Warren Buffett, not his successor Greg Abel, appears to still be driving major investment decisions at Berkshire Hathaway as the 95-year-old investor approaches his 96th birthday.
Two weeks ago, Berkshire Hathaway reported that its massive cash reserves fell by billions of dollars during the second quarter, the first significant drop since early 2022. Many observers, including financial journalists who cover the company, interpreted the move as Abel putting his stamp on the company after taking over as CEO. New disclosures about what Berkshire held in its equity portfolio as of June 30 complicated that picture, according to CNBC.
Barron's writer Andrew Bary has argued that Abel has not been involved in stock picks at all, and that it is Buffett who still likes making big investment decisions involving Berkshire's $350 billion-plus equity portfolio. In a CNBC interview last month, Buffett said he had "initiated" Berkshire's investment in Alphabet, Google's parent company. That stock first appeared in the portfolio in the third quarter of last year.
Bloomberg News reported that Berkshire's second-quarter purchase of $10 billion in Alphabet shares directly from the company came after Abel gave a "rapid signoff" to the deal in response to a "stealthy weekend call" to Berkshire from Goldman Sachs, the firm putting together Alphabet's enormous equity offering. Buffett is also presumed to have approved the transaction.
Bary concluded that the second-largest purchase of the quarter, a stake in Delta Air Lines, was the work of portfolio manager Ted Weschler. Abel, Bary noted, has no formal portfolio management experience and does not appear to be making notable stock-picking decisions. Abel has described himself as occupied with running Berkshire's many operating companies and finding new ones to acquire.
Abel has deployed cash in other ways. His $6.8 billion acquisition of Taylor Morrison Home closed after the second quarter ended.
Meanwhile, a close race is developing inside Berkshire's portfolio for third place among its largest holdings. The roughly $17 billion increase in Berkshire's Alphabet stake during the second quarter pushed the stock past Coca-Cola into the third-largest position by market value. As of June 30, Alphabet shares were worth $37.77 billion in the portfolio, compared to Coca-Cola's $32.51 billion, a gap of $5.26 billion.
Since then, Alphabet has dropped 3.5% while Coca-Cola has rallied 12.1%. By Friday's close, Alphabet's lead over Coca-Cola had shrunk to roughly $20 million. On two days, July 30 and August 20, Coca-Cola briefly topped Alphabet at the close.
The question of who is actually running investment strategy at Berkshire has broad implications for long-term shareholders, many of whom built positions specifically because of Buffett's track record. Whether Abel eventually takes the reins on stock decisions, and when that transition happens, remains an open question.
