Since succeeding Warren Buffett as CEO of Berkshire Hathaway (BRKA -0.18%) (BRKB -0.18%) last January, Greg Abel has made some major changes to Berkshire’s stock portfolio. In the two quarters since taking the helm of the Oracle of Omaha’s holding company, Abel has both increased stock holdings and jettisoned many positions, including a few held for many decades.
However, Abel hasn’t materially decreased Berkshire’s positions in Apple, American Express, Alphabet, Bank of America, and Coca-Cola. During Q2 2026, Berkshire trimmed its BofA stake by 5.9%, while increasing its Alphabet position by 45.2%.
These five blue chip stocks now account for around 60% of its investments in U.S.-listed equities. Yet while this indeed represents high concentration, is that in itself a major risk? Not necessarily.
Image source: The Motley Fool.
High conviction led to high concentration
It’s unfair to call Berkshire Hathaway’s stock portfolio concentrated under Greg Abel’s watch. After all, it was Warren Buffett’s penchant for long-term, high-conviction investments that led to such high concentration in the first place.
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Namely, that’s the case with American Express and Coca-Cola, two of the longest-held Warren Buffett investments. Berkshire has held these stocks for over 30 years. Buying them at far lower prices than they trade for today, Berkshire’s high concentration in them is due to long-term compounding. In his initial letter to shareholders, Greg Abel indicated that Berkshire’s portfolio will stay largely concentrated in these names.
That said, Abel did leave the door open for Berkshire to “significantly adjust a holding if we see fundamental changes in its long-term economic prospects.” That may be the story with BofA, which, as mentioned, is a position Berkshire continued to pare down. Abel’s letter also said nothing about increasing a position, as has occurred with Alphabet. Last quarter, the company increased its position by around $17 billion.
Although attributed to Abel, don’t discount Buffett’s role in the increased allocation to Google’s parent company. According to published reports, Buffett, who still serves as Berkshire’s chairman, is the one who pushed for the increased stake.
A larger risk to keep in mind
Berkshire may have much of its stock portfolio in just five investments, but this overstates the extent to which these risks affect Berkshire Hathaway as a whole.
However, even if the largest equity position, Apple, worth around $70.5 billion, were to experience a severe drawdown, the net impact would be relatively modest. Here’s how: If Apple fell 50%, the value of Berkshire’s position would fall by $35.25 billion. That’s a steep loss in absolute terms, but compare it to the company’s $1 trillion market cap and $750 billion in shareholders’ equity.
Also, in terms of liquidity, between its $365.5 billion cash position and its operating businesses, which generate around $45 billion annually, it’s not as if Berkshire will be “forced” to sell in a cash crunch.
Still, there is a larger risk to keep in mind, if not concentration risk: performance risk. Irrespective of whether upping the ante on Alphabet is Buffett’s or Abel’s idea, Abel will own the outcome. Abel will also be “on the hook” for future investment choices, which, in the long run, will need to measure up to Buffett’s track record.
