Berkshire Hathaway is famous for its value orientation. So why is it betting on Bending Spoons, a quirky and richly priced technology conglomerate? This past week, Berkshire added $330 million in stock on top of the $600 million investment it made in Bending Spoons' initial public offering in July.
Bending Spoons, based in Milan, has assembled a group of technology castoffs, such as AOL and Brightcove. Its unusual name, a nod to psychic powers, comes from the sci-fi classic The Matrix. Its stock is anything but cheap, trading for about 10 times forward sales and more than 30 times estimated 2027 earnings, well above the S&P 500's valuation.
So what has attracted Berkshire, the Warren Buffett creation, to Bending Spoons? A new direction under newish CEO Greg Abel? Berkshire won't say. Berkshire has made tech investments, notably Apple, but it generally won't pay a premium price.
Henry Ellenbogen, founder of Durable Capital Partners, spelled out some of the company's charms at the Barron's July Midyear Roundtable: "We believe Bending Spoons' revenue and Ebitda per employee will continue to compound, allowing the company to drive better organic growth and strong operating leverage."
So far, the move is a big win for both Berkshire and Bending Spoons. The latter's stock jumped 45% in the past week and Berkshire has a paper profit of about $800 million so far.
Write to Andrew Bary at andrew.bary@barrons.com
Last Week
Nasdaq Jitters
Terrible times for the tech-heavy exchange. It was down 4.5% for the week on a variety of fears, ranging from whether AI investments will pay off in the long run to laggard cloud-computing stocks like CoreWeave. Look out below!
Will They? Won't They?
With inflation up 3.7%, the possibility of the Federal Reserve hiking interest rates again has reared its ugly head. But would the Fed raise rates so close to an election? CME Group's Mark Shore says probably not. Historically, from Oct. 1 to Election Day, the Fed didn't act 67% percent of the time. And when it did, it cut rates 67% of the time. Don't touch that dial.
Dimon Says
A busy period of punditry for JPMorgan Chase chief Jamie Dimon. He wrote a Wall Street Journal op-ed called "A Plan for the Western World's Revival." Then, in an earnings report, he opined about the "solid economy" but warned that "large fiscal deficits, sticky inflation, elevated asset prices, rising interest rates and geopolitical conditions continue to shift under the surface." Has he replaced Warren Buffett as a must-read?
Harvard Under Siege
Well, not so fast. The Boston Globe says Harvard's endowment reached "a new peak" at $68 billion this fiscal year, up 20% from 2025. The return: 27%. And amid President Donald Trump's attacks, Harvard also hauled in $1.5 billion from donors. Take that, Ken Griffin.
Next Week
Tuesday 10/20
Roughly 70 S&P 500 index companies report results as we enter?the heart of earnings season.
GE Aerospace, General Motors, and Netflix release third-quarter results Tuesday, followed by AT&T, Abbott Laboratories, Lam Research, Meta Platforms, Tesla, and Texas Instruments on Wednesday. Comcast, Lockheed Martin, Procter & Gamble, and Western Digital announce their earnings Thursday, while American Express and SLB close out the week on Friday.
The Census Bureau reports new residential construction data for September. Consensus estimate is for a seasonally adjusted annual rate of 1.3 million privately owned housing starts, slightly more than in August.
The National Association of Realtors reports pending home sales for September. Pending home sales are expected to be flat month over month after a 0.3% rise in August.
Friday 10/23
S&P Global releases both its Manufacturing and Services Purchasing Managers' Indexes for October. Consensus estimates are for a reading of 55.5 for the Manufacturing PMI and 57.9 for the Services PMI. This compares to readings of 55.9 and 58.8, respectively, in September.
The Numbers
$5 T
Apple's market value, reached this past week; Nvidia is the only other company to hit that level.
12%
Gain in BJ's Wholesale Club stock since January, outpacing bigger rivals Walmart and Costco.
7.5%
Fannie Mae's prediction for 30-year mortgage rates through 2027, up from 6.1% at the start of this year.
$222 B
Private-equity fund-raising this year through Sept. 30, on pace for its worst year since at least 2020.
Write to editors@barrons.com
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