Home / Business and Economy / Buffett's Successor: Abel Shakes Up Berkshire Portfolio
Buffett's Successor: Abel Shakes Up Berkshire Portfolio
28 Apr
Summary
- Greg Abel succeeded Warren Buffett as Berkshire CEO on Dec. 31.
- Bank of America may be removed from Berkshire's holdings.
- Abel added Apple and Moody's to the 'compound' investment list.
Berkshire Hathaway has entered a new chapter with Greg Abel officially succeeding Warren Buffett as CEO as of December 31. Abel, who has been with the company for over 25 years, now oversees daily operations and the firm's extensive investment portfolio. Buffett remains as chairman of the board.
Abel shares Buffett's value investing philosophy, focusing on strong management and competitive advantages. However, changes are anticipated, notably the potential removal of Bank of America, Buffett's former second-largest holding, from Berkshire's portfolio. This is suggested by Buffett's recent shareholder letter and Berkshire's filings.
Buffett designated eight holdings as "indefinite," including Coca-Cola, American Express, Occidental Petroleum, and Japan's five sogo shosha. In his first letter as CEO, Abel added Apple and Moody's to his list of companies expected to compound value over decades.
Bank of America was notably absent from both Buffett's and Abel's lists of long-term holdings. Further indicating a shift, Buffett systematically reduced Berkshire's stake in Bank of America by nearly 515.6 million shares, approximately 50%, in the six quarters preceding his retirement.
Berkshire's initial investment in Bank of America in August 2011 was strategic, providing capital and yielding preferred stock. A significant gain was realized in 2017 when Buffett exercised stock warrants for a $12 billion profit. Initially attractive due to a 62% discount to book value, Bank of America shares now trade at a premium, which may conflict with Abel's strict adherence to value investing principles.
