Berkshire Hathaway’s $8.5 billion purchase of homebuilder Taylor Morrison signals Greg Abel’s capital-allocation strategy post-Buffett.
Berkshire Hathaway agreed to acquire homebuilder Taylor Morrison for $8.5 billion, marking CEO Greg Abel’s first major deal since succeeding Warren Buffett. The purchase aligns with Berkshire’s existing housing-related businesses, including Clayton Homes and Shaw Industries, but raises questions about Abel’s long-term strategy for capital deployment.
Berkshire’s stock has underperformed the S&P 500 since Buffett’s departure announcement, falling 13% while the index gained 33%. Since Abel took over, Berkshire is down 5%, compared to an 11% rise in the S&P 500. Analysts estimate Berkshire holds $80 billion to $100 billion in dry powder for acquisitions or buybacks.
The deal reflects Abel’s preference for familiar sectors but leaves investors watching whether Berkshire will integrate its holdings or continue standalone investments.