Berkshire Hathaway (BRK.A 0.18%) (BRK.B 0.09%) holds an equity portfolio featuring around 50 stocks, with CEO Warren Buffett having clear favorites such as Apple, Coca-Cola (KO -0.91%), and American Express (AXP 0.32%). Buffett has praised these companies repeatedly and stated he wouldn’t sell them while in charge. However, Berkshire Hathaway has already reduced its Apple holdings by about half over the past year, though it remains the largest position, accounting for roughly 22% of the total portfolio. Buffett hasn’t sold any shares of Coca-Cola or American Express yet. With Buffett stepping down and Greg Abel taking over, could these stocks be at risk?
Coca-Cola and American Express are Berkshire Hathaway’s longest-held positions, acquired in 1988 and 1991 respectively, and completed by 1994 and 1995. Buffett has highlighted several reasons for his admiration of these companies: their dividends, global brand recognition, and strong profitability. Together, these two companies provide Berkshire Hathaway with over $1 billion annually in dividends, and their stock value has grown from an initial investment of $2.6 billion to approximately $50 billion.
Greg Abel, Buffett’s successor, is relatively unknown to the market as he tends to stay out of the spotlight. Despite being part of Berkshire Hathaway for 25 years, he became vice chairman in 2018 and was named Buffett’s successor in 2021. Abel oversees all non-insurance businesses, but the equity portfolio is managed by Todd Combs and Ted Weschler. If this structure remains unchanged, Abel may not significantly alter investment decisions, leaving them to the current team. Buffett has mentioned that some recent trades, such as the purchase of Amazon stock in 2019, were made by his managers rather than himself. Without Buffett’s direct involvement, the investment team might feel more comfortable making bold trades outside of Buffett’s traditional preferences.
Buffett has acknowledged that as Berkshire grows larger, it becomes harder to make impactful investments. Abel might introduce new strategies that differ from Buffett’s approach, potentially developing his own leadership style. However, revolutionary changes seem unlikely, as Buffett’s investing philosophy has shaped Berkshire Hathaway’s success, and the current team, trained under Buffett, is expected to continue his legacy.
In the near term, it seems unlikely that Coca-Cola or American Express will be sold, as both companies continue to perform well for the reasons Buffett values. However, Abel has not made the same commitments to these stocks as Buffett, so a sale could be considered in the future.
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