Berkshire Hathaway Will Embrace Tech
As expected, social media is ablaze with Berkshire Hathaway’s latest 13F filing, the first to be released with Greg Abel as CEO. The various buy and sell decisions overseen by Warren Buffett’s successor were always going to be put under a microscope as the market debates Abel’s skill as a stock picker. The 13F wasn’t short of drama. When examining Abel’s background, strengths, and weaknesses, as well as Berkshire’s standing, a picture of how Berkshire Hathaway will look post-Buffett is starting to come into focus. The company is likely in for dramatic changes, and Silicon Valley will play a role.
During his first three months as CEO, Abel worked quickly to put his touch on Berkshire’s equity portfolio. As detailed in Berkshire’s latest 13F, Abel reduced the number of companies comprising Berkshire’s equity portfolio by 30%. Most of the positions sold appear to have been purchased by Todd Combs over the years. Combs had initially been groomed to be Buffett’s protégé. Those plans shifted with Combs recently leaving Berkshire to run a special investment fund for Jamie Dimon at JPMorgan. Berkshire also announced new stakes in Macy’s and Delta, names in industries that Buffett has famously talked down in the past. The big move was Berkshire tripling its stake in Alphabet to what is now a $23 billion position at its current stock price.
For a company that famously “didn’t get” technology, approximately 30% of Berkshire’s equity portfolio is once again tech, represented by two companies: Apple and Google. This percentage had been higher prior to Buffett slashing Berkshire’s Apple stake. However, Apple had always been thought of as different than a tech pure play. When explaining the Apple purchase, Buffett would often comment on Apple’s uniqueness resembling more of a consumer staples company.
With Greg Abel as CEO, I expect to see two major changes at Berkshire Hathaway:
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