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Reuben Gregg Brewer, The Motley Fool
Sat, June 13, 2026 astatine 7:35 AM CDT 4 min read
Greg Abel replaced Warren Buffett arsenic CEO of Berkshire Hathaway (NYSE: BRKA)(NYSE: BRKB) astatine the commencement of 2026. Wall Street was waiting for him to marque his archetypal large move, which helium did connected May 31, erstwhile it was announced that Berkshire Hathaway was buying homebuilder Taylor Morrison Home (NYSE: TMHC) for $6.8 billion. What should investors work into this move? Perhaps not arsenic overmuch arsenic immoderate believe.
Wall Street is ever looking for clues
When Warren Buffett was moving the amusement astatine Berkshire Hathaway, investors were ever trying to decipher his actions and words. The thought being that figuring retired wherefore Buffett was doing thing would pb to different concern opportunities. Wall Street has continued down that aforesaid way with Buffett's successor, Greg Abel, with immoderate arguing that the acquisition of Taylor Morrison is simply a awesome that a lodging rebound is successful the cards.
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Buffett was not a large capitalist due to the fact that helium could clip the marketplace oregon accurately prime the inflection constituent for idiosyncratic sectors. He was a large capitalist due to the fact that helium could spot the semipermanent worth successful businesses and clasp them to payment from their maturation implicit time. Yes, helium had a worth bias, preferring to bargain erstwhile businesses were connected sale. But helium wasn't trying to clip anything; helium was simply attempting to bargain bully companies erstwhile they were attractively priced.
Greg Abel has worked with Buffett for decades, and it is highly improbable that his determination to bargain Taylor Morrison is driven by the anticipation that the homebuilder assemblage volition abruptly instrumentality off. In fact, fixed Taylor Morrison's valuation, a bully terms was apt the main draw. At the existent banal price, which is hovering adjacent Berkshire Hathaway's connection price, the stock's price-to-sales ratio is astir 0.9x.
Other large homebuilders are notably much expensive. For example, D.R. Horton (NYSE: DHI) has a P/S ratio of 1.3x. PulteGroup's (NYSE: PHM) P/S ratio is 1.4x. And Toll Brothers' (NYSE: TOL) P/S ratio is astir 1.3x. Lennar (NYSE: LEN), however, has a P/S ratio of 0.7x, which suggests that it is inactive attractively priced comparative to different large homebuilders.
Berkshire Hathaway isn't hiding its logic
What is astir absorbing present is that Abel was precise upfront astir his imaginativeness for Taylor Morrison. In the quality merchandise announcing the deal, helium stated: "Over time, we expect to unify our site-built homebuilding operations into a combined level enabling america to present the imagination of homeownership to much Americans." In different words, this is 1 portion of a larger portfolio that volition make worth implicit clip arsenic Berkshire Hathaway's lodging operations are integrated into a single, much cohesive business, alternatively than operating each concern individually.
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