Buffett’s Fading Patience: A Shift in Berkshire’s Strategy?

The second quarter’s portfolio snapshot of Berkshire Hathaway reveals telling trends that suggest Warren Buffett’s successor, Greg Abel, may be departing from the legendary investor’s patient approach to investing. Berkshire added $17 billion to its stake in Alphabet, now its third-largest holding, and increased its bet on Delta Air Lines by 44%. Meanwhile, it trimmed its Ally Financial stake by 7% and cut its Capital One holding by 58%.

Michael Burry, an investor made famous by “The Big Short,” has expressed concerns about Abel’s decision-making. In a Substack post, Burry wrote that he believes his biggest fear – that Buffett’s successor would not have the same level of patience for the fat pitch – has come true. Burry argues that this lack of patience is a significant departure from Buffett’s approach, which has characterized Berkshire’s success.

Berkshire’s history reveals that its success was built on Buffett’s willingness to wait for the right opportunities. As he once told the New York Times, “What’s nice about investing is you don’t have to swing at pitches. You can watch pitches come in one inch above or one inch below your navel, and you don’t have to swing.” This approach has served Berkshire well over the years, allowing it to build a reputation as a patient and disciplined investor.

Abel’s decision to reduce Berkshire’s massive cash pile by investing $10 billion in Alphabet marks a significant shift from Buffett’s approach. While this move may seem logical given Alphabet’s market value and potential for growth, it also raises questions about Abel’s priorities. Is he more focused on short-term gains than long-term success? Or does it reflect a broader shift in the company’s strategy?

Despite Burry’s criticism being somewhat premature, his warning serves as a timely reminder that even the most successful investors can become complacent or lose their way. The market’s reaction to Berkshire’s second quarter spending has been telling: both classes of Berkshire shares dropped more than 3%, suggesting that investors are already questioning Abel’s strategy and its implications for the company’s long-term success.

It remains to be seen whether Abel will continue down this path, which Buffett and Charlie Munger once described as “Ted Williams waiting for a fat pitch.” If he does, investors may find themselves watching Berkshire from the sidelines rather than following its lead.