Finding the Once and Future Berkshire Hathaway Inc. (BRK.A)

Master of the niche

Markel is another niche insurance underwriter. Its name and ticker symbol have, too, been tossed in the mix as the “next Berkshire Hathaway Inc. (NYSE:BRK.A).”  The company does have a price-to-book that is in the realm of Graham’s magic number for the ratio — right now around 1.28. This is only a little higher than Berkshire Hathaway’s own price-to-book.  Its P/E is a tad high at 19, although lower than the industry average of 22.

Apollo Investment Corp. (NASDAQ:AINV): One small Buffett step?

Finally, I would like to pass on one of the long-shot candidates for the next Berkshire Hathaway Inc. (NYSE:BRK.A), Apollo Investment. This company seems to claw out of one hole, and then plunge into the next.  Apollo’s business model is different from White Mountain and Markel, and may be a little more like Buffett, who used the steady income of his insurance companies to diversify. It may also explain the lack of traction, because they are investing in an extremely risky investment environment.  But, Graham and Buffett care little about bad luck. What about the numbers?

The company’s price-to-book is low, 1.03. That’s still in the “little too low” area. Its P/E is also very low, about 10.

Statistically speaking there are always Berkshire Hathaway-like companies out there. Finding the next Berkshire Hathaway may seem a little like pulling a sword from a stone, especially in the wake of an epic stock market disaster, but sure as the sun rises in east Camelot, good companies will rise again and you will know them by their balance sheets. While indicators, like price-to-book, help identify contenders, the real unknown is how many of these companies have someone like Buffett at the helm to continually guide the company in notoriously choppy waters of security analysis.

The article Finding the Once and Future Berkshire Hathaway originally appeared on Fool.com and is written by Matt Swayne.

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