Abel goes his own way with new Berkshire investments, including billions for AI

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Buffett praises new CEO for ‘quick’ and ‘smooth’ acquisition

Warren Buffett tells CNBC’s Becky Quick that new Berkshire Hathaway CEO Greg Abel is “starting” first major deal, $6.8 billion acquisition Taylor Morrison Home PageA. residential builder and developer It has operations in 12 states.

On Monday’s “Squawk Box,” Becky quoted Buffett’s phone call the day before announcing the deal:

“Greg did it quicker, smoother than I could have done it, and I never had to talk to the CEO.

“He threw it.”

Becky noted that Buffett would move quickly when he wanted to make a deal, and “that’s basically what Greg took and did.”

Abel reportedly went to Arizona and spent about five hours with Taylor Morrison CEO Sheryl Palmer, but when he returned he didn’t think he had made a deal.

A few days later, Palmer called and said the price was fair and the board was ready to move forward.

Becky said Abel talked to Buffett and Berkshire chief executive Sue Decker but did not tell the rest of the board until the deal was completed.

“This is kind of the Berkshire way of trying to move quickly on these issues,” he added.

Appearing on Monday’s “Squawk on the Street” later that morning, Palmer said joining Berkshire was “a once-in-a-lifetime opportunity for the company, the brand and team members across the country.” (The full interview is available to CNBC Pro subscribers.)

He started talking to Abel “probably just a few weeks ago,” and his “pitching pitch” was that Berkshire “has a great collection of site builders, and they often build around first-time buyers… and if you think about the Berkshire eco-system and what they’ve been building for decades, I think what Greg saw was an opportunity to build a platform on a national scale.”

Berkshire housing and home improvement subsidiaries include: Clayton Houses, Shaw Industries, Johns ManvilleAnd benjamin moore.

One joint newsletter Abel echoed Palmer on the deal, saying, “Over time, we hope to consolidate our site-built home construction operations onto a unified platform, thereby offering the dream of homeownership to more Americans.”

Christopher Davis at Hudson Value Partners pointing Bloomberg The goal of combining operations is a “notable departure” from Berkshire’s long-standing practice of allowing subsidiaries to operate independently, but he thinks investors will “welcome this evolution in approach.”

CFRA Research analyst Cathy Seifert tells access point“Given Greg’s strength as an operator, it will be interesting to see whether he will combine these units to achieve greater scale and efficiency.”

Reuters reports UBS analyst John Lovallo has been telling clients that the combination of Taylor Morrison and Clayton would create one of the nation’s five largest homebuilders.

He calls the acquisition “a strong vote of confidence in the medium-to-long-term outlook for the homebuilding industry, which has a shortage of approximately 7 million homes.”

Abel makes a major contribution to Alphabet’s AI goals

And in what appears to be a vote of confidence in the future of artificial intelligence, Berkshire will invest $10 billion in Alphabet, helping to finance the company’s big spending.”world-class AI computing infrastructure to meet unprecedented customer demand.”

Google’s parent company is part of a larger plan to raise nearly $80 billion from stock sales. private settlement will sell 5 billion dollars Class A shares (GOOGL) Paying Berkshire $351.81 per capita and another $5 billion Class C shares (GOOG) $348.20 each.

Accordingly BloombergThe acquisition was the result of Goldman Sachs’ “secret weekend call” to Berkshire, which put together Alphabet’s massive stock offer, and Abel’s “swift approval” that offered “new assurance that Warren Buffett’s investment conglomerate remains the first port of call for companies in need of a big check or vote of confidence.”

When the deal was announced after Monday’s close, Berkshire’s GOOGL purchase price was 5.5% below the stock’s market value and GOOG was a 6.5% bargain.

Now the discounts have dropped to 4.5 percent and 4.8 percent.

Berkshire currently owns $21.3 billion worth of Alphabet’s Class A shares, making it the fifth-largest position in its equity portfolio.

This was apparently Berkshire’s decision to more than triple the stake to almost 58 million shares in the first quarter, up from the close to 18 million shares it purchased in the third quarter of last year.

Once the new shares are added, Alphabet will likely have the third- or fourth-largest holding in Berkshire’s long-held holdings. Coca Cola The stock is now worth about $32 billion.

Abel’s enthusiasm for Alphabet stands in marked contrast to Buffett’s greater reluctance to invest in technology.

He felt that he had no ability to predict which companies would be successful in the long run, and so heFully willing to sacrifice a large return in exchange for a certain return“In areas he understands better, especially dotcom bubble In the late 1990s.

So far, Buffett hasn’t said anything publicly about Berkshire’s investments in Alphabet.

In an interview with CNBC in 2017, Warren Buffett says Google should have known about the profit potential because GEICO was a major customer of the company.

Holdings as of March 31, 2026, as reported. Berkshire Hathaway’s 13F filing On May 15, 2026, except:

A complete list of holdings and current market values ​​is available on CNBC.com’s Berkshire Hathaway Portfolio Tracker.

Please send me any questions or comments about the newsletter at: alex.crippen@nbcuni.com. (We’re sorry, but we do not forward questions or comments to Buffett himself.)

Additionally, reading Buffett’s annual letters to shareholders is highly recommended. There are people gathered on Berkshire’s website here.

— Alex Crippen, Editor, Warren Buffett Watch