Berkshire Hathaway's new CEO, Greg Abel, has outlined the company's investment strategy for the post-Buffett era in his inaugural letter to shareholders. He designated four companies—Apple (AAPL.US), American Express (AXP.US), Coca-Cola (KO.US), and Moody's (MCO.US)—as the firm's "core holdings," indicating these positions are expected to remain stable long-term and are unlikely to be reduced. Abel stated these four businesses are entities that Berkshire "understands thoroughly, highly regards their management, and anticipates will deliver compound growth for decades." He explicitly committed to maintaining "limited activity" regarding these stakes.
Combined, these four stocks represent over half of Berkshire's approximately $300 billion equity portfolio. When including the roughly $35 billion stake in five Japanese trading companies, these nine core positions account for two-thirds of the total portfolio. Notably, Bank of America (BAC.US) and Chevron (CVX.US), which are among Berkshire's top five holdings, were absent from this core holdings list.
Simultaneously, Abel did not specify who will be responsible for day-to-day stock investment decisions, leaving significant uncertainty about the future direction of Berkshire's investment strategy.
The four "permanent holdings" benefit from a substantial cost advantage. Coca-Cola and American Express have been held by Berkshire for over 40 years, while the stake in Moody's has been held for more than 20 years. These stocks have long been viewed by the market as quintessential "permanent holdings," partly due to their extremely low acquisition costs. For example, Berkshire's average cost basis for Coca-Cola, acquired in the late 1980s, is approximately $3 per share, while the stock closed at a record high of $81.56 last Friday. The Apple position has been held for about a decade, with Berkshire's average cost around $27 per share—roughly one-tenth of the current price of $264.
It is noteworthy that the Apple stake had previously undergone significant reduction. Over recent years, Warren Buffett had trimmed the position by about 80% from its peak, holding 227 million shares by the end of 2025. Abel's latest comments suggest this reduction will not continue further. Analysis suggests that when selling Apple shares, Berkshire appeared to prioritize selling lots with higher cost bases to minimize the tax burden from the substantial sales in 2024.
The exclusion of Bank of America and Chevron from the core list has drawn market attention. Data shows that over the past 18 months, Berkshire has reduced its Bank of America stake by about half to 517 million shares, with a corresponding value of approximately $28 billion. The Chevron holding is valued at around $20 billion.
In his letter, Abel mentioned that Berkshire holds "meaningful positions" in a "few other companies," where capital allocation will be "more dynamic," with the potential for these to eventually be elevated to core holdings. This statement leaves room for interpretation but also indicates that these two stocks currently remain under observation rather than being locked in.
Questions remain regarding the portfolio management structure, sparking discussion about Abel's role. Abel made clear that the "ultimate responsibility for investment decisions rests with me as CEO." He also noted that Buffett continues to work five days a week in the office and remains "available for consultation" on capital allocation, including stock investments. However, Abel himself has no direct portfolio management experience and is also responsible for overseeing more than 50 subsidiary companies.
At the investment manager level, Ted Weschler, who has been a portfolio manager at Berkshire since 2012, will continue to manage approximately 6% of the investment portfolio, a scale consistent with his previous responsibilities. This arrangement differs notably from Berkshire's public statement when hiring Weschler in 2011. At that time, Berkshire stated in a press release that after Buffett was no longer CEO, Todd Combs and Ted Weschler would be responsible for managing the entire stock and bond portfolio, possibly with the assistance of an additional manager. The other investment manager, Todd Combs, departed in December of last year to take an investment role at JPMorgan.
It has been noted that Berkshire currently lacks a dedicated manager responsible for the day-to-day management of the overall investment portfolio. Combined with Abel's characterization of "permanent holdings," some observers believe that new stock investments may no longer be a primary source of value creation for Berkshire in the future. This represents a significant shift for a company whose early foundation was built on successful stock investments.