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Warren Buffett's Successor, Greg Abel, Pared Down Bank of America, and Piled Into a Virtual Monopoly That's Now Berkshire's 3rd-Largest Holding
The Motley Fool • • business
Key Points:
- Berkshire Hathaway's new CEO, Greg Abel, has continued to reduce the company's stake in Bank of America for the eighth consecutive quarter, selling 30.23 million shares and cutting the total position by 53%, likely due to profit-taking and valuation concerns.
- Bank of America stock has shifted from trading at a 62% discount to book value in 2011 to a 64% premium as of August 2024, and its sensitivity to Federal Reserve rate cuts has negatively impacted its net interest income.
- Berkshire significantly increased its investment in Alphabet (Google's parent company), purchasing over 48 million shares across Class A and Class C, making Alphabet its third-largest holding with a market value of nearly $36.6 billion.
- Abel's confidence in Alphabet stems from its dominant position in global internet search, ownership of YouTube, and strong growth in AI-driven cloud services, with Google Cloud's high-margin sales growing 82% in the June quarter.
- Other portfolio moves include selling Constellation Brands and reducing stakes in Kroger and Capital One Financial, while also increasing holdings in Macy's and Delta Air Lines for the second straight quarter.
