Berkshire Hathaway Has Piled $930 Million Into This Stock Since Its IPO. Should Investors Follow?

Warren Buffett once said in an interview that he doesn't think Berkshire Hathaway (NYSE: BRKA) (NYSE: BRKB) has ever participated in an initial public offering (IPO). There are too many incentives on the sell side for it to make sense to buy an IPO, he argued.

Greg Abel may have just found the exception that proves the rule. The new Berkshire CEO invested $600 million in the Bending Spoons (NASDAQ: BSP) IPO in July, when the company raised $1.68 billion at a valuation of around $18 billion. He recently added another $330 million to the investment in a private placement, giving Berkshire a 4% stake in the Milan-based tech company.

It's unclear whether Abel or Ted Weschler (who manages about 6% of Berkshire's equity portfolio) is responsible for the purchases. While it goes against Buffett's thoughts on IPO stocks, the investment is rooted in the fundamentals that drove Buffett's success for over 60 years in charge of Berkshire.

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Some similarities and differences with Berkshire Hathaway

Bending Spoons is in the business of buying software companies, improving operations, collecting cash flow, and reinvesting in more software companies. In the same ethos as Berkshire Hathaway, it plans to hold the companies it acquires forever.

Additionally, it doesn't chase "sexy" names like hot new AI companies. It sticks to relatively boring businesses that other investors (either private or public) may have dismissed. Past acquisitions include AOL, Evernote, Vimeo, Eventbrite, and Meetup.

Unlike Berkshire, which takes a mostly hands-off approach with its acquisitions, Bending Spoons completely revamps the operations of each business it adds to its portfolio. The company hires best-in-class operators to take over new acquisitions. It focuses on cutting costs, expanding product development, and improving monetization (typically by increasing prices). Its track record is solid, and it's developed a repeatable playbook.

The company benefits from a virtuous cycle. As it builds its portfolio and track record of acquisitions, it has a better understanding of how much a business is worth as a stand-alone company and how much more it's worth inside Bending Spoons. That allows it to outbid competitors while still producing solid returns on its investment.

Management has also invested heavily in artificial intelligence, which benefits from access to data from across its portfolio of businesses. In its IPO prospectus, Bending Spoons attributes its worker productivity to AI improving its operations. Revenue per full-time employee increased from $1.12 million in 2023 to $2.57 million in 2025, and it's on track to exceed $4 million this year.

Why would Berkshire Hathaway buy it?

Bending Spoons aims to achieve an internal rate of return of 65% on a levered basis and 25% on an unlevered basis. That's a high hurdle, but management has been able to find investments and deploy capital. It bought six companies for $1.92 billion in 2025. It recently acquired Airtable for $1.285 billion and agreed to buy Miro for $1.355 billion.

Management's ability to identify businesses capable of achieving that return on invested capital may be exactly what attracted Berkshire to the company. In an interview earlier this year, Buffett shared what he looks for in a good business. The trick in investing "is to find businesses that are going to earn high returns on capital for an extended period of time."

Bending Spoons is well-positioned to do exactly that. That shows up in a strong operating margin and growing cash from operations. The company's operating margin expanded to 34% from 32% last quarter, and cash from operations nearly tripled to $254 million.

That said, there are some risks involved with buying the stock. The company has significant leverage, with $4.09 billion in net debt. That's 2.4 times adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA), and 3.25 times shareholders' equity. It recently added more debt, in addition to the $330 million equity raise from Berkshire. With the rising cost of capital, Bending Spoons needs to ensure that it can meet its target internal rate of return on acquisitions.

Additionally, Bending Spoons may face challenges deploying a growing amount of capital into new acquisitions each year. As the amount it looks to invest grows, finding enough acquisitions or big enough acquisitions that meet its benchmarks becomes more difficult.

It's exactly the challenge Berkshire Hathaway faces today, except at a much larger scale. Management says it has identified over 1,000 potential acquisition targets with total revenue exceeding $400 billion, so it doesn't think it'll be a problem for some time. Still, markets can change quickly, and potential returns could drop.

Overall, the company is an interesting business. The stock soared higher after Berkshire's investment. Berkshire paid just $33 per share in its private placement. It may be worth waiting for the market to digest the news before taking a position in the company, but it could be a valuable addition to a portfolio if the stock price comes down closer to what Berkshire paid.

Adam Levy 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.