Greg Abel has been Berkshire Hathaway's CEO for only a few months. He just made it count.
Berkshire has officially taken over Taylor Morrison, a homebuilder, paying $8.5 billion entirely in cash. That is a lot of money, even for Berkshire. For context, Taylor Morrison posted about $1 billion in pre-tax profit and $8 billion in revenue in its most recent full year.
Abel said in a statement, "Berkshire is acquiring a best-in-class national homebuilder, led by an exceptional team and backed by a trusted reputation for customer experience." The deal is his first since taking the top job at the start of this year.
Warren Buffett, Berkshire's chairman and former CEO, is clearly impressed. He said Abel "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." That is high praise from the man who built Berkshire into a $1 trillion company.
Berkshire has a cash problem - the good kind. As of March 31, the company held $380 billion in cash. That pile had doubled in just two years. When you have that much money sitting around, you need to put it to work.
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Abel has been looking for smart places to deploy that cash. The Taylor Morrison deal is one piece of a bigger puzzle. In October, Berkshire agreed to pay nearly $10 billion to buy OxyChem from Occidental Petroleum. And the company has been quietly building a big stake in Alphabet, Google's parent company.
That Alphabet position is worth around $28 billion now. Berkshire bought $18.5 billion worth of Alphabet stock over the nine months ending March 31, then added another $10 billion in a private placement in June. So Abel is spreading the money around - chemicals, tech, and now housing.
The homebuilder acquisition makes sense with Berkshire's existing operations. The company already owns Clayton Properties Group, which builds site-built homes. Abel plans to combine Taylor Morrison's brands with that group. His thinking is that bringing these two together can help address the US housing affordability crisis, which is a real problem for a lot of families right now.
Berkshire's history in housing spans multiple ventures, from the real estate brokerage Berkshire Hathaway HomeServices to building-product suppliers like Clayton Homes, MiTek, and Acme Brick. Adding Taylor Morrison gives the conglomerate a stronger foothold in the site-built home market. According to the announcement, Berkshire plans to combine Taylor Morrison's residential labels - including Taylor Morrison Home Funding, Esplanade, and Yardly - with its existing site-built homebuilding unit, which consists of 15 regional and local builders collectively known as Clayton Properties Group. Sheryl Palmer, CEO of Taylor Morrison, echoed this sentiment, stating that the combined entity will achieve "transformative" scale and reach.
Clayton Properties Group, already part of Berkshire's portfolio, operates those 15 regional and local homebuilding companies across the U.S., offering a range of single-family homes. By merging these with Taylor Morrison's national footprint, Abel aims to create a more efficient and affordable homebuilding platform capable of serving a broader customer base.
For investors, the bigger story might be what Abel does next. He is putting new top executives to work on deals, including a new general counsel and a future finance chief.
The bottom line: Abel is showing he can move fast and think big. Berkshire's cash pile is still enormous even after this deal, so there will be more acquisitions coming. If you own Berkshire stock, you are watching a succession plan that is working. If you do not, you are seeing a master class in how to put idle cash to work without overpaying.
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