Since Greg Abel took over as CEO at Berkshire Hathaway (BRKA +0.44%)(BRKB +0.38%) at the beginning of the year, the company has made some notable moves in the post-Warren Buffett era. There's been a shake-up in its stock portfolio, but something that has flown under the radar is the full acquisition of its second company this year, Taylor Morrison Home, for $72.50 per share, or about $8.5 billion.
Berkshire is known for its stock portfolio, valued at $357 billion as of July 30, but it also owns companies outright. With Abel and Berkshire recently acquiring new operating businesses versus blockbuster stock purchases, it's worth taking a dive into the former.
What Berkshire now owns
The conglomerate now owns dozens of companies outright. Here are some of its notable major subsidiaries:
| Company Name | |
|---|---|
| Taylor Morrison | Homebuilding |
| Clayton Homes | Homebuilding |
| Benjamin Moore | Paints |
| Shaw Industries | Flooring |
| Johns Manville | Building products |
| GEICO | Insurance |
| General Re | Insurance |
| Alleghany | Insurance |
| BNSF Railway | Railroads |
| Berkshire Hathaway Energy (BHE) | Energy |
| Precision Castparts | Industrial |
| Lubrizol | Industrial |
| Marmon Holdings | Industrial |
| Dairy Queen | Restaurants |
| Duracell | Batteries |
| Fruit of the Loom | Clothing |
| See's Candies | Confections |
| Pilot Flying J | Truck stops |
Source: Berkshire Hathaway.
These give an idea of Berkshire's diversified portfolio. Insurance is its bread and butter, but it has its hands in enough businesses to capture cash flow across plenty of industries.
Image source: The Motley Fool.
What the Taylor Morrison acquisition means
Even before the Taylor Morrison acquisition, Berkshire owned a few companies involved in housing and building. Companies like Benjamin Moore, Shaw Industries, and Johns Manville focus on specific building materials and products, while Clayton Homes is a homebuilder company.
Taylor Morrison is now Berkshire's second homebuilder, and Abel was clear on why the move was made: "Over time, we expect to unify our site-built homebuilding operations into a combined platform enabling us to deliver the dream of homeownership to more Americans."
By owning homebuilders and product manufacturers, Berkshire has a suite of businesses that can get a piece of the pie during almost every stage of the homebuilding process.
With mortgage rates as high as they are -- around 6.8% and 6.3% for a 30-year and 15-year fixed, respectively, at the time of this writing -- homebuying isn't likely to experience a huge surge anytime soon. However, Berkshire has always been known for playing the long game.
We can't say exactly when another housebuilding boom will occur, but when the time comes, Berkshire will be well positioned to thrive during it.
