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Berkshire Hathaway Under CEO Greg Abel: Portfolio Shift and Alphabet Stake Increase

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Berkshire Hathaway Shifts Strategy Under New CEO Greg Abel

A new era begins. In Q1 2025, Berkshire Hathaway executed a dramatic overhaul of its investment portfolio, exiting 16 positions while pouring billions into Alphabet and Delta Air Lines.

Portfolio Changes: Q1 2025

Exits and Reductions

Berkshire Hathaway's 13F filing for the first quarter of 2025 reveals the company completely exited 16 positions, including:

  • Amazon (AMZN): Sold entirely after a 77% reduction in the previous quarter.
  • Domino's Pizza (DPZ): Sold after six consecutive quarters of purchases.
  • Visa (V) and Mastercard (MA): Both sold.
  • UnitedHealth Group (UNH): Sold.
  • Chevron (CVX): Stake reduced by 35%.

New Additions and Increases

  • Alphabet (GOOGL, GOOG): Berkshire increased its stake by purchasing $10 billion in stock — $5 billion in Class A shares at $351.81 per share and $5 billion in Class C shares at $348.20 per share. This brings the total Alphabet position to an estimated $23 billion, making it the fourth-largest holding.
  • Delta Air Lines (DAL): Purchased over $2.6 billion, acquiring approximately 40 million shares.
  • Macy's (M): A new position worth nearly $55 million was established.
  • The New York Times Co. (NYT): Berkshire nearly tripled its stake.

Reasons for Changes

  • Amazon: The exit was reportedly motivated by valuation concerns; the position was not considered a fundamental bargain.
  • Domino's Pizza: The sale was attributed to the impact of inflation on consumers. The company reported subpar same-store sales growth in the U.S. (0.9%) and a decline in international same-store sales (-0.4%) in Q1.
  • Alphabet: The increased stake reflects a focus on Alphabet's search business, YouTube, and high-margin cloud services (Google Cloud), which experienced 63% year-over-year growth in Q1, partly driven by AI solutions.

Alphabet's $80 Billion Capital Raise

Alphabet Inc. announced a plan to raise $80 billion in new equity capital, including:

  • A $30 billion public offering.
  • A $40 billion at-the-market share issuance program.
  • A $10 billion private placement to Berkshire Hathaway.

Alphabet's AI bet is massive. Proceeds will fund investments in AI infrastructure and global computing capacity, as the company faces demand for AI solutions that exceeds available supply.

Impact on Related Companies

Following the announcement, Broadcom (AVGO) shares rose over 6% in premarket trading. Broadcom has a long-term agreement to supply custom AI chips to Google through 2031, as well as a separate agreement with Anthropic to provide access to approximately 3.5 gigawatts of AI computing capacity starting in 2027.

Berkshire Hathaway's Concentrated Portfolio

The fourth-quarter 13F filing for 2023 revealed that Warren Buffett left his successor with a highly concentrated portfolio. Approximately 61% of Berkshire's $318 billion investment portfolio is held in just five stocks:

  • Apple (AAPL)
  • American Express (AXP)
  • Coca-Cola (KO)
  • Bank of America (BAC)
  • Chevron (CVX)

Long-Term Holdings

Warren Buffett previously identified Coca-Cola and American Express as indefinite holdings. Coca-Cola has been a continuous holding since 1988, and American Express since 1991. These holdings provide significant annual yields relative to their cost basis:

  • Coca-Cola: Cost basis of approximately $3.25 per share, yielding approximately 63%.
  • American Express: Cost basis of approximately $8.49 per share, yielding approximately 39%.

Potential Portfolio Adjustments

  • Apple: Its trailing 12-month P/E ratio has increased to 34 since Berkshire's initial purchase in Q1 2016. The company has experienced periods of weakness in physical device sales.
  • Bank of America: Acquired in August 2011 at a 62% discount to book value, the stock now trades at a 31% premium to book value.
  • Chevron: Could become a foundational holding. Greg Abel's background as CEO of MidAmerican Energy (now Berkshire Hathaway Energy) provides familiarity with the energy sector. Chevron's integrated operating model provides a hedge against crude oil price fluctuations.

Energy Sector Investments

Under Warren Buffett's leadership, Berkshire Hathaway made significant investments in the oil and gas sector, totaling at least $58 billion. Specific acquisitions include:

  • Building significant positions in Chevron and Occidental Petroleum.
  • Acquisition of Dominion Energy's natural gas and storage assets in 2020 (~$10 billion).
  • Purchase of a 50% stake in the Cove Point liquefied natural gas facility in July 2023 ($3.3 billion).
  • Acquisition of the remaining 8% of Berkshire Hathaway Energy in October 2024 (~$2.4 billion).
  • Acquisition of Occidental Petroleum's petrochemical division, OxyChem, in 2025 (~$9.7 billion).

CEO Greg Abel's Inaugural Shareholder Letter

Greg Abel delivered his first annual letter to shareholders — an 18-page document outlining operational plans and discussing the equities portfolio. Abel identified four stocks as core holdings, stating they are "businesses we understand well, have a high regard for their leaders, and expect will compound over decades."

Abel signals stability. He indicated an expectation of "limited activity in these holdings," marking a clear, long-term orientation.

Core Holdings

  • Apple (AAPL): Represents 18.9% of the portfolio. First acquired in 2016, the stake has been reduced by about 75% in recent years. Apple's conservative approach to AI development and its consistent share buyback program are noted as attributes.
  • American Express (AXP): Represents 14.7% of the portfolio. Initially invested in 1964, significantly increased in the 1990s. The company's closed-loop payment network and recurring fee revenue are key differentiators.
  • Coca-Cola (KO): Represents 10.2% of the portfolio. Held for decades, it is recognized as a defensive consumer staple and a Dividend King with 63 consecutive years of dividend increases.
  • Moody's (MCO): Represents 3.7% of the portfolio. Acquired in 2000. Moody's provides ratings on corporate debt and is one of three major entities controlling approximately 95% of this regulated market.

Other Developments

  • Taylor Morrison Home: One day before the Alphabet investment announcement, Berkshire agreed to acquire homebuilder Taylor Morrison Home for $6.8 billion in cash.
  • Alphabet's CEO on AI: CEO Sundar Pichai indicated expected capital expenditures of $180–190 billion for the year, part of a projected $700 billion in industry-wide AI capex.