Oliver Barnes

Home building is very linked to demand for homes, which itself is linked to interest rates and mortgage rates.

And now with the rise of inflation again in the US, it's possible that the anticipation for interest rates to come down, that may not happen anymore, right?

So there are risks and there are forks in the road.

But the idea here for Berkshire is buying more exposure to a sector that they like.

Well, Greg Abel, in his time at Berkshire, was a dealmaker, right?

He did do M&A.

And broadly speaking, in the final years of Buffett's tenure as CEO, Berkshire's dealmaking machine slowed.

And they've been incredibly cautious.

They've also been cautious on the X.

side.

They've pulled a lot of money out the market and have a huge cash pile.

Berkshire's sitting on $400 billion of cash and short-term treasury bills, which they can put to work at any point.

And I think what we're seeing here is a prelude to probably Berkshire's deal-making machine firing up again.

Well, Berkshire had exposure to homebuilders, has now gone and done a big homebuilding deal.

They've got a lot of exposure in the insurance sector.

They could do an insurance deal.

They've got exposure in oil and gas.

They could do an oil and gas deal.

When you're run by an investor who is 90 plus years old,

and was nearing retirement, and tends to take a cautious mindset, you can understand why maybe taking big swings at headline M&A was not really on the cards for Berkshire in the past few years.