Berkshire Hathaway has significantly expanded its investment in Alphabet, adding $17 billion in the second quarter to make it the company’s third-largest equity holding. This strategic move includes a $10 billion private placement and further open market purchases.
Despite this aggressive investment, concerns have been raised about Berkshire’s cash management strategy and potential shifts from Warren Buffett’s patient investing approach. Concurrently, Berkshire continues to trim its financial sector holdings, notably reducing its stake in Bank of America.
Berkshire Hathaway, led by Warren Buffett, has significantly increased its investment in Google's parent company, Alphabet, adding a substantial $17 billion worth of shares in the second quarter. This strategic move positions Alphabet as the third-largest holding in Berkshire's equity portfolio.
According to Berkshire's latest quarterly filing with the SEC, the conglomerate now owns nearly 106 million shares of Alphabet's Class A and Class C stock, currently valued at approximately $36.6 billion. This positions Alphabet just ahead of Coca-Cola, whose shares held by Berkshire are valued at $35.1 billion, but still trails behind Apple ($69.7 billion) and American Express ($51.9 billion).
A significant portion of this investment, approximately 60% of the 48.1 million new shares, was acquired through a $10 billion private placement with Alphabet announced in early June. This implies that Berkshire also purchased around $7 billion of Alphabet shares on the open market.
Beyond Alphabet, Berkshire also increased its stake in Delta Air Lines by 44%, adding roughly $1.6 billion. This brings their Delta holdings to 57.3 million shares, valued at $5.1 billion. This marks a notable shift, as Berkshire had previously divested its airline holdings in early 2020 due to the COVID-19 pandemic's impact on travel.
Other notable additions include a 142% jump in Macy's holdings, though this amounts to only about $100 million, and an approximate $280 million increase in its stake in homebuilder Lennar, coinciding with Berkshire's $6.8 billion acquisition of Taylor Morrison Home.
On the selling side, Berkshire continued its trend of trimming financial holdings. The company reduced its Ally Financial stake by 7% and its Capital One holding by a significant 58%. While the reduction in Bank of America was a modest 5.9%, the sheer size of the holding meant this accounted for the largest dollar cut of the quarter, valued at around $1.7 billion.
The article also touches on Michael Burry's concerns regarding Berkshire's cash pile management under Greg Abel, Buffett's successor. Burry expressed fear that Abel might lack Buffett's patience for high-quality investments, potentially signaling a shift away from Buffett's long-held strategy of waiting for the "fat pitch." This sentiment appears to be shared by some investors, as Berkshire's stock experienced a decline despite the resumption of share buybacks.
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