The Abel Era Begins with a Bang π
Berkshire Hathaway's (BRK.A, BRK.B) latest 13F filing is out, and it's a bombshell. New CEO Greg Abel didn't just tweak the portfolio; he blew it up. The number of holdings was slashed from 39 to just 26, signaling a radical shift in strategy. While some see a new, decisive leader, I see a man potentially repeating the errors of his predecessor. Let's dive into the moves that have the market buzzing.
The Great Purge: Todd Combs' Legacy Erased
Abel's first major act was to fully exit 15 positions, effectively liquidating the entire portfolio managed by former Berkshire fund manager Todd Combs. This included high-quality names like Amazon (AMZN), Visa (V), and Mastercard (MA). While a new CEO often wants his own team and strategy, dumping these compounders feels like a knee-jerk reaction. It raises a critical question: was this a strategic shift, or just a house-cleaning exercise that threw the baby out with the bathwater?
The Ghost of Buffett's Past: Airlines and Retail βοΈποΈ
What Abel bought is far more controversial than what he sold. He established a massive $2.6 billion position in Delta Air Lines (DAL) and a smaller $55 million stake in Macy's (M). This is the investing equivalent of walking into a minefield your mentor has already mapped.
- Airlines (Delta): Warren Buffett has publicly called airlines a 'bottomless pit' for capital. His 1989 US Airways preferred stock investment was a 'terrible mistake,' and his 2016 airline basket was a loser that he sold at a loss during the pandemic. The allure of pricing power and credit card rewards is tempting, but history shows that capital intensity and economic sensitivity always win in the end.
- Retail (Macy's): Buffett has said retail is a 'tough business with little moat.' While the real estate thesis (buying Macy's for its valuable NYC flagship) is a classic value play, it's a thesis that has been 'obvious' for a decade. The stock is down nearly 40% over that period. Abel is betting that this time is different, but time is not on the side of a dying business model.
Technical Insight: A look at Delta's chart shows it is currently trading near a key resistance level at $55. A failure to break through this level on the back of Berkshire's endorsement would be a major bearish signal, suggesting the 'Buffett curse' on airlines is still in effect.
This is the most debated topic on Wall Street right now. Is Greg Abel a bold new visionary, or is he making the same old mistakes? Here's how the bulls and bears are lining up.
The Big Bet: Alphabet and the AI Future π
Not all of Abel's moves are bad. His largest purchase by far was a massive addition to Alphabet (GOOGL, GOOG). This is a smart, forward-thinking move. Alphabet is arguably the best-positioned company in the AI race, controlling both the leading AI model (Gemini) and its own custom chips (TPUs). This is a long-term winner.
However, his decision to triple down on The New York Times (NYT) is puzzling. While a great business, its forward P/E of ~27 is steep. It feels like a small, nostalgic bet rather than a high-conviction allocation.
Key Portfolio Changes at a Glance
| Action | Stock | Stake Size (Approx.) | Strategic Logic | Risk Level || :--- | :--- | :--- | :--- | :--- || Exited | Amazon, Visa, Mastercard | Full Exit | House cleaning / Shift to value | Missed Growth || New Buy | Delta Air Lines | $2.6 Billion | Airline pricing power / Credit cards | π¨ High || New Buy | Macy's | $55 Million | Real estate value play | π¨ High || Increased | Alphabet | $10+ Billion | Dominant AI position | β Low || Increased | New York Times | Tripled | Digital subscription growth | β οΈ Medium (Valuation) |
π In-Depth Fundamental Analysis
| Company | Share Price | P/E Ratio | P/B Ratio | ROE | Operating Margin (OPM) | Revenue Growth |
|---|---|---|---|---|---|---|
| GOOG (Alphabet) | $379 | 28.94 | 9.60 | 38.88% | 36.12% | 21.80% |
| M (Macy's) | $21 | 8.91 | 1.12 | 13.64% | 7.47% | -1.10% |
| GOOGL (Alphabet) | $383 | 29.23 | 9.69 | 38.88% | 36.12% | 21.80% |
| MA (Mastercard) | $499 | 28.83 | 65.81 | 232.08% | 60.84% | 15.80% |
| V (Visa) | $329 | 28.70 | 16.42 | 60.35% | 67.35% | 17.10% |
| AMZN (Amazon.com,) | $266 | 31.41 | 6.48 | 24.29% | 13.14% | 16.60% |
| NYT (New) | $75 | 32.17 | 6.03 | 19.68% | 13.13% | 12.10% |
| DAL (Delta) | $76 | 11.12 | 2.44 | 24.99% | 3.18% | 12.90% |
Scenarios & Conclusion: A Fork in the Road for Berkshire
Greg Abel is a new CEO, and he deserves time to build his legacy. But his first moves are a mixed bag that should make any Berkshire shareholder cautious.
Best-Case Scenario π:
- Abel is a disciplined value investor who correctly identifies the bottom in airlines and retail.
- Delta's post-pandemic pricing power proves sustainable, and Macy's real estate is finally unlocked.
- Alphabet's AI dominance drives the majority of Berkshire's future returns, making the other bets irrelevant.
Worst-Case Scenario π»:
- Abel falls into the same value traps that Buffett warned about for decades.
- Delta gets crushed in the next recession, and Macy's continues its slow decline into irrelevance.
- The sale of Amazon, Visa, and Mastercard looks like a catastrophic mistake in 5 years, as Berkshire misses out on the next leg of the tech bull market.
The Verdict: Abel's bet on Alphabet is genius. His bets on Delta and Macy's are a gamble. For now, the Oracle of Omaha's shadow is long, and his successor seems to be ignoring some of its most important lessons. Investors should watch closely. If Delta falters, it won't just be a bad tradeβit will be a sign that the new Berkshire has lost its way.
