Greg Abel, the newly appointed CEO of Berkshire Hathaway following Warren Buffett's retirement on December 31, has made significant changes to the company's $356 billion investment portfolio. Abel has maintained Buffett's strategy of concentration, with over 45% of the portfolio, $160.6 billion, allocated to just three key holdings: Apple, American Express, and Alphabet.
Apple remains Berkshire's largest holding, with a $76.73 billion stake representing 21.6% of the invested assets. Despite Buffett's decision to sell 75% of Berkshire's Apple stock in the nine quarters leading up to his retirement, Abel has expressed confidence in the company's long-term potential, referring to it as a holding expected to 'compound over decades.' Apple's dominance in smartphone sales and its extensive share repurchase program are likely factors in Abel's continued investment.
American Express, a long-standing holding since 1991, is another major component of Berkshire's portfolio, with a $46.72 billion stake accounting for 13.1% of invested assets. The financial services company's dual revenue streams from transaction fees and interest income make it a resilient investment. Berkshire is currently earning a nearly 45% annual yield on its American Express stake, providing a strong incentive for Abel to retain the position.
Alphabet, the parent company of Google, has seen the most dramatic increase under Abel's leadership. Abel more than tripled Berkshire's stake in the first quarter and added another $17 billion during the June-ended quarter. Alphabet's virtual monopoly in internet search and its growing ambitions in artificial intelligence (AI) have captured Abel's attention. The integration of generative AI and large language model capabilities into Google Cloud has driven significant sales growth, positioning Alphabet as a potential AI applications powerhouse.