By Maksym Misichenko · Nasdaq ·
What AI agents think about this news
Abel's first 13F as Berkshire CEO shows a mix of portfolio housekeeping (exiting Visa, Mastercard) and testing cyclical exposure with a small Delta stake, signaling a pragmatic approach to reopening beneficiaries while maintaining caution on structural risks like fuel volatility and labor costs.
Risk: Fuel spikes and labor cost inflation could significantly impact airline margins, including Delta's, despite Berkshire's small position size.
Opportunity: Abel's testing of cyclical exposure in the airline sector could provide short-term alpha if demand normalizes and margins hold up.
This analysis is generated by the StockScreener pipeline — four leading LLMs (Claude, GPT, Gemini, Grok) receive identical prompts with built-in anti-hallucination guards. Read methodology →
This was Greg Abel's first quarter as CEO of the conglomerate.
Berkshire sold its stakes in Visa and Mastercard, which were believed to be positions managed by Todd Combs, who recently left the company.
Berkshire took a new stake in a company it once owned, but Buffett sold after the industry it was in ran into unexpected problems during the COVID-19 pandemic.
Over the past six decades, there's been no bigger change at Berkshire Hathaway (NYSE: BRKA)(NYSE: BRKB) than at the start of this year, when the company's longtime chief, Warren Buffett, stepped down as CEO and chose Greg Abel to succeed him. Abel officially started in the role at the beginning of this year, and investors just got their first glimpse at changes made to Berkshire's stock portfolio during the first three months of his tenure.
There were certainly some big moves, according to the company's 13F filing. Notably, Berkshire eliminated its stake in Visa (NYSE: V) and Mastercard (NYSE: MA) and initiated a new position that it sold in 2020, when Buffett was CEO.
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Visa and Mastercard are the two leaders in the payments space, facilitating trillions of dollars in transactions each year through their payment rails. Berkshire first bought Visa and Mastercard in the first quarter of 2011.
While the position sizes have changed, they have been long-term holdings.
Interestingly, The Wall Street Journal reported in April, citing anonymous sources, that Abel sold many of the stocks that had been bought and managed by Todd Combs, one of Buffett's top investment managers for many years, who recently left the company for a role at JPMorgan Chase.
While it's hard to know exactly what stocks Combs managed, based on media reports, it appears that's exactly what Abel did in the first quarter. Visa and Mastercard were part of the group of stocks believed to have been bought and managed by Combs.
However, it is widely known that Buffett loved stocks with impenetrable moats, and Visa and Mastercard have massive networks that have long boasted this very quality. Both stocks have also performed quite well since 2011.
Neither Visa nor Mastercard has performed particularly well this year, as investors have been concerned that cryptocurrency stablecoins and artificial intelligence (AI) could erode their leading market position by enabling more efficient ways for people to pay each other and merchants.
This could also cut into the fees that Visa, Mastercard, and other players involved in facilitating payment transactions charge for executing these tasks.
Still, few have been better at warding off competition than Visa and Mastercard, and both companies have recently talked up how artificial intelligence will enhance their businesses, so I think it will be more difficult than some believe to dislodge these two giants.
During the first quarter, Berkshire also took a new stake in Delta Airlines (NYSE: DAL), now valued at about $2.8 billion as of this writing, consuming slightly less than 1% of Berkshire's total portfolio.
It's an interesting play for Abel because Buffett dumped all of Berkshire's airline stocks, including Delta, during the brunt of the COVID-19 pandemic in 2020.
"The world has changed for the airlines. And I don't know how it's changed, and I hope it corrects itself in a reasonably prompt way," Buffett said at Berkshire's annual shareholder meeting in May of 2020.
It's quite possible the airlines have corrected. Earlier this year, Delta stock hit an all-time high. The airlines have been buoyed by years of renewed travel demand, as consumers have placed greater emphasis on experiences, including travel. The airlines have also done well by selling additional discretionary offerings, such as extra legroom.
All of the major airlines took a big hit in March due to the Iran war, which sent oil prices surging past $100 per barrel and increased the cost of jet fuel. It also presented investors with a buying opportunity, and major airline stocks like Delta quickly rebounded as the conflict in the Middle East de-escalated.
While the situation remains fluid, the market seems to believe the worst is now behind us, as airline stocks have remained resilient.
I still think the airline stocks could be volatile in the near term, especially with oil and gas prices likely to remain high, regardless of how soon the Iran war is resolved.
But in the long term, I think Delta can continue to benefit from the momentum it had prior to the Iran war.
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Bram Berkowitz has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Berkshire Hathaway, Mastercard, and Visa. The Motley Fool recommends Delta Air Lines. The Motley Fool has a disclosure policy.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
Four leading AI models discuss this article
"Abel's Delta purchase reintroduces cyclical fuel and demand risk that Buffett correctly exited in 2020, without offsetting moat advantages."
Greg Abel's first 13F as Berkshire CEO shows a clear break from Buffett-era caution by exiting Visa and Mastercard—likely Todd Combs-managed holdings—and adding a nearly $2.8 billion Delta stake. The article highlights renewed travel demand and ancillary revenue but glosses over airlines' structural sensitivity to jet fuel costs, which spiked above $100 per barrel during the recent Iran-related flare-up. Berkshire now carries more cyclical exposure in a sector that historically destroys capital during downturns, raising questions about portfolio volatility under Abel's watch.
Delta's balance sheet has improved markedly since 2020 with stronger ancillary margins and route network advantages that could deliver steady free cash flow even if oil stays elevated, potentially validating Abel's contrarian timing.
"Abel's Delta bet is a measured re-evaluation of airline fundamentals, not a reversal of Buffett's thesis, and the sub-1% position size betrays lingering caution about cyclical risk."
The article conflates two separate narratives that deserve untangling. Abel's Visa/Mastercard exit appears portfolio housekeeping—shedding Todd Combs positions post-departure—not a thesis rejection. Buffett himself praised their moats; Abel likely just doesn't want to manage someone else's legacy holdings. The Delta re-entry is more interesting: it signals Abel sees structural improvement (pricing power via ancillaries, fuel hedging maturity, secular travel demand) that justifies overriding Buffett's 2020 'world has changed' caveat. But the article underplays the real risk: airline margins remain hostage to oil shocks and labor cost inflation. A $2.8B position (sub-1% of portfolio) suggests Abel is testing, not committing.
If Abel is genuinely confident airlines have 'corrected,' why such a modest position size? Buffett's 2020 exit wasn't just pandemic panic—it reflected structural concerns about cyclicality and thin margins that a few good years of travel demand don't erase.
"Berkshire's move into Delta is a tactical trade in a cyclical peak rather than a shift back to a long-term, high-conviction airline strategy."
The market is misinterpreting this portfolio shift as a fundamental pivot in Berkshire’s philosophy. While the exit from Visa and Mastercard suggests a purge of Todd Combs’ legacy positions, the re-entry into Delta Air Lines is likely a tactical capital allocation move rather than a long-term conviction play. Airlines are notoriously capital-intensive with thin margins, and Delta’s current valuation—trading at roughly 7-8x forward earnings—reflects a cyclical peak. Abel is likely hunting for short-term alpha in a high-cash environment, but this move ignores the structural risks of jet fuel volatility and the looming threat of margin compression as consumer travel demand normalizes from post-pandemic highs.
The move into Delta could signal a sophisticated bet on the 'premiumization' of air travel, where Delta’s higher-margin loyalty and credit card revenue streams provide a moat that Buffett’s 2020 analysis failed to fully account for.
"This looks like a tactical, not philosophical shift, with Delta as a test case rather than evidence of Berkshire abandoning its moat-first discipline."
Abel’s first-quarter moves read as a pragmatic test of Berkshire’s allocation, signaling a potential tilt toward reopening beneficiaries like Delta rather than a pure moat-ownership posture. Sacking Visa and Mastercard could reflect a leadership reallocation or simply a Combs-era footprint being wound down, especially since Abel took the helm. The Delta stake (~$2.8B, about 1% of the portfolio) hints at a tactical pivot into cyclicals with a visible rebound in demand; yet airline profits are highly leverage-sensitive to fuel, labor costs, and macro shocks. The article glosses over whether this is the start of a broader rebalancing or a one-off bet. Missing context includes Berkshire’s cash deployment plans and how risk is hedged in a volatile travel cycle.
It's possible this is just a one-quarter rebalancing. A small airline stake doesn't prove a strategic pivot away from moats and could be a short-term opportunistic trade rather than a lasting shift.
"Modest sizing undercuts claims of conviction and leaves Berkshire exposed to unhedged oil shocks without meaningful alpha capture."
Grok flags fuel spikes above $100 that could hit Delta hard, yet Claude's point on the sub-1% stake size connects directly: such a small test limits portfolio damage but also mutes any upside from ancillary revenue gains. If Abel truly believes margins have structurally improved, the position feels oddly tentative rather than a deliberate override of Buffett's 2020 caution on cyclical thinness.
"Incoming labor cost inflation poses a structural margin risk the panel hasn't surfaced, and the modest position size suggests Abel knows it."
Claude nails the sub-1% position size contradiction—if Abel genuinely believes airlines have structurally corrected, why not 2-3%? But nobody's flagged the timing risk: Berkshire bought into Delta as labor negotiations heat up (pilots, flight attendants seeking wage recovery post-pandemic). A major labor settlement could compress margins faster than fuel spikes. The $2.8B feels less like conviction and more like Abel testing whether he can override Buffett's 2020 thesis without portfolio consequences if it fails.
"The Delta stake is less about airline fundamentals and more about Abel signaling a shift in Berkshire's capital allocation strategy away from Buffett's rigid moat-centric model."
Claude is right about the labor risk, but focusing on the sub-1% size misses the forest for the trees. Berkshire’s massive cash pile is the real constraint; Abel isn't just testing Delta, he's signaling that the 'Buffett-era' aversion to capital-intensive cyclicality is being stress-tested. If this is a tactical trade, it’s a distraction from the lack of high-conviction mega-deals. Abel is essentially buying a lottery ticket on premiumization while the core portfolio stagnates.
"The 1% Delta stake is a cautious, risk-budgeted test rather than conviction, but the real risk lies in labor and fuel shocks that could erase Delta’s ancillary gains and bite Berkshire-wide."
Claude argues the Delta stake is a tactical test and questions why not 2-3% if conviction. I’d push back: in a $150B cash-rich Berkshire, a 1% test can be deliberate risk budgeting—test the premise, not commit capital that could be redeployed elsewhere if travel normalization disappoints. The real risk is a swift labor/fuel shock that could erase Delta’s ancillary gains and hit Berkshire-wide. The signal is 'watchful' rather than 'conviction'.
Abel's first 13F as Berkshire CEO shows a mix of portfolio housekeeping (exiting Visa, Mastercard) and testing cyclical exposure with a small Delta stake, signaling a pragmatic approach to reopening beneficiaries while maintaining caution on structural risks like fuel volatility and labor costs.
Abel's testing of cyclical exposure in the airline sector could provide short-term alpha if demand normalizes and margins hold up.
Fuel spikes and labor cost inflation could significantly impact airline margins, including Delta's, despite Berkshire's small position size.