Abel goes his own way with new Berkshire investments, including billions for AI
In this article BRK.B TMHC GOOGL GOOG BRK.B Follow your favorite stocks CREATE FREE ACCOUNT (This is the Warren Buffett Watch newsletter, news and analysis
In this article BRK.B TMHC GOOGL GOOG BRK.B Follow your favorite stocks CREATE FREE ACCOUNT (This is the Warren Buffett Watch newsletter, news and analysis on all things Warren Buffett and Berkshire Hathaway. You can sign up here to receive it every Friday evening in your inbox.) ABEL GOES HIS OWN WAY WITH NEW INVESTMENTS IN HOME BUILDING... AND AI Buffett praises new CEO for 'fast' and 'smooth' acquisition Warren Buffett tells CNBC's Becky Quick new Berkshire Hathaway CEO Greg Abel has "launched" with his first major deal, the $6.8 billion acquisition of Taylor Morrison Home, a residential homebuilder and developer with operations in 12 states. On Monday's "Squawk Box," Becky quoted Buffett from a phone conversation the day before when the deal was announced: "Greg did this faster than I could have done it, smoother than I could have done it, and I never talked to the CEO. "He has launched." watch now Becky noted that when Buffett wanted to do a deal, he would move quickly, and "this is basically what Greg has picked up and done, too." She reports Abel went to Arizona and spent around five hours with Taylor Morrison CEO Sheryl Palmer, but when he came back, he did not think he had a deal. Then, a few days later, Palmer called to say the price was fair and her board was ready to proceed.
Becky says Abel spoke with Buffett and Berkshire lead director Sue Decker but didn't tell the rest of the board until after the deal had been completed. "That's kind of the Berkshire way, to try and move quickly on these things," she added. watch now A home under construction stands behind a "sold" sign in a new development in York County, South Carolina, U.S., February 29, 2020. Lucas Jackson | Reuters Zoom In Icon Arrows pointing outwards Berkshire already owns $21.3 billion of Alphabet's Class A shares, making it the fifth largest position in its equity portfolio. It was apparently Abel's decision to more than triple the stake in the first quarter to almost 58 million shares from the close to 18 million shares Berkshire purchased in last year's third quarter. Zoom In Icon Arrows pointing outwards When the new shares are added, Alphabet will probably become Berkshire's third or fourth biggest stock holding, rivaling its long-held Coca-Cola stake, which is currently worth almost $32 billion. Abel's enthusiasm for Alphabet is a marked contrast to Buffett's great reluctance to invest in tech. He felt he didn't have the ability to predict which companies would prosper in the long term, so he was "perfectly willing to trade away a big payoff for a certain payoff" in areas he better understood, especially during what turned out to be a dot-com bubble in the late 1990s.
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