Berkshire Hathaway, under its new CEO Greg Abel, is already looking vastly different from the decades of leadership that came before it. In his first full quarter as CEO since taking the reins from legendary investor Warren Buffett at the start of the year, Abel has executed a massive portfolio shakeup. In a move that goes completely against Buffett’s lifelong investing rules, Berkshire has more than tripled its stake in Google’s parent company, Alphabet, while completely dumping its shares in Amazon, according to a report by Fortune.
Greg Abel breaking Buffett’s ‘tech rule’
For decades, Warren Buffett was famously reluctant to buy tech stocks. His reasoning was simple: he didn’t understand the sector well enough to predict who the long-term winners would be. Buffett, however, famously broke his own rule late in his career to buy a massive stake in Apple as he viewed it more as a consumer loyalty brand than a tech company.Abel appears to have a different comfort level with the Silicon Valley. According to a new filing with the Securities and Exchange Commission (SEC), Berkshire expanded its holding in Google-parent Alphabet during the first three months of the year. At the end of last year, Berkshire had 17.8 million Alphabet shares worth $5.6 billion but in end of March, it had 58 million Alphabet shares worth nearly $17 billion.Meanwhile, Amazon is on the losing end of the shift, with Berkshire completely liquidating its position in the e-commerce giant alongside major financial stocks like Visa and Mastercard. Fortune also reported that the rebalancing follows the departure of long-time portfolio co-manager Todd Combs late last year.
Berkshire also makes the ‘Delta’ gamble
Alphabet wasn’t the only shocking addition. Berkshire also revealed a massive $2.6 billion purchase of Delta Airlines stock, picking up nearly 40 million shares.This move appears to be raising eyebrows because of Buffett’s view of the aviation industry. Buffett has bought and dumped airline stocks multiple times over the decades, once famously joking to shareholders in 2008 that a farsighted capitalist at Kitty Hawk should have “shot Orville [Wright] down” to save future investors from the cutthroat, low-margin airline industry.The filing also revealed a small, new $55 million stake in retailer Macy’s, which caused the department store’s stock price to pop following the disclosure.Earlier this month, Abel led his very first annual shareholders meeting as CEO, while a retired Buffett watched from the floor with the rest of the board of directors.
