The second quarter was marked for Berkshire Hathaway by a landmark decision: the investment giant increased its stake in Alphabet, Google's parent company, by an impressive $17 billion. This move instantly propelled the tech giant to the third position in Berkshire's portfolio structure, signaling a serious reshuffling of priorities.
According to the latest 13F filing, Berkshire now holds nearly 106 million shares of Alphabet (Classes A and C), with the total value of this position reaching approximately $36.6 billion. Notably, Alphabet has surpassed the legendary Coca-Cola ($35.1 billion) in terms of investment volume, but still trails the leaders — American Express ($51.9 billion) and Apple ($69.7 billion).
The structure of the deal is intriguing: about 60% of the new shares were acquired through a $10 billion private placement, which the parties had agreed upon back in June. The remaining $7 billion was purchased on the open market. This is the first such large-scale investment in Alphabet in the last 14 quarters, which in itself signals a shift in the investment paradigm.
At the same time, Berkshire increased its stake in Delta Air Lines by 44%, investing an additional approximately $1.6 billion. This move looks especially symbolic against the backdrop of 2020, when Warren Buffett exited all four major U.S. airlines at a loss. Also noticeable is the growth in positions in Macy's (+142%, about $100 million) and the construction company Lennar (+$280 million).
However, not everyone shares Berkshire's optimism. Michael Burry, the investor who predicted the 2008 mortgage crisis, expressed clear disappointment with the actions of the new management. His main argument: Buffett's successor, Greg Abel, is spending only a small fraction of the company's colossal cash reserves. Recall that in the first quarter, this reserve reached a record $397 billion, and by the end of the second quarter it had only shrunk to $360 billion.
Burry believes that Abel's current decisions are more of a semblance of activity than strategically sound investments. At the same time, he does not advise shorting Berkshire's stock, acknowledging that the market has already reacted with a decline of more than 3% over the week. Interestingly, Alphabet's shares have also fallen in price amid the departure of top AI executives, although this is hardly directly related to Berkshire's actions.
My take on the situation
We are witnessing a classic transition period. On one hand, increasing the position in Alphabet is a bet on the long-term growth of AI and cloud technologies. On the other hand, the market's reaction and the skepticism of veterans like Burry suggest that investors do not yet believe in the decisiveness of the new management. Berkshire's further actions with its remaining reserves will be the litmus test: whether Abel can step out of Buffett's shadow and execute truly bold deals, or whether we will only see cautious tactical moves. For the market, this is a signal to pay heightened attention to every subsequent 13F filing.