Lingering mysteries from Berkshire's portfolio update

The large reduction in the number of stocks in Berkshire Hathaway's equity portfolio that was revealed in last Friday's first quarter 13F SEC filing was perhaps bigger than expected but it wasn't a total surprise.

The Wall Street Journal had reported new CEO Greg Abel would be selling many or all of the stocks formerly managed by Todd Combs, who left for a job at JPMorgan late last year.

It's harder to explain how the two new names, Delta Air Lines and Macy's, got into the portfolio.

Berkshire almost never reveals who makes buy and sell decisions for individual stocks, but the rule of thumb had been Warren Buffett handled the larger positions, and one of the two (now one) portfolio managers were responsible for the smaller positions.

Abel, who now has overall responsibility for the company's investments, replaces Buffett in that construction.

The Oracle, however, is still coming into the office five days a week as chairman, and in late March he told CNBC's Becky Quick he is still making investment calls but won't do anything Abel thinks is "wrong." 

Presumably, Abel also wouldn't do anything that Buffett opposes.

That makes the reintroduction of Delta to the portfolio after a six-year exile something of a mystery.

Buffett, who suggested in early 2008 that a "farsighted capitalist" should have shot down Orville Wright at Kitty Hawk, would presumably be unwilling to give an airline stock a third chance after a troubled 1989 US Airways investment and a money-losing 2016 return to the sector that he dropped in 2020 at the start of the Covid-19 pandemic.

And, in fact, the Wall Street Journal reported Monday that Buffett told the paper he wasn't involved in the Delta decision.

But it added Berkshire "can't seem to quit its love affair with airlines" as Abel showed "an early fondness for them, too." 

Writing for The Motley Fool, Geoffrey Seiler was disappointed that Abel appeared to be repeating Buffett's mistakes. 

At Barron's, though, Andrew Bary thinks Delta was "likely" a purchase by Ted Weschler, Berkshire's remaining portfolio manager.

At $2.6 billion, as of March 31, it "exactly matches the increased authority of about $3 billion that he got this year as his responsibility went to 6% of the portfolio from 5%, based on Abel's comments in his annual letter."

Bary also notes Weschler "has a value bent, and Delta is the industry leader valued at around 10 times earnings."

Either way, it is at least a short-term success.

The Delta holding is now valued at $3.0 billion, a 14.5% increase from the end of the first quarter.

That includes an 8.4% jump this past week to a record-high close of $76.14.

Berkshire's new Macy's position is also a short-term win, but the total value is just a fraction of the Delta buy.

It's gone from $55 million as of March 31 to $63 million now, an increase of 14.2%, including a 12.2% rally this week.

Usually, a position that accounts for less than 0.02% of Berkshire's equity portfolio would be seen as the work of a portfolio manager.

But in that March interview with CNBC, Becky asked him if he is still making new purchases and he replied, "Got one tiny purchase, but we aren't finding things that — we weren't finding them before."

CNBC thinks he may have been referring to the Macy's stake but notes he could also have been talking about an international purchase or other investment that would not have to be included in the 13F filing. 

Barron's also believes Buffett's comment could have been a reference to the Macy's position.

It sees the retailer's "significant real-estate holdings" as a plus and recalls that in 2015, Buffett personally bought for his own account an 8% stake in Seritage Growth Properties, which controlled stores and real estate spun off by Sears.

"It would be notable if the Macy's buy was done by Buffett. It would show that at 95, he still loves the investment game and can't resist a bargain-priced stock even if the size of the holding is too small to matter at Berkshire."

Two new filings in Japan show Berkshire is continuing to build its positions in at least two of the country's enormous "trading houses."

Its Mitsubishi stake increased to 11.1% as of April 30, up from 9.7% previously, and its Sumitomo stake rose to 10.3% as of May 12, up from 9.3%.

Abel has been involved in Berkshire's Japanese investments for the past several years and almost certainly is behind the additional purchases.

Berkshire may be buying more shares of its other Japanese stocks but only needs to file updates when a holding ratio increases by 1% or more.

The total value of the six stocks, as currently disclosed, is almost $46 billion.

BRK.A stock price: $728,641.00

BRK.B stock price: $486.38

BRK.B P/E (TTM): 14.48

Berkshire market capitalization: $1,048,584,611,864 

Berkshire Cash as of December 31: $373.3 billion (Down 2.2% from Sept. 30)

Excluding Rail Cash and Subtracting T-Bills Payable: $369.0 billion (Up 4.1% from September 30)

Berkshire repurchased $234 million of its shares in Q1 2026.

Please send any questions or comments about the newsletter to me at alex.crippen@nbcuni.com. (Sorry, but we don't forward questions or comments to Buffett himself.)

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Also, Buffett's annual letters to shareholders are highly recommended reading. There are collected here on Berkshire's website.

— Alex Crippen, Editor, Warren Buffett Watch