I’m a big fan of Berkshire Hathaway (NYSE:BRK-A, BRK-B) and Warren Buffett. As a result, I’ve become a big fan of holding company stocks.
While they’re not very popular with most investors, I’m always looking for Berkshire Hathaway alternatives that have lots of moving parts. I love that. The harder to evaluate the better.
I’ve always viewed Berkshire Hathaway as a sports team in that it’s got lots of different pieces delivering an above-average overall performance. Sometimes one or two of these pieces help keep it moving in the right direction. Like sports teams, no business is moving 100% forward. There are always weaknesses. Diversification helps avoid too many potholes.
With that in mind, I’m looking for holding company stocks of all sizes — I’m not talking about bank holding companies — that use diversification to their advantage.
Here are my three choices with one large, medium and small holding company stock.
Exor (EXXRF)
Ferarri car on the streets of France.
Source: Hadrian / Shutterstock
Exor (OTCMKTS:EXXRF) is the largest of the three holding companies with a market cap of 20.86 billion euros ($22.55 billion). It is the holding company of the Agnelli family, the co-founders of Fabbrica Italiana Automobili Torino, better known as Fiat.
Although the Agnelli’s were growing Fiat and acquiring other company’s long before Exor, it took the creation of IFI International (IFINT) in 1964 to hold its non-Italian businesses for the family’s ambitions outside Italy to take hold.
In 1991, IFINT acquired Exor SA, a French holding company, and merged it with IFINT in 1993, to form Exor Group. In the 21st century, the family took its five holding companies and merged them into one — Exor. The Agnelli family owns 52.6% of its shares.
Exor owns significant ownership positions in many public companies including Ferrari (NYSE:RACE), where it owns 22.9% of the shares and 36.5% of the voting rights, and Stellantis (NYSE:STLA), where it has 14.2% of the shares and 23.2% of the voting rights. Exor also owns several private businesses such as The Economist (34.7% of the shares and 20.0% of the voting rights) and Christian Louboutin (24.0% of the shares and voting rights).
Most importantly, its net asset value per share has a compound annual growth rate between 2009 and 2023 of 18.6%, 730 basis points higher than the MSCI World Index.
Loews (L)
The word Loews is seen at the top of Loews Hollywood Hotel.
Source: Hayk_Shalunts / Shutterstock.com
Loews (NYSE:L) is the second-largest holding company with a market cap of $17.58 billion. The company has come back from a long losing streak in the past year with its shares gaining over 27%.
Not to be confused with Lowe’s (NYSE:LOW), the home improvement retailer, Loews’ history unofficially dates back to 1946 when Laurence Tisch convinced his parents to buy a New Jersey hotel for $125,000. Ten years later, the Tisch’s built their first Florida hotel. It remains in the hotel business to this day.
The current version of Loews has four operating segments: 92% of CNA Financial (NYSE:CNA), wholly-owned subsidiaries Boardwalk Pipeline and Loews Hotels, and 53% of privately held Altium Packaging. In addition, it has $3.1 billion in cash and investments on its balance sheet along with $1.8 billion in debt.
Its capital allocation is simple. It does three things: Repurchases its shares, invests in the businesses mentioned above and looks for new platform investments to grow beyond the four current businesses.
Its largest equity investment in the company’s Q2 2024 13F, excluding CNA, is Hanesbrands (NYSE:HBI). Loews owns 29.2 million shares, or 8.3% of the total.
Boston Omaha (BOC)
an empty billboard on a highway
Source: Shutterstock
Boston Omaha (NYSE:BOC) is the smallest of three holding companies with a $466.2 million market cap.
I chose BOC because it’s based in Omaha like Berkshire Hathaway. It is named after the two founders’ two hometowns. And one of the founders, Alex B. Rozek, is the grandson of Warren Buffett’s sister, Doris.
It has four operating segments: insurance, billboards, broadbank, and asset management. Together they generated revenue of $25.6 million in Q1 2024, up 12.3% from a year earlier.
Its EBITDA in the trailing 12 months ended March 31 was $19 million on $99 million in revenue. That was good for a 19.2% EBITDA margin.
Rozek left Boston Omaha to pursue other opportunities in May with co-CEO Adam Peterson fully assuming the position’s responsibilities. While their partnership was a good one, sharing the CEO job results in additional expenses and potential conflicts. This can hurt shareholder value.
As Peterson states in the 2023 shareholder letter, BOC shares had a CAGR of 14% from early in 2015 to the end of 2022. At the end of 2023, it was down to 5.5%. Also down year-to-date, the stock is lower than at the end of 2023.
Its combination of operating businesses and minority investments make it an interesting speculative bet for aggressive investors.
On the date of publication, Will Ashworth did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
On the date of publication, the responsible editor did not have (either directly or indirectly) any positions in the securities mentioned in this article
Will Ashworth has written about investments full-time since 2008. Publications where he’s appeared include InvestorPlace, The Motley Fool Canada, Investopedia, Kiplinger, and several others in both the U.S. and Canada. He particularly enjoys creating model portfolios that stand the test of time. He lives in Halifax, Nova Scotia.
