Warren Buffett has proven to be a great investor. He might be the best of all time because of how long has record goes back to.
His company, Berkshire Hathaway, usually only invests in US-headquartered businesses like Coca Cola and American Express.
But there are some ASX shares that I think would be fit for Warren Buffett:
Insurance Australia Group (ASX: IAG)
IAG is the only business on the ASX that Berkshire Hathaway seemingly has a large position in.
A few years ago Berkshire Hathaway took a 3.7% stake of the large insurer. There is a 10-year deal that IAG would give Berkshire Hathaway 20% of the premiums and the American giant would pay 20% of the claims.
Insurance was one of the divisions that really transformed Berkshire Hathaway with its ability to generate investable ‘float’ for Berkshire Hathaway.
IAG usually pays a solid dividend too, but shareholder payments during COVID-19 could be tricky.
WHSP (ASX: SOL)
WHSP is an investment conglomerate. It invests in both ASX-listed and unlisted businesses, just like Berkshire Hathaway. The franking credit system makes it more attractive for WHSP to invest in Australian businesses.
It’s invested in many different industries like a telco, building products, resources, pharmacies, agriculture and so on.
The company has outperformed the ASX over the long term and this record could continue as it looks for new investments that could be long term winners.
It generates a solid amount of cashflow each year as it receives investment income (dividends and interest) from its assets . It uses this growing cashflow to pay a very reliable dividend that keeps growing every year.
Macquarie (ASX: MQG)
Warren Buffett has always liked a good financial share. Berkshire Hathaway owns large positions in most of the USA’s largest listed banks.
I’m not sure he would actually be interested in Australia’s domestically-banks except perhaps CBA (ASX: CBA), but that’s expensive when compared to other international banks.
However, I do think Warren Buffett would be interested in buying Macquarie shares, the global investment bank. It generates earnings from across the world. It is future focused, has effective leadership, it’s agile and quality. The Royal Commission into Financial Services proved how much better Macquarie is than other financial institutions in my opinion.
Macquarie has been an attractive business over the past decade and I think that will continue once COVID-19 is over.
Summary
All three of these shares are at least decent ideas. Looking at today’s prices, I think I’d only want to go for WHSP because of its diversification and very reliable dividend.
It’s a shame Warren Buffett doesn’t really like investing in technology shares, because there are some really great ones on the ASX:
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Disclosure: at the time of publishing, Jaz owns shares of WHSP at the time of writing, but this could change at any time.
