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Billionaire investor Warren Buffett famously avoided technology growth stocks for most of his career. However, after noticing how obsessed his grandchildren were with their iPhones, he ended up making Apple the largest holding for Berkshire Hathaway.
But with Buffett now retired and Greg Abel running the show, Berkshire seems more interested in tech stocks. Last week, it invested another $330m in a company called Bending Spoons (NASDAQ:BSP). It’s now put nearly $1bn into the firm.
Never heard of Bending Spoons? Don’t worry, you’re probably not alone. The Italian technology conglomerate only went public in July, so it’s still largely under the radar.
What does Berkshire see in this growth stock? And might it be worth considering?
Mind over matter
Bending Spoons acquires struggling software platforms, drastically cuts operating costs, and improves the product to boost growth and profitability. Acquisitions include Evernote, video platform Vimeo, Eventbrite, Airtable, and AOL (the gateway to the internet in the 1990s).
The AI-driven app developer takes its name from the scene in The Matrix where a child bends a metal spoon purely with thought. Some people probably thought the company was round the bend buying AOL for $1.5bn!
Yet the facts speak for themselves. The firm’s portfolio of products has more than 1bn registered users, 400m monthly active users, and 7m+ monthly paying customers. And growth’s strong.
Bending Spoons is often compared to serial acquirer Constellation Software.
Impressive growth
In August, the company announced Q2 results, and they were impressive. Revenue hit $704m, up 126% year on year, with growth driven by file-transfer service WeTransfer and Tractive, a maker of GPS and health trackers for dogs and cats.
Net profit jumped 171% to $177m. So the company’s already profitable, which is obviously something Buffett and Berkshire prize.
Looking ahead, Wall Street foresees $6.2bn in revenue in 2028, up from $2.9bn this year. Profits will grow alongside, according to forecasts.
Another thing worth noting is that Schiehallion Fund — the FTSE 250-listed investment trust managed by Baillie Gifford — has the stock as its top holding. Above Anthropic and SpaceX!
Is the stock worth a look?
Interestingly, co-founder and CEO Luca Ferrari wants Bending Spoons to become a tech version of Berkshire Hathaway. If successful, that could create significant value for investors, given its current $27bn market-cap.
That said, as the acquisitions inevitably get larger, there could be a couple of bad ones. There’s also the fact that the firm uses debt to finance these takeovers, adding risk if things go awry.
In terms of tech/software opportunities though, there has never been a better time than today due to AI disruption fears and the SaaSpocalypse. Bending Spoons has its plate full!
Our bottom-up analysis has identified more than 1,000 digital businesses that could be attractive targets over the next several years. Collectively, those businesses generate nearly $400 billion of estimated revenue in 2025.
Luca Ferrari
This growth stock isn’t conventionally cheap (it surged 41% after Berkshire invested). But the fact that Berkshire and Baillie Gifford have sizeable stakes in it is a massive endorsement. As such, I reckon it’s one worth watching closely.
That’s what I’ll be doing over the next few weeks, including studying the firm’s Q3 report next month. Who knows? Perhaps it could be a mini-tech Berkshire in the making.
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Ben McPoland owns shares in SpaceX.
This story originally appeared on Motley Fool
