2 Industry-Leading Companies Warren Buffett Should Strongly Consider Acquiring With Berkshire Hathaway's $334 Billion War Chest

Few Wall Street money managers have the ability to command the attention of professional and everyday investors quite like the aptly dubbed "Oracle of Omaha," Warren Buffett. Since Buffett took over as CEO of Berkshire Hathaway (NYSE: BRK.A)(NYSE: BRK.B) in the mid-1960s, he's overseen a cumulative return in his company's Class A shares (BRK.A) of 6,441,524%, as of the closing bell on April 24. Suffice to say he's lapped the broad-based S&P 500 many times over.

Buffett's undeniable success has earned him a huge following. Investors regularly look toward Berkshire's quarterly filed Form 13Fs and Form 4s to determine which stocks he's been buying and selling. Mirroring Buffett's investing activity has been a path to success for decades.

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Berkshire Hathaway CEO Warren Buffett. Image source: The Motley Fool.

But over the past two and a half years, there's been far more selling than buying from Buffett and his top advisors. Berkshire Hathaway's brightest investment minds have been net sellers of stocks for nine consecutive quarters (Oct. 1, 2022–Dec. 31, 2024) to the tune of almost $173 billion. Selling plenty of stock has raised a lot of capital and swelled Berkshire's treasure chest (which includes cash, cash equivalents, and U.S. Treasuries), to a record $334.2 billion, as of Dec. 31. This is enough cash to buy all but 21 of the 499 other companies that are in the S&P 500.

Buffett is an unwavering optimist who believes in the long-term growth of the U.S. economy and America's stock market. But he's also an unabashed value investor who won't reach for great companies when their valuation doesn't make sense. With the stock market entering 2025 at its third-priciest valuation during a continuous bull market, when back-tested 154 years, Buffett has had every reason to sit on his hands and wait for price dislocations to present themselves.

Following historic bouts of volatility for Wall Street's major indexes in recent weeks, some intriguing values have begun to emerge. With over $334 billion in cash at his disposal, the following two stocks would make for compelling acquisition targets, if the price is right.

Sirius XM Holdings

The first stock Buffett could acquire with relative ease is satellite-radio operator Sirius XM Holdings (NASDAQ: SIRI). Sirius XM's market cap is only $7.2 billion -- which makes one wonder if a buyout would do enough to move the needle for Berkshire Hathaway -- but Buffett's company already holds a whopping 35.4% of its outstanding shares.

What makes Sirius XM intriguing is its legal monopoly status. Though there are numerous terrestrial and online radio companies competing for listeners alongside Sirius XM, no company other than Sirius XM has been given a satellite-radio license. Ideally, this affords the company a good amount of subscription pricing power.

Another reason for Buffett to fancy Sirius XM is its revenue breakdown. Whereas most terrestrial and online radio providers are dependent on advertising, Sirius XM generated only 20% of its net sales from ads last year. More than three-quarters of Sirius XM's net revenue comes from recurring self-pay subscriptions. These tend to be highly predictable in virtually any economic climate.

Berkshire's chief is also known for packing his company's portfolio and owned assets with cyclical businesses that can take advantage of disproportionately long periods of economic growth. Even though Sirius XM's subscription-driven model shields it from the full brunt of recessions, the company's growing ad presence via Pandora can benefit from lengthy expansions in the U.S. economy.

The price is, arguably, right with Sirius XM, as well. Shares of the company can be picked up for 7 times forecast earnings in 2026, which is just a hair above the lowest forward price-to-earnings (P/E) ratio in Sirius XM's 31-year history as a publicly traded company.

Image source: Getty Images.

PayPal Holdings

If Buffett wanted to make a needle-moving splash with Berkshire Hathaway's more than $334 billion war chest, acquiring fintech colossus PayPal Holdings (NASDAQ: PYPL) would definitely get the point across. PayPal is a stock Berkshire Hathaway doesn't currently have a stake in.

It's no secret that the financial sector is the Oracle of Omaha's favorite. Despite paring down Berkshire's exposure to financial stocks in recent quarters, it's historically been his go-to sector for bargains, and to take advantage of the nonlinearity of economic cycles. PayPal definitely fits the bill of a company that can benefit from a growing economy and a larger digital-payment footprint.

Although PayPal doesn't have a fortified moat quite like Sirius XM, its key performance indicators suggest it's having no trouble encouraging its active accounts to become more engaged with each passing year. Between Dec. 31, 2020, and the end of 2024, the average number of payment transactions per active account over the trailing-12-month period soared from 40.9 to 60.6. Increasing engagement among active accounts is PayPal's bread-and-butter to better gross margins.

CEO Alex Chriss, who took over in late September 2023, also has a keen eye for what small businesses want in a digital payment solutions company. Before becoming PayPal's CEO, he served as executive vice president and general manager for Intuit's Small Business segment. Chriss is perfectly blending the right amount of spending on innovation with efficiency-based cost-cutting and share repurchases to enhance shareholder value.

We appear to be in the very early innings of a sustained double-digit annual growth opportunity for PayPal in the digital payments arena. With shares of the company valued at less than 12 times forward-year earnings, and PayPal sporting a current market cap of $63.3 billion, one more solid dip in the company's share price could provide the price dislocation for an industry leader that Buffett is waiting for.

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Sean Williams has positions in PayPal and Sirius XM. The Motley Fool has positions in and recommends Berkshire Hathaway, Intuit, and PayPal. The Motley Fool recommends the following options: long January 2027 $42.50 calls on PayPal and short June 2025 $77.50 calls on PayPal. The Motley Fool has a disclosure policy.