Greg Abel took over as CEO of Berkshire Hathaway (BRKA -1.08%)(BRKB -1.15%) from Warren Buffett this year, and there have been some notable changes in the company’s holdings over the past several months. Not only has Abel been buying more stocks in the most recent quarter, breaking Berkshire’s 14-quarter streak of being a net seller of stocks, but the composition of the portfolio also looks much different than in the past.
The biggest and most surprising move is undoubtedly its large position in Alphabet (GOOG -0.61%)(GOOGL -0.55%).
Image source: Getty Images.
Alphabet is now a top-three holding in Berkshire’s portfolio
Berkshire added Alphabet stock to its portfolio last year, even while Buffett was in charge. Buffett even admitted previously that he initiated the investment in Alphabet. He also admits, however, that he and Abel are in regular talks and discussions.
Today’s Change
(-0.61%) $-2.09
Current Price
$341.45
Key Data Points
Market Cap
Day’s Range
$339.57 – $345.05
52wk Range
$197.46 – $404.47
Volume
12.6M
Avg Vol
22.3M
Gross Margin
60.94%
Dividend Yield
0.25%
And while the position may have begun while Buffett was the CEO, it has expanded under Abel. Berkshire has since added to its holdings in Alphabet, and the total position now accounts for just over 10% of the overall portfolio, placing it ahead of Coca-Cola in value, behind only American Express and Apple.
It’s a considerable move for Berkshire because, with a market cap of more than $4 trillion, Alphabet isn’t exactly a cheap stock to buy. It makes sense, however, if Berkshire places a high value on its future growth prospects related to artificial intelligence (AI). While Alphabet has been a top growth stock to own for years, the AI angle and the elevated valuation definitely raise some eyebrows, especially given that Buffett previously said it was difficult to find value in the market.
Today’s Change
(-1.15%) $-5.80
Current Price
$498.23
Key Data Points
Market Cap
Day’s Range
$498.07 – $505.31
52wk Range
$464.01 – $537.74
Volume
4.7M
Avg Vol
4.8M
Gross Margin
23.52%
Do these changes make Berkshire a better investment moving forward?
Berkshire’s greater receptiveness to owning growth stocks, particularly those closely pursuing AI opportunities, can lead to greater upside for its overall portfolio in the long run. At the same time, however, it also introduces a bit more risk along the way. I suspect there will be more changes ahead for Berkshire’s portfolio, but I think overall it’s a good sign that the business is open to a wider range of growth opportunities.
That definitely makes the stock a more compelling option. Although its performance has been flat this year, I believe it has more upside, and Berkshire could be a great buy for the long haul, as Abel appears to be moving the company in the right direction.
American Express is an advertising partner of Motley Fool Money. David Jagielski, CPA 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.
