In the second quarter, Berkshire Hathaway aggressively increased its position in Alphabet, Google's parent company, by approximately $17 billion. This allowed the tech giant to rise to the third spot on the list of the legendary investment fund's largest holdings.
An analysis of the fresh 13F filing published this week reveals a landmark shift in Berkshire's strategy. For the first time in the last 14 quarters, the fund made a net purchase of shares, which in itself is a loud signal to the market. The total number of Alphabet shares (Classes A and C) held by Berkshire now stands at nearly 106 million, with a combined value estimated at approximately $36.6 billion.
Thus, Alphabet has overtaken Coca-Cola ($35.1 billion) in position size, trailing only American Express ($51.9 billion) and the perennial leader—Apple ($69.7 billion). Notably, about 60% of the new shares were acquired through a $10 billion private placement agreed upon in June, while the remaining $7 billion were bought on the open market.
Shifting Focus: From Aviation to Real Estate
Beyond the bet on technology, the fund is also showing other interesting changes in its portfolio. The stake in Delta Air Lines was increased by 44%, amounting to additional investments of around $1.6 billion. This move looks especially symbolic against the backdrop of Berkshire exiting all four major U.S. airlines at a loss in 2020. There is also noticeable interest in the consumer and construction sectors: the stake in Macy's grew by 142% (approximately $100 million), and about $280 million was added to homebuilder Lennar. These actions unfold against the announcement of the $6.8 billion acquisition of developer Taylor Morrison.
Criticism from Michael Burry
However, not all investors share the optimism of Berkshire's management. Renowned investor Michael Burry, famous for predicting the 2008 mortgage crisis, has openly expressed disappointment with the actions of new CEO Greg Abel. In a recent comment, he stated that his fears that Warren Buffett's successor would be too old and would not possess the legendary investor's patience are, unfortunately, coming true.
Burry notes that Abel has spent only a small portion of Berkshire's cash reserves. Although the "safety cushion" shrank from a record $397 billion to approximately $360 billion in the second quarter, it remains colossal. In the critic's view, Abel's first steps are more "the appearance of activity" than real strategic investments. Notably, last week Berkshire shares fell by more than 3% despite a large buyback, while Alphabet shares also corrected downward amid the departure of AI executives.
My take on the situation: We are witnessing a classic succession dilemma. On one hand, Abel is demonstrating a willingness to act, diversifying the portfolio toward technology and cyclical sectors. On the other, the scale of his decisions is not yet comparable to the "firepower" Berkshire possesses. The market is waiting for confirmation of whether this is the beginning of a new aggressive era or whether we are merely seeing cautious steps aimed at maintaining the image of active management. The future fate of the $360 billion in reserves will be the main indicator of the new leadership's true intentions.