Months after taking over from Warren Buffett, Greg Abel has made it clear he intends to tap into Berkshire Hathaway’s savings. In just a few days, Berkshire committed nearly $17 billion in two major deals, agreeing to buy homebuilder Taylor Morrison Home for $6.8 billion excluding debt and investing $10 billion in Alphabet through a discounted private placement tied to Google’s parent company’s massive artificial intelligence fundraising efforts. “In absolute terms, this number is paltry compared to Berkshire’s vast reserves, but Mr. Abel appears to be taking a more aggressive approach to cleaning up his balance sheet than his predecessor, which has been one of the main hits to the stock,” said Vital Knowledge founder Adam Crisafulli. While Berkshire has long been criticized for being too cautious and struggling to find opportunities large enough to pivot, the flurry of deals provides one of the clearest signs yet that Abel is ready to put Berkshire’s massive balance sheet to work. The conglomerate had a record cash pile of nearly $400 billion at the end of March. “Greg has demonstrated a willingness to move quickly on both deals and is comfortable investing in technology,” said David Kass, a University of Maryland finance professor and Berkshire shareholder. BRK.A 1Y Mountain Berkshire Hathaway Class A Shares 1 Year The investment in Alphabet may be particularly noteworthy because it signals Berkshire’s willingness to pursue technology opportunities on a scale that it has so far avoided. Buffett, who has avoided most technology stocks for decades, often described Berkshire’s highly successful investment in Apple as a bet on consumer products rather than a bet on technology. Mr. Abel’s $10 billion investment in Alphabet also reflects characteristics of Mr. Buffett’s trading style. Berkshire received a 6.5% discount to the market price as part of the private placement, allowing it to take a significant position on favorable terms. “Google’s discount is reminiscent of Berkshire’s investments in companies like Goldman Sachs in 2008,” Kass said. These two trades span very different parts of the economy. The Taylor Morrison acquisition expands Berkshire’s housing business, which already includes home builder Clayton Homes, as well as a building products company and a residential real estate brokerage. Meanwhile, the Alphabet investment increases Berkshire’s exposure to high-tech space and growing demand for AI computing infrastructure. Mr. Abel has already earned praise from Mr. Buffett. After Berkshire agreed to buy Taylor Morrison, Buffett said, “Greg did it faster than I could have done it, smoother than I could have done it. …He hit the ground running.”
