Web Exclusive - Who Could Be Buffett's Next Buy?
Drew Ermenc
October 22, 2007
With an estimated $40 billion in cash burning a hole in Buffett's deep pocket, financial analysts
love to speculate on what companies he might be eying next. Here are a few in Atlanta that we think
might meet Buffett's acquisition standards:
Beazer Homes USA Inc. – The troubled homebuilder has had a rough year, with recent firings of
top brass, a sinking stock price (nearly an 80 percent drop since September '06), and several bank
default notices (they claim are without merit). Regardless, homebuilding is a fairly easy business
model to understand, and with a clean bill of health, Beazer could be seen as simply an undervalued
company in a down business cycle.
Morris and Raper Realtors – Could the moons be aligning for Ron Peltier, president of
HomeServices, the Berkshire subsidiary, to make a move to increase his Atlanta market share,
joining Jenny Pruitt & Associates and Harry Norman Realtors? Morris and Raper, the 10th largest
Atlanta residential real estate agency, is one of only a few agencies left in the local market
that's not affiliated with a national franchise, and Peltier is on record as saying it's a great
time to get good value for real estate companies.
AGL Resources Inc. – MidAmerican Energy, a subsidiary of Berkshire (and parent company of
HomeServices), has operations in the Midwest and Pacific coast and has been in full acquisition
mode to expand its gas transportation operations. AGL Resources distributes natural gas to more
than 2.2 million customers in five Eastern states, and could be a nice acquisition target if
MidAmerican looks to expand eastward. AGL's enterprise value stands at an affordable $4.96 billion
and the utility puts a high priority on corporate values, a significant plus in Buffett's eyes.