Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.
What: Shares of performance coatings and paint company Axalta Coating Systems Ltd (NYSE:AXTA) jumped 10% on Tuesday after it announced that Warren Buffett's Berkshire Hathaway (NYSE:BRK-A)(NYSE:BRK-B) is buying a stake in the company.
So what: Berkshire Hathaway is buying 20 million shares of Axalta's common stock from The Carlyle Group for $560 million, or $28 per share. This is half of the 40 million shares Carlyle said it was intending to sell, and could be a higher price than the company could get by unloading the shares on the open market.
Now what: This is the latest deal Buffett has made with a private equity firm after assisting or partnering 3G Capital with buyouts of Heinz, Kraft Foods, Tim Hortons, and Burger King. It's also a stake in a company still controlled by Carlyle, which owned 74.1% of the company before this deal.
Buying today after the pop probably isn't the best move, because traders who bought today were buying the Buffett headline. But if you have a bullish thesis on the stock, this could bolster that thesis now that one of the world's best investors is in your corner. In any case, Buffett is expanding his paint empire and is moving to align himself more and more with successful private equity firms, two interesting trends for the market.