Berkshire Hathaway Chairman and CEO Warren Buffett
Although he has traditionally focused his attention on opportunities based in the U.S., Warren Buffett appears more than willing to make deals in other corners of the global marketplace as well. In recent months, the investor has spent time traveling abroad to countries including India and South Korea. Reportedly, a major goal of these trips has been to identify large acquisition targets.
This week, Bloomberg pointed out a handful of companies from Brazil and China that appear to meet Buffett's criteria for attractive acquisition targets. Listed among the names are firms including Marcopolo, the largest bus maker in Brazil; and Chinese construction company, Lonking.
One common quality seen across these and many of the other companies highlighted by Bloomberg is their focus on the domestic populations of these popular emerging markets. As the economies of Brazil and China continue to grow and expand, the consumers from these nations have become increasingly popular targets for investors.
In the past, I have highlighted a variety of ETFs that are well designed to provide investors with access to the domestic populations of emerging markets. Using these funds, risk-tolerant investors may be able to prepare for the possibility of a Brazilian or Chinese Berkshire Hathaway acquisition down the road.
Products including Market Vectors Brazil Small Cap Index ETF and Guggenheim China Small Cap ETF are designed to share exposure to small-cap companies in Brazil and China respectively. As I've highlighted on a number of occasions, both of these funds are noticeably weighted toward consumer-focused industries. Additionally, given their small size, the companies comprising these indices likely do most of their business domestically. Therefore, their future performance will rely heavily on the strength of the nations' consumer classes.
Although Buffett's future acquisition plans ultimately remain uncertain, there is little doubt that, in the weeks and months ahead, this will be a hotly discussed topic. In the event that the Oracle of Omaha turns his attention to the emerging markets, funds such as BRF and HAO may be the products that end up receiving the strongest Buffett-inspired boosts.
Buffett's company has more than $38-billion ready to be invested. In his letter to shareholders issued in late February, Buffett likened this pile of cash to a loaded elephant gun ready to be fired.
Aside from his future acquisition plans, however, another hotly discussed topic among Buffett fans is the controversial resignation of David Sokol. As more information becomes available in the weeks and months ahead, this topic will be sure to generate interest and debate from market commentators and Berkshire Hathaway followers.