Berkshire Hathaway's new chief executive, Greg Abel, has signalled a potential shift in the conglomerate's strategy with a $10bn investment in Google's parent company, Alphabet, and a $6.8bn acquisition of homebuilder Taylor Morrison. The moves, announced within days of each other, suggest a more hands-on approach than that of his predecessor, Warren Buffett.
Abel's investment in Alphabet is part of a broader $80bn fundraising by the tech giant to fund computing infrastructure for its artificial intelligence offerings. Berkshire agreed to purchase $5bn of Class A and $5bn of Class C stock. This builds on a stake Berkshire began accumulating last year, which had tripled to nearly 58 million shares by the end of March.
In a departure from Buffett's long-standing practice of allowing acquired companies to operate autonomously, Abel plans to integrate Taylor Morrison with Berkshire's existing site-built homebuilding operations under Clayton Homes. 'Over time, we expect to unify our site-built homebuilding operations into a combined platform,' Abel stated. Berkshire also owns other housing-related businesses, including Benjamin Moore paint and Shaw Floors, suggesting further potential for consolidation.
Analysts view Abel 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.' Investor Steven Check added, 'Under Greg, where it makes sense for efficiencies or scale, we’ll likely see more consolidation.'
Buffett praised Abel's decisive action 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.' However, the Taylor Morrison deal may face competition from other buyers, according to Raymond James analyst Buck Horne, who noted that private equity firms could make higher offers before shareholders vote.
