Family Holdings #16 - Alphabet builds AI empire, Berkshire escapes multi-billion claim
This week's topics:
Berkshire Hathaway is seeing the chance of a huge cost item diminish considerably now that the court of appeal ruled that the lawsuit against subsidiary PacifiCorp over the 2020 wildfires was wrongly treated as a class action. As a result of this decision, claimants must now demonstrate their damages individually, which increases the burden of proof and greatly reduces the risk of the previously estimated USD 8 billion in losses.
In a recent interview, Christopher Sheldon, Co-Head of Credit & Markets at KKR, sheds light on the investment giant's strategy in an increasingly volatile global climate. The conversation centres on the resilience of private credit, the importance of qualitative portfolio construction, and the enormous potential of the Asian market. Sheldon paints a picture in which KKR does not simply seek out risk for return, but secures value through smart structures and collateral.
Heico has, through three subsidiaries, supplied mission-critical electronic components for NASA's successful, crewed Artemis II mission around the moon. With the integration of these essential systems into, among other things, the Orion spacecraft, the company confirms its important role as a specialised supplier of reliable spaceflight hardware.
In Brief:
The German family holding company MBB SE (Frankfurt: MBB) is expanding its ongoing share buyback programme. Because of the sustained pressure on the share's price performance, the maximum buyback budget has been raised from EUR 22 million to EUR 25 million. In addition, the programme's term has been extended to 22 May 2026, meaning that just over EUR 6.5 million is currently still available for the repurchase of own shares.
Belron, the subsidiary of D'Ieteren (Brussels: DIE), known for windscreen repair company Carglass, is reportedly opting for a listing in Amsterdam. With an estimated valuation of between EUR 30 billion and EUR 40 billion, this would be one of the largest IPOs in Europe in recent years. Although New York was also considered, the choice now appears to be falling on the Dutch exchange, although the actual listing may not take place until 2027.
Prosus (Amsterdam: PRX) is selling a stake of approximately 4.5% in food delivery company Delivery Hero to Uber for an amount of EUR 270 million. The sale is taking place at a price of EUR 20 per share, which represents a premium of around 22% over the average share price of the past month. This step is necessary to comply with requirements from the European Commission following Prosus's earlier acquisition of Just Eat Takeaway.
Canada's TerraVest (Toronto: TVK) has set up an automatic plan for the repurchase of its own shares on the Toronto stock exchange. This allows the company to buy back just over 1.5 million shares through an intermediary. This represents around 7% of the outstanding shares. By automating this process, TerraVest can also continue to buy back shares during periods in which management itself is not permitted to trade, providing continuous support for the share price.
Through its operating company Vela Software, Constellation Software (Toronto: CSU) has once again completed two strategic acquisitions. First, it has absorbed Germany's Gewatec, a specialist in software for the 'smart manufacturing' industry, with solutions covering the entire production process, from planning to quality control. In addition, the Juniper Group (part of Vela) has acquired a majority stake in DerbySoft. This is a substantial acquisition in the travel and hospitality sector. DerbySoft serves more than 260,000 hotels worldwide with its platform for distribution and digital marketing. With around 450 employees and estimated annual revenue of approximately USD 90 million, the acquisition price is estimated at between USD 108 million and USD 135 million.
MBB SE, D'Ieteren, Prosus, TerraVest and Constellation Software are traded on the exchanges of Frankfurt, Brussels, Amsterdam and Toronto at prices of EUR 195.20, EUR 188.40, EUR 44.33, CAD 140.32 and CAD 2,662.05 per share, respectively.
Alphabet strengthens AI dominance through strategic alliances
Although we have discussed Alphabet (New York: GOOGL), Google's parent company, less often recently, the tech giant has been anything but idle behind the scenes. After all, at one of the largest companies in the world, there is relevant news to report on a weekly basis.
The common thread running through recent reporting is a focus on strategic partnerships; in recent weeks, several partnerships have indeed been announced that further strengthen the company's position:
Thoma Bravo: Google Cloud has entered into a strategic partnership with Thoma Bravo, the world's largest software investor. Through this collaboration, dozens of software companies in Thoma Bravo's portfolio gain direct access to the Gemini models and intensive technical support from Google. According to Karthik Narain, Chief Product and Business Officer at Google Cloud, this marks a turning point in which software companies are transforming into "AI-first" organisations that can offer their customers superior results through the deployment of autonomously acting AI systems. In addition to the productivity angle, the partnership also focuses heavily on cybersecurity; the security companies within Thoma Bravo will use AI to manage rapidly evolving risks. The aim is to secure the entire digital environment, with strong indications that Google will deploy its exclusive new Anthropic Mythos model for this purpose to tackle complex threats.
Intel: Google has committed to continuing to use the coming generations of Intel processors in its AI data centres. Although Nvidia currently dominates the market for AI chips, this deal shows that the traditional central processing unit (CPU) is reclaiming an important role. According to Intel CEO Lip-Bu Tan, scaling up AI requires more than just accelerators; it calls for "balanced systems" in which Intel's latest chips provide the necessary computing power to prevent bottlenecks in complex AI processes. The two companies are also continuing to develop so-called Infrastructure Processing Units (IPUs), specialised chips that take over peripheral tasks such as network traffic and data security, so that the main processors can be fully utilised for heavy AI computations. This multi-year commitment gives Google the stability it needs to keep up with the explosively growing demand for AI capacity.
Anthropic: Finally, there is the impressive collaboration between Google and Anthropic. The two parties have signed an agreement to supply enormous amounts of computing power (multiple gigawatts) via the next generation of Google's own AI chips (TPUs), which are being developed in close collaboration with chip designer Broadcom. This capacity is set to come online from 2027 to support the explosive growth of Anthropic's AI model, Claude.
On top of that came the news that the US Department of Defense (Pentagon), after talks with Anthropic broke down, is now in discussions with Google. The aim of these negotiations is to deploy the Gemini AI models for military purposes.
The reporting on the new AI partnerships surrounding Gemini confirms a trend that has been visible for well over a year now: Gemini is gaining ground at a rapid pace at the expense of ChatGPT. This shift is expected to continue, especially now that ChatGPT is increasingly shifting its focus towards the business market. The figures for the past twelve months speak for themselves: ChatGPT's market share fell from 77.4% to 56.7%, while Gemini grew from 6.0% to 25.56%.
Anthropic's Claude is also increasingly gaining market share these days. Over the past twelve months, the LLM model grew from 1.4% to 6.0%. Although Claude is expected to keep chipping away at market share, this cuts both ways for Alphabet. That's because Alphabet owns 14% of the shares in Anthropic. There are currently rumours of funding rounds that would value Anthropic at as much as $800 billion, an enormous leap compared with the $380 billion valuation at the start of this year. Should this valuation become reality, Alphabet's stake would represent a value of approximately $112 billion.
On top of that, Alphabet is also reaping the rewards of SpaceX's much-discussed listing. It recently emerged that Alphabet held a 6.11% stake in the space company at the start of 2026. Although the merger with xAI may have caused some dilution of this stake, at the reported market value of over $1,500 billion, Alphabet would once again have a holding worth more than $100 billion on its balance sheet.
Taken all together, Alphabet is once again proving to be an excellent capital allocator.
Alphabet is currently trading on the New York stock exchange at a price of USD 338.65 per A-share.
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Berkshire Hathaway secures important legal victory
The American investment holding company Berkshire Hathaway (New York: BRK-B) secured an important victory this week in a lawsuit concerning the Oregon wildfires. The Oregon Court of Appeals ruled in favour of PacifiCorp, a subsidiary of energy company Berkshire Hathaway Energy. This ruling could significantly reduce the company's potential liability.
The case concerns the devastating wildfires that occurred in 2020. In 2023, a jury initially found that PacifiCorp could be held guilty of gross negligence, and that the company was responsible for the damage. However, the Court of Appeals has now ruled that the judge in that earlier trial made an error by treating the case as a mass claim. As a result, the case has been sent back to the lower court for reconsideration.
In its ruling, the Court of Appeals stated that the earlier judge had wrongly allowed evidence of damages from 17 specific homeowners to be automatically applied to thousands of other claimants across the state of Oregon. Because of this decision, the remaining parties involved must now prove their losses on an individual basis, which significantly increases the legal burden of proof.
This legal turnaround could have major financial implications, given that the total costs for the company were previously estimated at tens of billions of dollars. The scale of this risk was substantial, with more than USD 1 billion in damages already awarded in earlier lawsuits and a USD 2.4 billion reserve set aside by Berkshire Hathaway at the end of 2023.
At the time, the holding company estimated total potential pre-tax losses at USD 8 billion, a setback that Warren Buffett explicitly described as a major disappointment in a letter to shareholders in 2024. However, by rejecting the joint claim, the likelihood of this enormous cost burden materialising is now significantly reduced.
Berkshire Hathaway is currently trading on the New York Stock Exchange at a price of USD 478.30 per B share.
Private credit remains resilient, according to KKR chief
In a candid interview, Christopher Sheldon, Co-Head of Credit & Markets at the American investment holding company KKR (New York: KKR), painted a sober picture of what he calls a "rolling recession". According to Sheldon, the credit market is in a critical phase in which the enormous growth of recent years is giving way to a sharp divide between winners and losers. Despite the turmoil, he still sees growth in revenue and profit among the more than 2,000 companies in KKR's portfolio, but vigilance is greater than ever.
The credo within the offices at Hudson Yards is currently clear: quality over return. Sheldon emphasises that this is not the moment to seek out risk for a fraction more yield. Instead, KKR is forcing its fund managers towards extreme diversification and a focus on 'Asset-Based Finance' (ABF). By providing loans backed by hard assets, the firm is trying to build a buffer against the inflation shocks that accompany an oil price above 100 dollars. "You have to make a lot of mistakes in this market to actually lose money if your portfolio is well constructed," says Sheldon, pointing to current returns of nearly 10 percent that act as a cushion.
Stability through disciplined management
Yet optimism is not universal. Although the 'wealth side' — the private-client arm of the credit market — attracted extra attention this week after KKR capped redemption requests at one of its funds at the 5% limit, Sheldon puts this in a reassuring perspective. According to him, the fact that outflow requests exceeded 7% is not an indication of a fundamental problem, but rather the moment when the pre-established fund structure proves its worth.
The so-called 'cap' is not an emergency brake that is only reached for in a panic, but a built-in safety valve that was already factored in when the fund was established. Sheldon states that maintaining this limit is essential to prevent the fund from having to sell assets at unfavourable prices. This gives priority to the stability of the investment for existing investors over the temporary liquidity demand of a minority. While the broader market sometimes reacts nervously to geopolitical tensions, he points out that KKR's institutional base, which relies on this disciplined management, remains rock-solid.
New investment and the future in Asia
While the brakes are being applied in the West, KKR is putting its foot down in Asia. The announcement of a strategic partnership with Samsung SDS, under which KKR is buying KRW 1.22 trillion (USD 820 million) worth of convertible bonds, is a powerful signal. Samsung SDS, the IT arm of the powerful Samsung conglomerate, is set to become KKR's gateway to the full AI transformation in Asia. In a market that remains divided over the sustainability of the AI boom, the firm has thereby created an asymmetric position. On the downside, KKR enjoys protection because the investment starts out as debt, offering the security of a creditor should AI growth disappoint. On the upside, the potential remains fully open, since in the event of a successful transformation and a rising share price, KKR can convert the bonds into equity.
According to Sheldon, the choice of this sector is no coincidence, as corporate software solutions are extremely 'sticky'. In an uncertain economy, replacing such systems is risky and costly. Asia also offers a unique opportunity because banks there still provide 80% of financing, while in the US and Europe they are losing ground to private lenders. KKR sees enormous 'white space' here to be the first major player to offer flexible capital.
KKR is currently trading on the New York stock exchange at a price of USD 105.94 per share.
Heico contributes to Artemis II space mission
The American serial acquirer Heico (New York: Hei-A) has announced that three of its subsidiaries supplied mission-critical electronic components for NASA's successful Artemis II mission. This ten-day crewed spaceflight around the moon marked an important step for space travel and tested essential navigation and life-support systems.
The companies involved are 3D PLUS, Exxelia and VPT. France-based 3D PLUS developed critical memory systems for both the Space Launch System and the Orion spacecraft. This company has an impressive track record, with more than 25 years of experience in the sector and over 220,000 components in space.
Exxelia, also based in France, supplied capacitors and magnetic products that are integrated into the Orion spacecraft. The American company VPT, based in Virginia, developed radiation-hardened converters and filter solutions. These VPT components were deployed in the electronic onboard systems (avionics) of the Space Launch System to ensure reliability under extreme conditions.
The executives of the subsidiaries and Heico's management have congratulated NASA on this achievement. Heico Co-CEOs Eric Mendelson and Victor Mendelson say they are proud to have played a role in this space milestone. Heico thereby confirms its role as a specialised supplier of highly reliable components for space hardware and advanced systems.
Heico is currently trading on the New York stock exchange at a price of USD 222.82 per share.
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This article was translated automatically from Dutch using AI. In case of any difference, the Dutch original prevails. Read the original in Dutch.
