Berkshire Hathaway Doubles Down on Alphabet Investment

Berkshire Hathaway's new CEO, Greg Abel, has taken the reins and is following in Warren Buffett's footsteps by investing heavily in high-conviction stocks. One of his biggest investments so far has been in Alphabet, where Berkshire Hathaway has spent $23 billion since the start of the year.

Abel has continued to buy shares of Alphabet even after it became one of the conglomerate's five largest holdings. This is a familiar pattern for Berkshire Hathaway, which tends to buy more shares of high-conviction stocks over months or years.

The case of Apple and Visa offer examples of this pattern, where Berkshire Hathaway initiated positions in these companies and continued buying them practically every quarter until the end of 2018 and between 2011 and 2016 respectively. With Alphabet's recent purchases already indicating that management considers it a high-conviction stock, we may see Berkshire Hathaway do the same.

Alphabet boasts several qualities that Warren Buffett looks for in a stock, including outstanding financial results, a wide moat from network effects, and undervalued valuation at around 18.1x forward earnings, lower than the average of 20x for information technology stocks.