Warren Buffett is the former CEO and chairman of Berkshire Hathaway.
Paul Morigi/Getty Images for Fortune/Time Inc
Berkshire Hathaway is set to invest $330 million in Bending Spoons, adding to its previous $600 million.
Warren Buffett's storied conglomerate is poised to hold a 4% stake in the owner of AOL and Vimeo.
Berkshire's wager is a surprise, but there's some DNA in common with Bending Spoons.
Berkshire Hathaway's latest bet isn't a no-brainer or a head-scratcher; it's somewhere in between.
What's the deal?
Berkshire — which has seen Warren Buffett retire as CEO and chairman since the turn of the year — has agreed to invest $330 million in Bending Spoons, on top of a $600 million injection when the Italian tech conglomerate went public in July, giving the Nebraska behemoth a 4% stake.
Bending Spoons disclosed Berkshire's backing in a press release on Wednesday, catapulting its stock up nearly 50% over two days, a phenomenon known as the "Buffett effect." The stock fell on Friday, but still ended the week more than 20% above Monday's opening price.
Berkshire has agreed to buy 10 million shares for $33 each, around a 13% discount to Bending Spoons' closing price of $38 on Tuesday, the day before the deal was announced.
CEO and cofounder Luca Ferrari described Berkshire in the press release as "among the finest and most respected capital allocators in the world," and a "longstanding inspiration" for Bending Spoons.
Neither company responded to requests for comment from Business Insider.
What is Bending Spoons?
Bending Spoons acquires digital businesses, transforms and optimizes them to increase profits, then reinvests those earnings in further acquisitions.
It has been pursuing that strategy for more than a decade and has never sold a material business. Its acquisitions to date include AOL, Evernote, Vimeo, Eventbrite, and WeTransfer.
Ferrari's company said in the press release that it "strives to envision the most successful version of an acquired business," then works to close the gap between that vision and reality "as quickly and completely as possible."
Bending Spoons said that typically involves "deep" transformation such as "reorganizing teams, overhauling technology, redesigning user interfaces, accelerating product development, and enhancing marketing and monetization," often with a good dose of AI.
Ferrari gave the example of Evernote on a recent episode of the "Joys of Compounding" podcast.
He said the business had around 350 employees when Bending Spoons acquired it at the start of 2023. That shrank to roughly 60 within 12 to 18 months, and now it's being run by around 20 people.
Yet Ferrari said Evernote "launched by far the biggest update to the product in maybe a decade" this spring.
Bending Spoons CEO Luca Ferrari.
Marco Bertorello / AFP via Getty Images
Why is Berkshire's investment a surprise?
First and foremost, Bending Spoons is a tech conglomerate, and Berkshire has eschewed tech for most of its history with a few big exceptions, namely Apple and Alphabet.
That's because Buffett is a bargain hunter who likes to invest with a "margin of safety" in case something goes wrong, and tries to stay within his "circle of competence," only buying into what he deeply understands.
Tech companies have rarely been a good fit for his approach, as they typically have lofty valuations, unpredictable outlooks, and complex products and services.
Indeed, Bending Spoons generated 32 cents in earnings per share last year. Berkshire is paying more than 100 times that per share in the coming private placement.
It's true that Bending Spoons is growing fast, with revenue surging 126% year-on-year to $704 million in the second quarter and adjusted operating income jumping 150% to $381 million. Few, however, would consider the stock a bargain from a fundamental perspective.
Berkshire is also famously a hands-off acquirer, offering founders the opportunity to cash out while continuing to run their businesses as they see fit. In contrast, a core aspect of Bending Spoons' strategy is revamping its acquisitions.
How does the deal make sense?
Berkshire and Bending Spoons have similarities as well as differences.
Both are decentralized conglomerates that buy businesses not to flip them, but to own them for the long term. Berkshire is a web of largely autonomous companies, including GEICO, Duracell, Fruit of the Loom, Pilot Travel Centers, and BNSF Railway. It has long offered a permanent home to the businesses it buys.
Bending Spoons has positioned itself as a forever owner, too, emulating Berkshire's approach of taking the cash generated by a subsidiary like See's Candies and using it to acquire more businesses.
Ferrari said in his recent podcast interview that Bending Spoons has fostered a culture of caring deeply about the company, and doesn't centralize decision-making in part because that "deprives people of that precious sense of ownership."
Buffett famously wrote "An Owner's Manual" for Berkshire shareholders. He's championed that mindset by keeping more than 99% of his net worth in Berkshire stock, and encouraging the company's other executives and directors to have skin in the game too.
Ferrari also said on the podcast that he has a "pathological love of learning" across different domains. That echoes Buffett's boundless curiosity and the late Charlie Munger's insatiable appetite for knowledge. Buffett's longtime business partner studied architecture, physics, history, meteorology, psychology, law, and, of course, investing, among other subjects.
Beyond their similar philosophies, it's worth noting that investing less than $1 billion into Bending Spoons isn't a huge deal for Berkshire. It has a $1.1 trillion market capitalization, had a $365 billion cash pile at the end of June, and its biggest stock position was worth about $66 billion at that time.
What's the takeaway?
The Bending Spoons deal could mark an evolution in Berkshire's investing style following Buffett's departure as CEO and chairman.
Berkshire hasn't commented on the purchase or on whether Buffett was involved. Its relatively small size could mean his remaining investment manager, Ted Weschler, was behind it.
Or it might be new CEO Greg Abel, who piled an additional $10 billion into Alphabet in a private placement this summer after consulting with Buffett.
Whoever was responsible, and whatever their reasons for investing, this will be an intriguing wager to watch for Berkshire followers.
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Ukraine, which long kept its weapons at home, is now clearing its arms makers to sell abroad. Its Commission on Export Control has granted 18 Ukrainian companies permission to send their finished weapons abroad and has processed more than 400 export applications, with over 90% approved, the National Security and Defense Council says, citing commission head Davyd Aloian.
Ukraine now produces far more weapons than it can afford, with defense production growing from about $1 billion a year at the start of the invasion to a projected $55 billion in 2026.
The exports are reportedly conducted under the Drone Deals framework that President Volodymyr Zelenskyy unveiled in April, which allows controlled sales of surplus weapons to partner countries while the Defense Ministry and General Staff retain first claim to everything the front needs. Some categories already run up to 50% beyond what Ukraine can use or finance.
From a stalled commission to 18 approvals
The commission’s work had been halting. It resumed in February after an eight-month freeze and issued the first permits then, and its updated membership has been working since, Aloian notes.
Building partnerships abroad
Aloian framed the goal as scaling Ukrainian technology rather than one-off deals. The state wants domestic producers to expand abroad while partners get working solutions, he says, and is open to dialogue with the defense industry to fix problems as they arise.
Earlier, an industry group that represents more than 400 companies warned in September that the mechanism was choking. A new 20-to-30% fee on export permits priced Ukrainian goods out of the market, it said, and a joint-production program had stalled with hundreds of foreign bids pending.
Euromaidan Press cannot verify whether the Commission on Export Control has taken the issue into consideration.
The council recently met a UK Defense Ministry delegation to discuss closer cooperation, including a Drone Deal, an anti-ballistic coalition, and joint production, Aloian adds. Reaching foreign markets enables producers to attract new orders and investment, scale up, and build long-term partnerships.
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