Greg Abel opts for several striking new investments at Berkshire Hathaway

Copyright © BusinessAMBE 2023

Key takeaways

• Greg Abel is now at the helm of Berkshire Hathaway following Warren Buffett’s departure.
• The sale of 16 positions points to a far-reaching reshuffle of the investment portfolio.
• Huge cash reserves allow for strategic purchases in Alphabet and aggressive share buybacks.

After Warren Buffett stepped down as CEO of Berkshire Hathaway, having been at the helm for six decades, Greg Abel has taken over the reins. Although Buffett is no longer in charge, the 95-year-old remains active within the organisation, and market watchers continue to closely monitor shifts in the company’s investments under Abel’s leadership.

Sale of sixteen positions

Recent filings with the regulator indicate a substantial reorganisation of the portfolio, with 16 different shareholdings having been completely liquidated. This sharp increase in selling activity may be linked to the departure of Todd Combs, one of the investment managers to whom Buffett had previously delegated billions in capital.

Striking disposals included major stakes in UnitedHealth Group, Amazon, Mastercard, Visa and Domino’s Pizza, some of which took analysts by surprise.

Investment in Alphabet

Looking ahead to future disclosures, it is highly likely that Abel will continue to build on existing positions. Large institutional investors typically scale in and out of holdings gradually in order to avoid sharp price swings.

A good example is Alphabet; in the first quarter Berkshire acquired an additional 36.4 million shares. Given the company’s vast cash reserves of almost 400 billion dollars (345 billion euros) and the fact that it holds less than 1 per cent of Google’s parent company, a fresh multi-billion-dollar investment in Alphabet is perfectly conceivable.

Strategic growth

In addition to Alphabet, Abel could increase his stake in other core holdings such as Occidental Petroleum, American Express and Apple. He has also recently shown interest in Lennar and The New York Times.

Moreover, the company is investing in itself. Abel has given the green light for the buyback of Berkshire shares worth a total of 325 million dollars (280 million euros), a strategy intended to boost the value of the remaining shares for investors. To demonstrate his personal conviction in the company’s prospects, Abel is reportedly planning to spend his entire post-tax salary of 15 million dollars (13 million euros) on purchasing additional company shares. (fc)

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