Abel's Strategic Shift: What Berkshire's New CEO Didn't Say About Its Largest Holdings

When new CEO Greg Abel shared his inaugural shareholder letter, he offered investors a revealing glimpse into how he plans to steer Berkshire Hathaway’s massive $318 billion equities portfolio. Yet what proved equally telling was what Abel deliberately left out of his analysis. His decision to designate only four companies—Apple, American Express, Coca-Cola, and Moody’s—as “core holdings” expected to “compound over decades” raised an important question: Are there major positions in Berkshire’s top five that might not align with Abel’s long-term vision?

The Strategic Framework Behind Abel’s “Core Holdings” Designation

Abel’s new CEO tenure began with a carefully curated list of companies positioned for sustained growth with minimal portfolio turnover. These four stakes represent what Abel considers foundational to Berkshire’s equity strategy. By publicly naming them, he signaled confidence in their fundamental business models and industry positioning. Notably, he didn’t extend this same confidence to every major position on Berkshire’s books—a distinction that deserves closer examination.

The absence of certain holdings from this elite group doesn’t necessarily indicate immediate liquidation plans. Rather, it suggests these positions may not meet Abel’s criteria for being true “forever holds” in the portfolio. This distinction matters significantly for understanding the new CEO’s evolving philosophy compared to his predecessor’s approach.

Bank of America: A Questioned Core Asset

One conspicuous omission involves Bank of America, which represents 8.1% of Berkshire’s total portfolio and ranks as the fourth-largest equity position. This absence is particularly noteworthy given Berkshire’s historical commitment to the banking sector and its substantial stake in BAC specifically.

The history here is illuminating. Back in 2011, following the Great Recession’s aftermath, Berkshire injected $5 billion into Bank of America in exchange for preferred stock and warrants granting the right to purchase 700 million common shares at $7.14 each. By any measure, that investment proved exceptionally profitable when those warrants were exercised in 2017. This track record might suggest the stock deserves core-holding status.

Yet circumstances have shifted considerably. Berkshire has systematically reduced its Bank of America stake by approximately 50% over recent years—a trend that accelerated under Abel’s new CEO watch. More broadly, the banking sector has struggled since the Great Recession, consistently lagging the S&P 500’s returns on a pure performance basis. Given Berkshire’s substantial cash hoard and relative absence of new acquisition activity in recent years, the firm appears increasingly concerned about recession risks.

The valuation picture adds another layer of complexity. Bank of America currently trades around 175% of its tangible book value, positioning it toward the higher end of its ten-year valuation range. For a new CEO focused on capital allocation efficiency, this valuation level may not justify maintaining such a prominent portfolio position. The omission from Abel’s core holdings list suggests Bank of America occupies an uncertain position—perhaps not destined for complete elimination, but potentially a candidate for further reduction if valuations remain elevated.

Chevron: The Energy Puzzle

Another absence that merits attention is Chevron, accounting for 6.5% of Berkshire’s portfolio. This omission struck many observers as surprising, particularly given that Abel previously led Berkshire Hathaway Energy and has overseen a notable buildup in traditional energy holdings in recent years.

The new CEO’s decision to exclude Chevron from his core holdings list becomes even more intriguing when examining what the company has accomplished. Berkshire did sell considerable Chevron shares during 2022, yet has actually expanded its position since the second quarter of 2023, suggesting management still saw value in the position. Under normal circumstances, an expanding stake might signal comfort with the holding.

Chevron’s operational track record supports continued conviction. The company’s acquisition of Hess provided it with a premier upstream portfolio capable of delivering industry-leading profit margins. Its balance sheet metrics remain solid, with a net debt-to-cash flow ratio of just 1x—hardly a sign of financial distress. In 2025, Chevron repurchased $12 billion of its own stock and appears positioned to maintain roughly that pace going forward, indicating management confidence in valuation.

The energy sector’s geopolitical dimensions add further complexity. Chevron offers compelling leverage to Middle East tensions, since rising oil prices directly benefit its operations. Additionally, the company possesses significant infrastructure in Venezuela and has indicated plans to triple production there, positioning it advantageously for a potential shift in that country’s political and economic trajectory. Its trailing-12-month dividend yield of approximately 3.8% provides income support.

Unlike Bank of America’s case, where the core-holdings omission carries more negative connotations, Chevron’s exclusion appears more ambiguous. The new CEO may view it as a strong position best held rather than expanded—a difference worth noting when interpreting Abel’s strategic positioning.

What the Portfolio Tells Us About Abel’s Vision

The divergence between Berkshire’s actual holdings and what the new CEO chose to publicly endorse speaks volumes about his investment philosophy. Abel appears oriented toward businesses with durable competitive advantages, limited need for active management, and strong fundamental economics. His explicit core-holdings list reflects these priorities more clearly than did his predecessor’s more passive acceptance of legacy positions.

The banking sector’s ongoing structural challenges and energy’s uncertain long-term trajectory apparently don’t align with how Abel envisions Berkshire’s permanent portfolio structure. These judgments carry important implications for shareholders considering whether to match or contest his strategic direction during these early years of his new CEO leadership.