Breaking Down Buffett's Buy
Warren Buffett agreed to pay $4.5 billion to buy 60% of industrial conglomerate The Marmon Group. What did Buffett find attractive in Marmon and can you ride the billionaire's coattails?
Fast Money favorite Jon Najarian joins the panel for this conversation. Following is a synopsis of his main points.
Marmon is made up of over 125 companies, but investors can’t buy into it, explains Najarian. However, two sectors of the business are particularly attractive to me, and investors can “coat-tail it.” (In other words, can simulate Buffett’s play)
Marmon growth area: Transportation
Not only did Marmon build a state of the art railroad tank car production plant, explains Najarian, but they run a container leasing company in China.
Najarian’s Coat Tail Trades: FreightCar America (RAIL), The Greenbrier Companies (GBX), Trinity Industries (TRN), American Railcar Industries (ARII)
Marmon growth area: Water
Marmon is involved in water treatment, Najarian adds. They recently announced a joint venture with Hyflux, a big player in Asian residential and industrial water treatment.
Najarian’s Coat Tail Trades: Flowserve (FLS), Consolidated Water (CWCO), PowerShares Water Resources ETF (PHO),Powershares Global ETF Trust (PIO)
Jeff Macke says if you want to play Buffett’s acquisition, buy Berkshire Hathaway on any dip.
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Trader disclosure: On Dec. 26, 2007, the following stocks and commodities mentioned or intended to be mentioned on CNBC’s Fast Money were owned by the Fast Money traders; Macke Owns (YHOO), (ATVI), (DIS); Pete Najarian Owns (C), (MS), (N), (ANR); Pete Najarian Owns (HAL) Options, (MSFT) Options, (TGT) Options, (YHOO) Options; Finerman's Firm Owns (VLO), (WMT), (YHOO), (SUN), (GS), (PLCE), (SKS); Finerman's Firm Is Short (IJR), (MDY), (IWM), (SPY), (SPG), (TCO), (IYR); Finerman's Firm Is Short (LEH) And Owns (LEH) Puts; Finerman's Firm Owns (MBI) Puts; Finerman's Firm Owns (MSFT) Options; Finerman's Firm Owns Russell 2000 Puts; Finerman's Firm Owns S&P 500 Puts; Jon Najarian Owns (USB),(GBX), (RAIL), (TRN), (ARII), (CGW), (PHO), (PIO), (FLS), (CWCO)