Berkshire buys a homebuilder at a huge premium — ride the takeover wave across homebuilder stocks
Berkshire Hathaway, Warren Buffett's company, just announced it's buying home builder Taylor Morrison for $72.50 per share in cash — a 24% premium above Friday's closing price. It's the first big deal under new CEO Greg Abel.
Idea
When a major acquirer like Berkshire pays a big premium for a homebuilder, it signals that the sector is undervalued and could attract more takeover bids. Taylor Morrison's peers — D.R. Horton, Lennar, Meritage Homes — may rally as investors re-rate the whole group. Meanwhile, Taylor Morrison itself will likely still trade a bit below the $72.50 deal price because there's always a chance the deal falls through — that gap is essentially free money if the deal closes. Greg Abel choosing housing as his first major purchase tells the market Berkshire sees real value in homebuilders right now.