A distinct change is afoot at Berkshire Hathaway, a conglomerate of such vast proportions it rather gives one the jitters just contemplating it. Old Warren Buffett, a chap who’s navigated the financial waters with the skill of a seasoned admiral, has hung up his hat. Dec. 31st saw him retire, leaving the helm in the capable hands of Greg Abel, a fellow who appears to have a head for figures and a distinctly sensible approach to things. Naturally, a bit of a stir has been caused, but one trusts Mr. Abel knows what he’s about.
Mr. Abel, bless his sensible soul, has announced his intention to follow in the Oracle of Omaha’s footsteps – a rather large pair of shoes to fill, one might add. This includes a firm grip on eight existing stocks that Buffett deemed “indefinite” holdings – a delightfully permanent arrangement, what! These include the venerable Coca-Cola and American Express, stalwarts of the investment world, along with Occidental Petroleum and a quintet of Japanese trading houses. A solid foundation, one feels, upon which to build.
But, in the mere two months since assuming command, Mr. Abel is already leaving his mark, adding two further stocks to this select and rather exclusive club. A bold move, one might say, but a shrewd one, judging by the details.
A Spot of Permanence: The New Holdings
In his first missive to shareholders – a document brimming with financial wisdom, naturally – Mr. Abel revealed his fondness for a select few American companies. He specifically mentioned Apple, American Express, Coca-Cola, and Moody’s – businesses he understands, respects their leadership, and expects to perform admirably for decades to come. A comforting thought, isn’t it?
The inclusion of Moody’s to the ranks of Berkshire’s “forever” holdings wasn’t entirely unexpected. It’s been a part of the portfolio since 2000 – a veritable institution! – and offers a yield that’s positively dazzling. Berkshire’s original investment, a mere $10.05 per share, now yields a dividend of $4.12 – a rather handsome return, one must concede. There’s simply no reason to part with it, and one can’t blame them for that.
Moody’s, you see, is ideally positioned to thrive regardless of the economic climate. Should interest rates decline, corporate debt issuances will increase, benefitting Moody’s Investors Services. And in times of uncertainty, businesses flock to Moody’s Analytics for financial risk management. A clever arrangement, what!
However, the addition of Apple to this esteemed group has raised a few eyebrows. A rather surprising development, one might say.
Apple: A Forever Holding, Indeed?
Mr. Abel’s mention of Apple as a potential long-term compounder is rather intriguing, considering that the recently retired Mr. Buffett had sold off a substantial portion of Berkshire’s Apple stake in the preceding quarters. A bit of a puzzle, wouldn’t you say?
On the surface, Apple possesses all the qualities that both Buffett and Abel admire in a long-term investment. A remarkably loyal customer base, a trustworthy management team, and a share repurchase program that’s positively prodigious. Since 2013, Apple has spent over $841 billion to retire a staggering 44% of its outstanding shares. A dash of financial wizardry, if you ask me, and it’s had a decidedly positive effect on earnings per share.
However, Apple isn’t exactly cheap, and Mr. Abel, like his predecessor, is a stickler for value. When Mr. Buffett first took a position in Apple back in 2016, the price-to-earnings ratio was a respectable 10 to 15. Now, it commands a rather lofty 33.4, and physical device sales have stalled somewhat. A slight wobble, perhaps, but nothing to cause undue alarm.
While Mr. Abel assures us that Apple stock isn’t going anywhere, one wouldn’t be entirely surprised if Berkshire’s stake is further reduced. A prudent measure, one feels, but a testament to the fact that even the most astute investors remain vigilant. A bit of trimming here and there, and the portfolio should remain in tip-top shape for years to come.
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2026-03-04 23:15