Greg Abel Has Run Berkshire Hathaway for Most of a Year. Here's What He Has Actually Changed.
Key Points
Greg Abel succeeded Warren Buffett as Berkshire Hathaway's CEO on Jan. 1, but the transition in strategy has been gradual rather than radical.
Berkshire's big purchase of Alphabet stock has been one of the most notable moves under Abel's tenure.
Berkshire Hathaway (NYSE: BRKA)(NYSE: BRKB) CEO Greg Abel took over from Warren Buffett at the beginning of this year. To say that he had big shoes to fill would be an understatement. Buffett is one of the most famous investors in history and has guided Berkshire to performance that has generated incredible wealth for long-term shareholders.
With nearly three full quarters with Abel at the helm as CEO, there's been little change when it comes to the operations of Berkshire's fully owned subsidiaries. There haven't been any game-changing acquisitions to bring new businesses into the fold, either.
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There also hasn't been a dramatic shift in the composition of Berkshire's public stock portfolio. Investors have generally come to expect a slow and steady approach from the company -- that is, until the investment conglomerate is ready to make a big move. However, there has been one particularly notable change.
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Berkshire is betting big on Alphabet under Abel
When it comes to Berkshire's largest public stock holdings, Abel has been relatively hands-off -- with one notable exception. Alphabet (NASDAQ: GOOG)(NASDAQ: GOOGL) is now a top-five portfolio position for the company, coming in at No. 5 on the list. The rest of Berkshire's top-five holdings consist of Apple, American Express, Coca-Cola, and Bank of America.
The move to make Alphabet a major portfolio component is not totally surprising. In the lead-up to Abel succeeding Buffett in the CEO role, analysts and shareholders had broadly expected the company to make technology holdings a bigger part of the portfolio. Alphabet's impressive sales growth and stellar profitability, strong brand strength, and considerable competitive moat also suggest that the company is generally in line with the profile that Berkshire pursued under Buffett.
Berkshire's portfolio being heavily concentrated around tech actually isn't unprecedented. At one time, the company's position in Apple stock accounted for more than 50% of its total public stock holdings.
Alternatively, Alphabet currently accounts for roughly 10.5% of Berkshire's stock portfolio between class A and class B shares -- a level that no other tech stock has ever matched or exceeded, with the exception of Apple. With Apple accounting for roughly 20.8% of the investment conglomerate's public holdings based on the last available update, two tech companies now account for roughly 31% of Berkshire's total stock holdings.
Alphabet has qualities that seemingly make it a natural fit for the Berkshire portfolio, and it wouldn't be shocking to see Abel direct Berkshire to increase holdings in the company. It also wouldn't be shocking to see Berkshire buy stakes in other dependable, highly profitable tech leaders.
Bank of America is an advertising partner of Motley Fool Money. American Express is an advertising partner of Motley Fool Money. Keith Noonan has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Alphabet, American Express, Apple, and Berkshire Hathaway. The Motley Fool has a disclosure policy.