Locator: 50610BRKB.
Locator: 50610DEBACLE.
My hunch: no more annual meetings like the ones we were used to seeing with Munger / Buffett.
How bad is it? BRKB is getting beaten badly by MDU.
Ticker:
This is one of the longest stories I've ever seen in Barron's. This is not a good news story. Story in Barron's generally get no comments. This story had around 40 the last time I looked.
Berkshire Hathaway CEO Greg Abel isn’t following the original script when it comes to running the company’s $300 billion equity portfolio.
Warren Buffett originally envisioned that Ted Weschler and Todd Combs would run the portfolio when he stepped down as CEO.
“Todd and Ted—possibly aided by one additional manager—will have responsibility for the entire equity and debt portfolio of Berkshire, subject to overall direction by the then-CEO and Board of Directors,” the company said in a press release when Weschler was hired in 2011.
While Buffett was CEO, Combs and Weschler each had been running about 5% of the portfolio with Buffett handling the rest.
Abel succeeded Buffett as CEO at the end of last year and appears to be running 94% of it himself, while giving Weschler, a veteran Berkshire investment manager, authority over 6%. The 6% figure was cited in Abel’s inaugural shareholder letter in February, when he wrote that Weschler would get additional authority for some holdings run by Combs.
Combs left Berkshire in December for an investment job at JPMorgan Chase and won’t be replaced, according to The Wall Street Journal. Abel also decided to sell the stock that Combs had accumulated for Berkshire, the WSJ said. Barron’s wrote those holdings could total $15 billion.
Part of Abel’s strategy is to essentially freeze about two-thirds of Berkshire’s portfolio. He wrote in his annual letter that Apple, American Express, Coca-Cola, and Moody’s were core investments, with “limited activity in these holdings” likely.
The same approach applies for the five Japanese trading companies totaling about $40 billion that Buffett has accumulated since 2019, he wrote. These holdings total about $200 billion now.
There could be limited major additions to the portfolio anytime soon. Abel is a part-time manager, Weschler has limited authority, and Buffett sees little that excites him in the stock market.
Buffett told CNBC on March 31 that he wasn’t “finding things” in the stock market except for what he described as a tiny purchase. Asked about the then-5% year-to-date drop in the S&P 500, he said “this is nothing,” noting the index has been down 50% three times during his tenure as CEO.
The reported sale of the Combs-run stocks do follow a pattern. Berkshire sold many stocks held by former investment manager Simpson when he retired about 15 years ago, and it unloaded most of the $3 billion of stocks held by Alleghany after it bought the insurer in 2022.
Still, it seems rash to sell the Combs stocks simply because he departed. Combs bought blue-chip stocks, and selling them will probably will incur a tax bill and boost Berkshire’s cash toward $400 billion. Berkshire likely is sitting on too much cash already.
