Berkshire Hathaway Has Piled $930 Million Into This Stock Since Its IPO. Should Investors Follow?
Warren Buffett once said in an interview that he doesn’t think Berkshire Hathaway (NYSE: BRKA) (NYSE: BRKB) has ever participated in an initial public offering (IPO). There are too many incentives on the sell side for it to make sense to buy an IPO, he argued.
Greg Abel may have just found the exception that proves the rule. The new Berkshire CEO invested $600 million in the Bending Spoons (NASDAQ: BSP) IPO in July, when the company raised $1.68 billion at a valuation of around $18 billion. He recently added another $330 million to the investment in a private placement, giving Berkshire a 4% stake in the Milan-based tech company.
It’s unclear whether Abel or Ted Weschler (who manages about 6% of Berkshire’s equity portfolio) is responsible for the purchases. While it goes against Buffett’s thoughts on IPO stocks, the investment is rooted in the fundamentals that drove Buffett’s success for over 60 years in charge of Berkshire.
Source: www.fool.com — article syndicated from the publisher’s feed; all rights remain with the original publisher.