Does it Make Sense for Berkshire Hathaway to Acquire Markel Corporation?
Berkshire's offer to acquire Alleghany raises interesting questions regarding the possibility of further acquisitions in the insurance industry
Let’s put ourselves in Warren Buffett’s shoes on Friday, February 25, 2022.
Mr. Buffett’s annual letter to Berkshire Hathaway shareholders was scheduled to be posted on the internet the next morning.1 From a capital allocation perspective, the most important news in the letter was that Berkshire continued to repurchase shares in 2021. Over the course of two years, Berkshire deployed $51.7 billion to repurchase 9% of the shares that were outstanding at the end of 2019.
Berkshire Hathaway shares were clearly attractive from Mr. Buffett’s perspective, but he would have almost certainly preferred to find companies to acquire at the right price. Unfortunately, such opportunities were not found in 2021.
We can picture Mr. Buffett in his office in Omaha thinking about his annual letter and mulling over the potential of acquiring one of the countless public companies that he has been following for many years or even decades.
On his desk, Mr. Buffett picks up a letter from Joe Brandon, the newly…