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Berkshire Hathaway (NYSE: BRKA) (NYSE: BRKB), now led by Warren Buffett's successor, Greg Abel, is making another interesting investment in technology. In late October, the company added to its stake in Bending Spoons (NASDAQ: BSP), an Italian tech company with a familiar strategy for building businesses. What could Abel see in Bending Spoons?
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Management first invested in Bending Spoons during the company's July 2026 initial public offering. Then, in October, Berkshire made another $330 million investment through a private placement, bringing its total stake to 4%.
Bending Spoons is more than a typical software company, and it could be why Berkshire continued to add to its investment. At its core, the company has built a business model around acquiring established digital businesses and reinvesting cash into the next acquisition.
Once it acquires a business, it makes several key changes, including improving the technology, reorganizing teams, redesigning products, and strengthening marketing.
Today, Bending Spoons owns several digital businesses that many consumers already know. Its portfolio includes names like AOL, Eventbrite, and Vimeo. And more recently, the company completed its acquisition of the visual collaboration platform Miro.
In short, Bending Spoons has a repeatable system for improving digital businesses, and it's just one of the reasons the company could appeal to Berkshire.
Bending Spoons is a tech company, but its strategy could sound surprisingly familiar to Berkshire investors. After acquiring businesses, it improves them and keeps them for the long term. It has followed this strategy for more than a decade and has never sold a major business.
That's very different from a traditional private equity approach where a firm buys, restructures, then sells a company after a few years. Instead, Bending Spoons is trying to create a compounding machine.
Once an acquired business is improved and its earnings power grows, the cash flow it generates can be used to fund future acquisitions. That also means each acquisition makes the platform larger and more diversified.
Furthermore, the company describes operational excellence as an important part of this strategy, and Berkshire's added investment provides greater financial flexibility to pursue future opportunities. That leads to another key strength: Bending Spoons is building an advantage that extends beyond any single app or brand.
AOL, Evernote, and Vimeo are all very different businesses. But the common thread is the platform Bending Spoons has developed to run and transform them.
The company says its platform combines people, proprietary technologies, and data with an emphasis on talent and technical capabilities. It also says artificial intelligence (AI) is often both a central part of its vision for acquired businesses and a key tool for carrying out transformations.
And instead of starting from scratch with every acquisition, the company can apply lessons, technology, and processes developed across its existing businesses to the next one. That could make each added acquisition easier to integrate and improve.
However, the risk now is that any underperforming acquisition could put pressure on the company's compounding model. It must also continue to find attractive businesses at reasonable prices, and then successfully integrate and improve them.
But with the stock trading at a trailing price-to-earnings ratio (P/E) of about 102, investors already have some very high expectations for growth that the company must meet.
Still, its strengths could help explain why it has become a growing position in Berkshire's portfolio.
Eight of the 12 Wall Street analysts covering the stock rate it a buy or higher. And with an average target price of nearly $48, this suggests there's about 12% potential upside over the next year.
Ultimately, Bending Spoons offers Berkshire a different kind of tech investment, but one built on acquiring businesses, improving operations, and compounding value over the long term. In fact, that familiar strategy may be exactly what caught Berkshire's interest.
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Rick Orford has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Berkshire Hathaway. The Motley Fool has a disclosure policy.
Warren Buffett's Successor, Greg Abel, Just Added Another Tech Stock to Berkshire's Portfolio. Here's What He Sees. was originally published by The Motley Fool
