Berkshire Hathaway’s Core Investments: Buffett’s Favorites Under New Leadership

Berkshire Hathaway (NYSE: BRK.A)(NYSE: BRK.B) typically holds an equity portfolio of about 50 stocks. CEO Warren Buffett has repeatedly favored specific stocks like Apple, Coca-Cola (NYSE: KO), and American Express (NYSE: AXP), insisting he’d never sell them while in charge. Recently, however, Berkshire has sold roughly half its Apple position, though it still represents about 22% of the total portfolio. In contrast, Buffett has maintained his stakes in Coca-Cola and American Express. With Buffett stepping down and Greg Abel taking the reins, questions arise: could these beloved stocks be at risk?

Buffett’s Affection for Coca-Cola and American Express

Coca-Cola and American Express are among Berkshire Hathaway’s longest-held equities. The company first purchased Coca-Cola in 1988 and American Express in 1991, completing its investments by the mid-1990s.

Buffett has consistently referenced these two stocks, highlighting several appealing characteristics:

• Dividends: “These dividend gains, though pleasing, are far from spectacular. But they bring with them important gains in Stock prices,” Buffett noted in his 2022 letter to shareholders. Combined, Coca-Cola and American Express provide Berkshire Hathaway over $1 billion annually in dividends, with their stock value rising from an initial investment of $2.6 billion to approximately $50 billion.
• Global Brand Recognition: “Crucially, their products ‘traveled,'” Buffett observed in 2023. “Both Coke and AmEx became recognizable names worldwide, with their core products meeting essential needs in daily life.”
• Profitability: “We own a small percentage of a dozen or so very large and highly profitable businesses with household names like Apple, American Express, and Coca-Cola,” he wrote in 2024. Buffett mentions that great companies can generate profits without needing significant additional investments.

What’s Next for Greg Abel at Berkshire Hathaway?

Greg Abel remains somewhat of an enigma as he assumes leadership. Although part of Berkshire for 25 years, he became vice chairman in 2018 and was named Buffett’s successor in 2021.

He has managed all non-insurance businesses for years, but investment decisions currently rest with Todd Combs and Ted Weschler. Should this structure remain, Abel may adopt a less hands-on approach to the investment portfolio. If so, the current team could lead the way in making pivotal equity decisions. Notably, Buffett admitted that a manager decided to purchase Amazon Stock in 2019, suggesting the team has made many recent trades independently of him.

Recently, Buffett remarked on the challenges of investing a large amount of capital. When asked how he would allocate $10 billion today, he downplayed the impact it could have. Abel may guide the investment team differently than under Buffett’s leadership, potentially introducing new strategies.

Despite possible adjustments, significant changes in Berkshire’s investment philosophy are unlikely. Buffett’s strategies have shaped the company’s success, and the current investment team has been trained under his guidance.

Will the new leadership sell Coca-Cola or American Express? Given their strong performance and Buffett’s historical commitment, selling them seems unlikely in the short term. However, as Abel has not expressed the same dedication, the possibility exists for future changes.

Is Coca-Cola a Good Investment Right Now?

Before investing in Coca-Cola, consider the following:

The Motley Fool Stock Advisor analyst team has identified ten stocks they believe are currently strong investment opportunities… and Coca-Cola is not among them. The stocks that have made their list could show substantial growth in the coming years.

For instance, consider if you had invested $1,000 in Netflix on December 17, 2004; it would now be worth an astonishing $623,103. Likewise, a $1,000 investment in Nvidia since April 15, 2005, would have grown to $717,471.

Note that Stock Advisor boasts a total average return of 909%, significantly outperforming the S&P 500’s 162% return.

For more insights into the top 10 stocks, consider joining Stock Advisor.

The views and opinions expressed herein are those of the author and do not necessarily reflect those of Nasdaq, Inc.