Fast Money

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Fast Money

No.1 - What Will Warren Buffett Buy?

Nearly 30,000 pilgrims made the journey this weekend to the mecca of investing - Berkshire Hathaway's (BRK) annual meeting in Omaha, Nebraska. It's a yearly ritual after this meeting to play the game: What will Warren Buffett buy?

Buffett said the entire world is in play and elaborated with CNBC’s Liz Claman after the meeting. Here's an excerpt.

CLAMAN: Berkshire Hathaway is sitting on a pile of around $46 billion in cash to spend?

BUFFETT: It’s probably something like that, yeah.

CLAMAN: But with all of that money, you’d still sell some of that stock if a big enough deal came along where you needed to do that?

BUFFETT: We would sell some equities Berkshire owns if we needed to do so to finance a deal. We’re very reluctant to sell Berkshire stock itself.


Dylan Ratigan explains that he and the guys read Buffett’s investor letter then came up with criteria that they think Buffet wants in an acquisition target

The Top Three #1

The criteria…$40 - $60 billion market value, P/E of 17 or less, debt to equity less than 50%, 5-year earnings growth above 10% annually, and pre-tax profit of $75 million.

Using those specs, the guys can only come up with about 10 companies that would make the grade. They are.... (U.S. listed) Wellpoint (WLP), Lowe’s (LOW), Occidental Petroleum (OXY),Valero Energy (VLO) and AstraZeneca (AZN).  Also (foreign listed) Industrivarden – Sweden, Yara Int’l Asa – Norway, Boliden Ab – Sweden, Cosco Pac Ltd. – Hong Kong,
- Spain.

Eric Bolling likes Valero (VLO) but says it doesn’t have the dollar exposure that Buffet is looking for. Eric also likes National Grid (NGG) as an international utility.

Tim Strazzini says it’s hard to believe that AstraZeneca would ever go private. He thinks Wellpoint is the most likely candidate of the companies on this list to be acquired by Buffett.

Jeff Macke prefers Home Depot (HD) to Lowe’s although HD doesn’t meet the criteria.

Guy Adami prefers Unilever (UL) although it’s not on the list because of its PE ratio.

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Trader disclosure:
On May 7, 2007, the following stocks and commodities mentioned or intended to be mentioned on CNBC’s Fast Money were owned by the Fast Money traders:Strazzini Owns (SNDK), (TIN); Bolling Owns (SZE), (DIS), (NMX), (VE), Gold, Silver CNBC Is A Service Of NBC Universal And Dow Jones, Vivendi Owns 20% Of NBC Universal, The Parent Company Of CNBC