Berkshire Hathaway's new chief executive, Greg Abel, has signalled a potential shift in the conglomerate's strategy with a week of major deals, including a $6.8 billion acquisition of homebuilder Taylor Morrison and a $10 billion investment in Google's parent company Alphabet.
The Taylor Morrison deal, announced on Sunday, marks Abel's first major acquisition since taking over from Warren Buffett in January. Abel plans to integrate Taylor Morrison with Berkshire's existing site-built homebuilding operations under Clayton Homes, a departure from Buffett's hands-off approach. 'Over time, we expect to unify our site-built homebuilding operations into a combined platform,' Abel said, 'enabling us to deliver the dream of homeownership to more Americans.'
On Monday, Berkshire revealed it had purchased $5 billion of Alphabet's Class A common stock and $5 billion of Class C stock, part of Alphabet's plan to raise $80 billion for artificial intelligence infrastructure. This follows a stake Berkshire began building last year, which had tripled to nearly 58 million shares by the end of March.
Abel, who has overseen Berkshire's non-insurance businesses since 2018, is seen as a more active manager than Buffett. CFRA Research analyst Cathy Seifert noted, 'Given Greg's strength as an operator it will be interesting to see if he does consolidate these units to get some greater scale and efficiencies.'
Buffett praised Abel's deal-making in a CNBC interview, saying, 'Greg did that faster than I could have done it, smoother than I could have done it, and I never talked to the CEO. He has launched.' The Taylor Morrison deal offers $72.50 per share, a 24% premium over its last closing price, though analysts warn of potential competition from private equity.
