7 Heinz-like Stocks for Buffett
Last week’s Heinz deal shows that Warren Buffett is shifting his targets to cope with a more volatile environment. Here are seven more companies that could fit the bill, writes MoneyShow's Jim Jubak, also of Jubak's Picks.
You and I aren’t Warren Buffett, and that means we aren’t going to get the kind of deals that Buffett gets.
Nobody is offering you or me preferred stock yielding 9% in a safe, consumer blue chip, like Buffett got as part of last week’s $23 billion ($28 billion if you include assumed debt) buyout of HJ Heinz (HNZ).
To get 9%, you have to be Warren Buffett, the Sage of Omaha, with a name that brings investment bankers flocking to finance any deal that includes you. (Part of Buffett’s profit from a deal like Heinz is, in essence, a fee for making the financing of a $28 billion deal easier for his other partners.)
But that doesn’t mean you and I have nothing to learn from a deal like this. In fact, I think this one is particularly educational. The Heinz buyout is further confirmation—in case you needed more after looking at Buffett’s other recent moves, like his buyout of railroad Burlington Northern—that Buffett believes in what Pimco bond guru Bill Gross has called “the new normal market” and what I’ve called “the paranormal market.”
The Heinz deal makes the most sense if you see the next decade offering relatively modest returns and a continuation of the high volatility of recent markets.