A few months after taking over from Warren Buffett , Greg Abel is making it clear he intends to put Berkshire Hathaway ‘s cash hoard to work. In the span of just a few days, Berkshire committed nearly $17 billion across two major transactions, agreeing to acquire homebuilder Taylor Morrison Home for $6.8 billion, excluding debt, and investing $10 billion in Alphabet through a discounted private placement tied to the Google parent’s massive artificial intelligence fundraising effort. “On an absolute basis the figures are paltry compared to Berkshire’s massive cash hoard, but it does seem Abel is working more aggressively than his predecessor to deploy the firm’s balance sheet, which has been one of the main knocks against the stock,” said Adam Crisafulli, founder of Vital Knowledge. The back-to-back deals offer one of the clearest signals yet that Abel is prepared to put Berkshire’s enormous balance sheet to work after years of criticism that the company had become too cautious and was struggling to find opportunities large enough to move the needle. The conglomerate held a record cash pile of nearly $400 billion at the end of March. “Greg is demonstrating his willingness to move quickly in both transactions and is comfortable with investing in technology,” said David Kass, a finance professor at the University of Maryland and Berkshire shareholder. BRK.A 1Y mountain Berkshire Hathaway Class A shares 1 year The Alphabet investment may be particularly noteworthy because it points to a willingness to pursue technology opportunities on a scale Berkshire has historically avoided. Buffett spent decades steering clear of most technology stocks, and he often described Berkshire’s hugely successful investment in Apple as a consumer products bet rather than a technology wager. Abel’s $10 billion investment in Alphabet also echoes a hallmark of Buffett’s deal-making style. Berkshire received a 6.5% discount to the market price as part of the private placement, allowing it to build a sizable position on favorable terms. “The Google discount is reminiscent of Berkshire’s investments in 2008 in Goldman Sachs and other companies,” Kass said. The two transactions span very different parts of the economy. The Taylor Morrison acquisition expands Berkshire’s housing-related businesses, which already include homebuilder Clayton Homes as well as building product companies and a residential real estate brokerage. The Alphabet investment, meanwhile, increases Berkshire’s exposure to the tech sector and the growing demand for AI computing infrastructure. Abel has already earned praise from Buffett. After Berkshire’s agreement to buy Taylor Morrison, Buffett said: “Greg did that faster than I could have done it, smoother than I could have done it. … He has launched.”
Greg Abel channels Buffett’s dealmaking style in $17 billion spree
You May Also Like
More From Author
Markets in ‘greed’ mode as AI firms ready IPOs
