Quick Read – Abel paid $8.5 billion for TMHC at 8x EBITDA, a downturn multiple on a homebuilder BRK-B acquired while it was already trading below book value. – A structural 4 million home shortage underpins the bull case, and Berkshire’s $400 billion cash reserve makes this $8.5…
llion acquisition barely register on the balance sheet. – The analyst who called NVIDIA in 2010 just named his top 10 stocks and Berkshire Hathaway wasn’t one of them. Get them here FREE. $8.5 billion is what Berkshire Hathaway (NYSE:BRK-B) is paying for Taylor Morrison (NYSE:TMHC), a deal that lands as Greg Abel’s first major acquisition since taking over from Warren Buffett
And it lands at the precise moment when nobody, and we mean nobody, wants to own a homebuilder. The country is sitting on more than 500,000 unsold homes being held by builders, the most since the financial crisis era. Moreover, mortgage rates remain a problem.
Buyer traffic is soft. Taylor Morrison itself just reported a roughly 27% revenue decline year over year in its most recent quarter. Into that gloom walks Abel.