Greg Abel Is Doing Something at Berkshire Hathaway That Warren Buffett Never Would Have

For the 60 years Warren Buffett served as CEO of Berkshire Hathaway (NYSE: BRKA) (NYSE: BRKB), he employed a policy of not meddling in each subsidiary's managers' leadership of their respective business. His thinking? They were smart enough on their own to build a business he was interested in owning.

Buffett's predecessor, Greg Abel, may not feel quite the same way, though. After announcing its plans last month to wholly acquire and then privatize homebuilder Taylor Morrison Home Corp. (NYSE: TMHC), last week, Abel alluded to the possibility of combining Taylor with another Berkshire company -- manufactured- and mobile-homes builder Clayton Homes.

It's not happened yet. And it may never actually come to pass.

If it does, it would represent a change in Berkshire Hathaway's long-held aversion to fixing things that aren't actually broken.

Rational, but not necessarily for the best

It's certainly not a complete mismatch. Both companies build homes, which means both outfits require building materials, and both companies are subject to the same housing market ebbs and flows. The key difference is simply that Taylor erects its homes onsite, while Clayton fabricates its homes offsite and then transports them to their destination. To this end, each outfit also serves a distinctly different segment of the same target market.

Homebuilding isn't necessarily a business that benefits from diversification and shared resources, though. Supplies like lumber are often locally sourced, and in the case of Taylor, construction is often localized to a particular geographical market or subdivision.

Image source: Getty Images.

Then there's the cultural differences. Taylor Morrin's domestic arm of the company has been around for over a century and has been led by CEO Sheryl Palmer since 2007. That's a pretty long time to establish an ethos. Meanwhile, Clayton's been around since 1956 and is currently led by Kevin Clayton, son of the company's founder. Its corporate culture is well entrenched, too.

Connect the dots. These two organizations won't likely mesh very well.

Worth watching, but not worrying about...yet

Or maybe they will mesh. Never say never.

Regardless, if this were anything more than an off-the-cuff thought exercise from Abel, it's cause for concern for current and future Berkshire Hathaway shareholders. The conglomerate's 70-ish privately held companies collectively account for about one-third of Berkshire's total market value, generating on the order of $40 billion worth of operating earnings per year. One union of seemingly similar subsidiaries obviously doesn't threaten the entirety of this spendable profit. \But if this hinted plan for Clayton and Taylor becomes more common, it could slowly chip away at this cash flow. By the time it became clear it was a more sweeping problem, it could be too late to do anything about it.

Just don't read too much into the matter. As part of 2025's full-year report, Abel made a point of penning "our CEOs will never have to navigate layers of bureaucracy or have short-term earnings expectations dictated to them, leading to long-term value destruction," reflecting the fact that "our decentralized approach is a competitive advantage, attracting managers who thrive on autonomy and deliver on accountability."

In other words, don't worry about it too much...yet.

James Brumley 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.