Warren Buffett, the legendary investor and CEO of Berkshire Hathaway, has a record $334.2 billion in cash reserves as of December 31. This substantial war chest has raised questions about potential acquisition targets for Berkshire Hathaway. Despite selling stocks for nine consecutive quarters, Buffett remains optimistic about the long-term growth of the U.S. economy and the stock market.
With some intriguing values emerging following weeks of market volatility, there are two stocks in particular that could make compelling acquisition targets for Berkshire Hathaway if the price is right. The first potential acquisition target is satellite-radio operator Sirius XM Holdings. With a market cap of $7.2 billion, Sirius XM would be a relatively small acquisition for Berkshire Hathaway.
Notably, Buffett’s company already holds 35.4% of Sirius XM’s outstanding shares. Sirius XM is uniquely positioned in the radio market as the only company with a satellite-radio license, granting it significant subscription pricing power.
Warren Buffett targets Sirius XM
The bulk of its revenue comes from recurring self-pay subscriptions, which are highly predictable in any economic climate. At a valuation of just seven times forecast earnings in 2026, Sirius XM’s shares are attractively priced near their historical lows, making them an appealing target for acquisition. For a larger acquisition that would make a significant impact, another company stands out as a strong candidate.
This company fits well into the realm of financial companies that can benefit from economic growth and an expanding digital payment footprint. The company’s key performance indicators suggest increasing engagement, with the average number of payment transactions per active account rising significantly in recent years. The CEO’s focus on innovation and understanding of digital payment solutions for small businesses positions this company favorably for sustained double-digit growth in the digital payments arena.
This company’s current market cap of $63.3 billion is substantial but manageable for Berkshire Hathaway’s cash reserves. A dip in the company’s share price could create an opportunity for Buffett to acquire this industry leader at a favorable valuation. While it’s uncertain whether these acquisitions will happen, Sirius XM and this company present attractive opportunities for Berkshire Hathaway to deploy its $334 billion war chest in a way that aligns with Buffett’s investment philosophy.
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