I think there are a few ASX shares that Warren Buffett would want to have in his portfolio if he focused on Australia.
Warren Buffett has been one of the best investors in the world over the past five or six decades. He may not love many technology shares, but there are plenty of great industrial businesses that I think he'd like, such as these two:
APA Group (ASX: APA)
It owns a vast network of 15,000km of natural gas pipelines around Australia with a presence in every mainland state and the Northern Territory. It also owns or has interests in gas storage facilities, gas-fired power stations and renewable energy generation (wind and solar farms). APA owns, or manages and operates, a portfolio of assets and delivers half the nation's natural gas usage.
I think Warren Buffett would like APA because it's somewhat of a combination of Berkshire Hathaway Energy and Berkshire's railroad divisions.
He likes businesses that most people need for everyday life. Gas is obviously a resource in high demand. The federal government is looking to gas to help provide power for the country's recovery.
FY20 was a solid result with earnings before interest, tax, depreciation and amortisation (EBITDA) up by 5.1%, operating cashflow up 8.3% and net profit after tax (NPAT) up 10.1%.
The energy infrastructure ASX share continues to invest in new projects which can make more cashflow for APA. It has grown its distribution each year for the past decade and a half. At the current APA share price it offers a trailing partially franked yield of 4.6%.
Brickworks Limited (ASX: BKW)
It's a building products business. One of Berkshire Hathaway's larger divisions is Clayton Homes, so I think that shows Warren Buffett is interested in businesses related to the housing sector as a whole.
Brickworks is the biggest brick provider in Australia. It also sells other building products like precast, roofing, masonry and paving. It's one of the most efficient building products businesses in the country. It strategically picks its time when to do plant shutdowns that require work and, every so often, it builds a top-quality new manufacturing plant.
Excess old land owned by the ASX share can be sold into its property trust which it owns equally with Goodman Group (ASX: GMG). This is a great strategy because it allows Brickworks to recognise the value of its land and then benefit from the long-term returns of industrial properties.
Two huge distribution centres are being built for Amazon and Coles Group Limited (ASX: COL) in Sydney. Once these are completed it will materially push up the net asset value (NAV) of the trust and increase net rental income. That will be good for the underlying value of Brickworks shares as well as its earnings and cashflow.
Brickworks also owns around 40% of ASX share Washington H. Soul Pattinson and Co. Ltd (ASX: SOL) which I think is the business that may be the closest thing the ASX has to Berkshire Hathaway because it owns both listed ASX shares and unlisted businesses.
The cross-holding between the two businesses has been there for decades and it has successfully kept corporate raiders away. For Brickworks, the Soul Patts shares help smooth earnings and cashflow during the difficult construction years (such as 2020).
The investment income from Brickworks' property trust and the Soul Patts shares are enough to fund the Brickworks dividend to investors. Brickworks' dividend has been maintained or grown every year for 40 years.
At the current Brickworks share price it has a grossed-up dividend yield of 4.5%.
