predictable nature of the businesses.

Berkshire’s operations, however, don’t have to think about this at all. Their managers also don’t have to deal with quarterly investor calls.

That’s what I see as the company’s key strength. And I think it’s going to be a durable and important one.  

How many investments?

There’s no magic number of investments investors need in a portfolio. A better way to think about it is in terms of specific risks. 

The point of diversification is to limit the impact of anything that can go wrong. And that includes things that are impossible to foresee.

In my Stocks and Shares ISA, Berkshire Hathaway covers a range of industries. With that and some other similar businesses, I’m happy with 16 stocks.

The post How many investments do you need in your Stocks and Shares ISA? appeared first on The Twelfth Magpie.

To put that into perspective, investing just £1,000 at the start of this journey would now be worth £60,993,940 today. By comparison, the same investment into an S&P 500 index tracker would have only mustered £161,610 – 377 times less!

But what about in just the last five years?

Did Buffett beat the market?

In the last five years of Buffett’s tenure as Berkshire’s CEO, he continued to deliver impressive returns. In fact, even when the S&P 500 tumbled into a steep correction during 2022, Buffett remained in the black, achieving a positive, albeit small gain.

So how much money could investors have made with a simple £1,000 investment with Buffett’s returns?

At a 117.2% return, that means a £1,000 investment at the start of 2021 is now worth £2,172.31 using Buffett’s method versus the £1,961.96 earned by passive index investors.

But with the ‘Oracle of Omaha’ now semi-retired (he’s still company chairman) and capital deployment being led by his successor, Greg Abel, is Berkshire Hathaway still worth considering?

To buy, or not to buy

Despite being hand-picked by Buffett, some institutional investors remain on the fence about Abel’s appointment. This isn’t due to a perceived lack of skill, but rather an unproven ability to manage a massive one-trillion-dollar enterprise.

As a result, Berkshire Hathaway shares have been steadily losing their ‘Buffett Premium’ with the stock actually falling slightly behind the S&P 500 in 2026, so far. However, as a result, Berkshire shares are now trading at a genuinely compelling valuation if Abel can continue to steer the ship as Buffett did.

At a price-to-earnings ratio of just 15.5, the stock offers an undemanding entry point to a diversified investment portfolio that appears to be a bit of a safe haven in the increasingly uncertain geopolitical landscape.

After all, Berkshire’s portfolio consists of a largely US domestic earnings base covering the rail, utilities, insurance, energy, and consumer staples sectors, providing a lot of insulation against global trade disruptions. And with Abel restarting Berkshire’s buyback programme, he appears keen to start deploying the group’s enormous cash pile.

So where does that leave investors?

What’s the verdict?

Seeing Berkshire shares lag the market across the first few months of 2026 isn’t that alarming. Short-term performance is ultimately meaningless for long-term investors. And there have been plenty of periods where even Buffett fell behind his benchmark.

Yet if this evolves into a prolonged downturn due to Abel’s inability to fill Buffett’s shoes, then there’s valid cause for concern. Personally, the moves made by Abel so far appear prudent, continuing Buffett’s disciplined investing style while also seeking undervalued opportunities outside the US market – most notably Japan.

With that in mind, I think now might be a good time to mull buying Berkshire shares given the firm’s promising trajectory at a discounted price. But it’s not the only opportunity I’ve got my eye on right now.

The post £1,000 invested in Warren Buffett’s portfolio 5 years ago is now worth… appeared first on The Twelfth Magpie.

The firm also has insurance businesses, a railroad, an energy unit, and a lot of cash. And this makes it a highly diversified operation.

Diversification

Berkshire’s stock portfolio is worth $274bn. And 43% of this is Apple ($62bn) and American Express ($56bn).

Ordinarily, a lack of diversification makes for a risky business. But that’s not really the case in this situation. 

That’s because Berkshire has a lot of other assets besides its stock portfolio. These include:

• A collection of insurance operations
• A Class 1 US railroad
• An energy subsidiary
• $390bn in cash (and cash equivalents)

These are all private businesses, except for the cash. But there’s a strong case for thinking that each of them might currently be worth a lot more than $62bn.

Investors therefore shouldn’t think that an investment in Berkshire Hathaway is an outsize bet on Apple. It isn’t.

Apple sales

Buffett actually made exactly this point at the 2023 Annual Shareholder Meeting. Back then, Apple was around 40% of the stock portfolio. In response to a question about concentration, Buffett pointed out that this didn’t make it 40% of Berkshire Hathaway. And this is right.

Since then, the company has significantly reduced its stake in Apple. It’s gone from owning 915m shares to 228m. 

Share buybacks at Apple mean Berkshire’s stake has been reduced by less than it might seem. But it owns less of the iPhone company than it used to.

Investors have been trying to figure out what to make of this. In my view, though, there are more important things to focus on.

Working together

Berkshire’s private businesses create diversification for the firm. And its real strength is the way these work together. The rail and energy units create opportunities to earn high returns on insurance premiums. This is something other insurers can’t match.

Equally, the profits produced by the other subsidiaries can be used to settle insurance claims. And that allows the firm to write larger policies.

The strong balance sheet also keeps borrowing costs down across the organisation. And that’s a huge advantage for capital-intensive operations.

Berkshire’s value isn’t just its collection of assets – which are more diversified than they look. It’s the way these combine to create unique strengths.

What are the risks?

I don’t think concentration is a major issue with Berkshire. And it’s hard to find an existential threat for a company with $390bn in cash. Nonetheless, there are some risks.

The most obvious are to do with the firm’s insurance businesses. This is where the biggest potential liabilities are. The company writes some big policies and a natural disaster could lead to large losses.

There’s also a threat of changes in regulation at its rail and energy businesses limiting future returns. And no amount of cash can eliminate that.

These are worth keeping in mind. But risk-free businesses simply don’t exist and I think Berkshire is one of the safest around.

One-of-a-kind

I don’t think there’s another firm like Berkshire Hathaway in the world. And that’s not because others haven’t tried to copy it.

Building an organisation like the one Buffett put together is extremely difficult. Buying shares in it, however, is not – and that’s what I’m doing.

The post Warren Buffett’s firm has 43% of its stock portfolio in 2 names. But… appeared first on The Twelfth Magpie.

It’s not just the usual speculation about stocks trading at cheap prices. There’s a much deeper reason why a deal could be in the pipeline. 

Utilities

The company is National Grid (LSE:NG). And to see why this makes sense, we need to take a closer look at Berkshire’s utilities division.

One of its existing subsidiaries – PacifiCorp – is facing big legal risks. These are related to the California wildfires from 2020 and 2022. The business has already paid $575m to settle claims. But the number being speculated as a potential total is closer to $50bn. 

As a result, its credit rating has been downgraded. And that means higher costs and collateral requirements for borrowing.

Berkshire’s balance sheet means bankruptcy is out of the question. But Buffett has said the firm won’t finance legal risks indefinitely.  PacifiCorp has sold assets to raise cash, but the legal risk remains. And that’s where National Grid – potentially – enters the picture.

National Grid

In California and Oregon, liability comes down to PacifiCorp’s equipment causing the fires. Importantly, it doesn’t have to be found negligent. Greg Abel – Berkshire’s new CEO – sees this as contrary to the social contract between states and utilities. But the situation in the UK is different. 

In Britain, a claimant has to prove actual negligence in order to win a payout. And the chances of a forest fire are much lower in the first place.

On top of this, National Grid has recently accepted the RIIO-3 framework. That increases its allowed return to 6% (in real terms) until 2031. That means there’s a lot more regulatory certainty here than in the US. And this is what makes utilities attractive investments in the first place.

This is why some analysts have identified National Grid as a potential Berkshire acquisition. But the case doesn’t stop there.

Returns

Becoming part of Berkshire Hathaway could bring some changes at National Grid. And there’s a lot of scope for higher returns.

One is the dividend. National Grid shares currently come with a 3.8% yield. As part of Buffett’s company, that wouldn’t be necessary. Instead, the business could reinvest all the cash it generates. And an attractive regulated return makes this a nice growth opportunity.

On top of this, Berkshire could use its cash to reduce National Grid’s significant debt. That would bring down costs, boosting returns further. In other words, there’s scope for the business to reinvest more of its capital at more attractive rates. And this makes it much more attractive.

This, however, only happens as part of a firm like Berkshire Hathaway. So it’s not a reason for ordinary investors to consider buying the stock.

Will it happen?

A number of analysts are connecting Berkshire Hathaway and National Grid. And there’s a lot of careful thought behind it. 

One of the major obstacles was the fact the FTSE 100 stock was up significantly in 2026. But it’s fallen 10% in the last month.

Another potential issue is the UK government’s ability to block the deal. That might scupper any deal and creates uncertainty.

Takeover talk can be good for shareholders of the company being acquired. But in this case, I’m buying shares in the one doing the acquiring.

The post Is Warren Buffett’s firm about to buy this FTSE 100 company? appeared first on The Twelfth Magpie.

In previous years, my plan’s been simple. But some things have changed over the last 12 months, so should I take a different approach in the year ahead?

Please note that tax treatment depends on the individual circumstances of each client and may be subject to change in future. The content in this article is provided for information purposes only. It is not intended to be, neither does it constitute, any form of tax advice. Readers are responsible for carrying out their own due diligence and for obtaining professional advice before making any investment decisions.

Strategy

Until this year, my strategy has been to limit my Stocks and Shares ISA deposits to £16,000. The remaining £4,000 has been invested in my Lifetime ISA where I own one stock.

The stock’s Berkshire Hathaway (NYSE:BRK.B). There are a few reasons I’ve chosen it as the starting point for my investing each year, one of which is its diverse range of subsidiaries.

This offers the kind of diversification that comes with an index fund, but with an advantage. Berkshire’s subsidiaries are very well resourced as a result of the firm’s balance sheet.

The company’s emphasis on long-term value and financial strength means I think it has a great chance of being around 50 years from now. And that’s the main thing I’m looking for.

Warren Buffett

As virtually everyone knows, billionaire investor Warren Buffett retired as Berkshire Hathaway CEO at the start of the year. And that’s why I’ve been thinking about whether to keep buying the stock this year. 

Running a company with £370bn in cash and cash equivalents isn’t an easy task. And new CEO Greg Abel made this point in his letter to investors while reporting a recent acquisition.

Berkshire recently acquired pest control business Bell Laboratories. The firm’s happy with the deal, but Abel said he wished it could have been 10 times bigger.

This highlights one of the biggest challenges for the firm. There are small opportunities, but can Berkshire find one big enough to make a meaningful impression on $370bn?

Outlook

One thing I think is going unnoticed is the prospect of Berkshire repurchasing Buffett’s shares. And Abel acknowledged the possibility of this in the letter. At today’s prices, Buffett’s stake is worth about $160bn. That’s not enough to account for the whole $370bn, but it could use a lot of it in a way that benefits current shareholders. 

Buying back Buffett’s shares would bring the share count by around 16%. That by itself would likely cause earnings per share to go significantly higher even without growth elsewhere.

On top of this, the firm does need major cash reserves for its insurance division. Having these helps turn the danger of a major liability from an existential threat to an unfortunate event.

What should I do?

Unless something major happens in the stock market before 5 April, I’ll be doing what I usually do in the new financial year. I’ll buy Berkshire shares and then figure out what else to do.

I think investors wondering why the company has so much cash might be about to get their answer soon. And I expect this to have a big impact on the business and the share price.

That means I’ll be looking to limit my Stocks and Shares ISA to £16,000 rather than £20,000. But there’s plenty investors can get done with those sums.

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