100% overnight gains? (From The Oxford Club)

When Berkshire Hathaway (NYSE: BRK.B) makes a move, the entire market stops to look. So when news broke on Oct. 14 that Berkshire had poured another $330 million into a relatively unknown Italian software company, the reaction was quick and absolutely dramatic.

Shares of Bending Spoons (NASDAQ: BSP) rocketed more than 40% in a single session. It’s the kind of headline and price action that grabs every investor's attention and raises the obvious question: with arguably the most famous name in investing doubling down, should you buy too?

What Is Bending Spoons?

Most investors have likely never heard of Bending Spoons, but they've probably used one of its products. The Milan-based technology company, founded in 2013, operates a portfolio of digital apps and software platforms that reads like a tour of the internet's familiar names.

It owns Evernote, the note-taking app, along with WeTransfer, Meetup, StreamYard, the video platform Brightcove, and Remini, a popular AI-powered photo-enhancement app.

The business model is what makes it interesting, and it is no coincidence that it caught Berkshire's eye. BSP acquires established digital businesses, streamlines them, and runs them for cash flow, much the way Berkshire itself buys and holds operating companies. Essentially, it is an acquisition machine for software, and the fresh capital from Berkshire is explicitly earmarked to fund more deals. Led by co-founder and CEO Luca Ferrari, the company generates annual sales of roughly $3.3 billion and only went public this past July.

The Berkshire Investment, and the Catch

Here is where the story gets a bit more nuanced than the headline and price action suggest. Berkshire's latest $330 million investment, which lifts its stake to 4% and makes it the sixth-largest shareholder, follows a $600 million initial investment made during Bending Spoons' July IPO. That brings Berkshire's total investment to nearly $1 billion, a genuine show of confidence in the company and its strategy.

But the details matter enormously. Berkshire did not buy its shares on the open market like an ordinary investor. It acquired 10 million newly issued shares through a private placement at $33 per share, a price already about 13% below the stock's pre-announcement level. With shares now trading near $54 after the surge, anyone buying today pays roughly 60% more than Berkshire did.

That’s no small detail. Berkshire negotiated and now has a fantastic, built-in margin of safety that anyone chasing the stock after a 40% pop simply won't get.

But Should You Chase It?

After accounting for the premium over Berkshire's entry price and this week's surge, Bending Spoons is now far from cheap. The stock trades at a trailing price-to-earnings ratio of nearly 70 and roughly 10 times sales, demanding multiples that leave little room for a misstep. The market has effectively priced in many quarters of flawless execution on the company's acquisition strategy.

And Wall Street isn't buying the hype just yet. Despite the Berkshire halo, analysts rate Bending Spoons a Hold, with an average price target of $44. That's well below the current share price, a clear sign analysts think the stock has sprinted well ahead of its fundamentals. Put simply, the professionals covering the name see downside potential from here, not upside, at least until the valuation cools or the business grows into it.

Of course, none of these points make Bending Spoons a bad company. It is an interesting, fast-growing business with a proven operator at the helm and a strategy that has clearly impressed one of the world's largest companies, with projected earnings growth north of 79% to show for it. But even a wonderful business can be a poor investment if you overpay.

Admire the Buyer, Mind the Price

The instinct to follow Berkshire is natural, and Bending Spoons has earned a place on the watchlist for anyone drawn to a software roll-up with serious backing. But chasing the stock days after a 40% single-session surge, at a price nearly 60% above what Berkshire itself paid and well above the analyst consensus target, is a very different proposition from the deal Berkshire actually struck.

For investors drawn in by the headline and fundamentals, the wiser play may be patience: let the hype settle, watch whether the valuation and price reset, and remember that even when you admire the company doing the buying, the price you pay is what determines your return.

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