Berkshire Buys Into Bending Spoons Cheap

Berkshire Hathaway is putting another $330 million into Bending Spoons, after a $600 million investment tied to the Italian company’s stock-market debut in July. That takes Berkshire to a 4% stake, according to Business Insider, and it matters less as a test of Berkshire’s balance sheet than as a clue about what Berkshire is willing to tolerate on price and business model after Warren Buffett’s retirement as chief executive and chair.

The immediate market reaction was loud enough to drown out the arithmetic for a moment. After Bending Spoons disclosed Berkshire’s backing, the stock jumped nearly 50% over two trading sessions before giving back some ground. It still finished that run more than 20% above the opening price before the disclosure. Markets do enjoy a celebrity endorsement. Sometimes they even call it analysis.

The more useful figure is the one Berkshire negotiated: $33 a share for 10 million shares, about 13% below Bending Spoons’ closing price of $38 before the deal was announced. That discount says two things at once. First, Berkshire did not buy into the excitement at the market price. Second, even with the discount, this is not an obviously cheap stock by ordinary Buffett standards.

Business Insider notes Bending Spoons earned 32 cents a share in the prior year. Paying $33 for that level of earnings is more than 100 times trailing earnings. Investors can make that multiple work only if they believe the company can keep expanding quickly and turn acquisitions into durable cash flow rather than a sequence of expensive integrations dressed up as strategy.

The growth case is not hard to see. Bending Spoons said second-quarter revenue rose 126% from a year earlier to $704 million, while adjusted operating income rose 150% to $381 million. Those are real numbers, not a founder’s mood board. But denominators matter. Fast growth off an acquisitive base can reflect buying volume as much as improving the underlying business, and adjusted profit is not the same thing as cash that survives restructuring, product reinvestment, and the next deal.

Bending Spoons’ method is unusually blunt. It buys digital businesses, cuts deeply, retools products and monetization, and uses the proceeds to fund more acquisitions. Business Insider cited chief executive Luca Ferrari saying Evernote went from about 350 employees at acquisition to roughly 60 within 12 to 18 months and is now run by around 20 people. That may be efficient. It may also be easier to defend in a spreadsheet than in a product roadmap. Still, if a software asset can be made materially better with a fraction of the cost base, the old owner was not exactly running a monastery.

This is also where the Berkshire angle gets interesting. Berkshire itself is a decentralized long-term owner, but usually a hands-off one. Bending Spoons is also a long-term owner by self-description, yet its whole playbook is intervention. The overlap is not operational style; it is capital allocation. Buy assets, keep them, harvest cash, redeploy it. The difference is that Berkshire historically preferred businesses whose economics it could explain without needing a product demo.

The stake is tiny by Berkshire standards. Business Insider puts Berkshire’s cash pile at $365 billion at the end of June and its market value at about $1.1 trillion. A sub-$1 billion commitment is not a declaration that Berkshire has become a software conglomerate in waiting. It is better read as permission for someone inside the post-Buffett Berkshire to place a relatively small, structured bet on an operator that looks less like Apple and more like a private-equity shop that happens to ship apps.

That does not prove a durable change in Berkshire’s investing doctrine. It does show that the new regime is willing to back a company whose attraction lies in acquisition discipline and cost surgery, even when the public valuation would have made old-school value investors reach for a darker room.