Greg Abel Signals Shift: Berkshire Hathaway’s Departure from Buffett’s Legacy Investment

It’s a new era for Berkshire Hathaway (NYSE: BRKA)(NYSE: BRKB). After spending more than half a century leading Berkshire and seeing it grow into a trillion-dollar company, Warren Buffett hung up his work coat for the final time as CEO on Dec. 31.

The Oracle of Omaha’s successor is his longtime understudy, Greg Abel, who’s been with the company for over a quarter century. Although Buffett remains chairman of Berkshire’s board, it’s Abel who now has the final say on the company’s day-to-day operations and its closely watched, 48-stock investment portfolio.

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In many respects, Buffett and Abel are cut from the same cloth. They’re value investors above all else, and tend to focus on companies with strong management teams, easily identifiable competitive advantages, and robust capital-return programs.

But this isn’t Warren Buffett’s Berkshire anymore, and changes should be expected under new leadership. Arguably, the most eye-popping change is the possibility that Abel will dump the Oracle of Omaha’s former No. 2 holding, Bank of America (NYSE: BAC). Although Form 13Fs will tell the tale, there are several signs and hints to suggest that BofA is getting the heave-ho.

Bank of America wasn’t labeled a “forever” stock by Buffett or Abel

In early 2024, when Berkshire’s now-retired billionaire boss released his 2023 annual letter to shareholders, he outlined eight holdings he viewed as “indefinite.”

As you might expect, Buffett pointed to Coca-Cola (NYSE: KO) and American Express (NYSE: AXP) as untouchable. These are the two longest-tenured holdings — Coca-Cola since 1988 and Amex since 1991 — and are generating annual yields on cost of 63% and 45%, respectively.

Buffett also highlighted integrated oil and gas company Occidental Petroleum as an indefinite holding. Despite having an on-again, off-again relationship with energy stocks since this century began, Berkshire’s former boss strongly believes in Occidental’s long-term success.

The sogo shosha (Japan’s five trading houses) were the final five companies Buffett outlined as forever-type holdings. This includes Mitsubishi, Mitsui, Itochu, Marubeni, and Sumitomo. Abel played an integral role in establishing and building up Berkshire’s stakes in the sogo shosha.

In late February, Greg Abel released his first letter to shareholders as Berkshire’s CEO, and added two new names to the list of companies he believes “will compound over decades.” These two stocks are Apple and Moody’s.

Seven of Berkshire’s 10-largest holdings were labeled as indefinite or compound-type investments by Warren Buffett or Greg Abel. Bank of America was missing from both lists, signaling it’s not viewed as a forever holding.

Berkshire’s Bank of America position has been pared down for six consecutive quarters

The next clue that BofA may be sent to the chopping block by Buffett’s successor can be seen in Berkshire’s 13Fs.

A Form 13F is a required quarterly filing by institutional investors with at least $100 million in assets under management. These filings allow investors to track which stocks and exchange-traded funds Wall Street’s brightest money managers have been buying and selling.

According to Berkshire’s 13Fs, Warren Buffett was a persistent seller of Bank of America stock for six consecutive quarters leading up to his retirement. Here’s the breakdown:

• Q3 2024: 235,168,699 shares sold

• Q4 2024: 117,449,720 shares sold

• Q1 2025: 48,660,056 shares sold

• Q2 2025: 26,306,156 shares sold

• Q3 2025: 37,197,363 shares sold

• Q4 2025: 50,774,078 shares sold

Between July 17, 2024, and Dec. 31, 2025, Buffett reduced his company’s stake in BofA by nearly 515.6 million shares, or roughly 50%. The more than 1.03 billion shares previously held made Bank of America Berkshire’s No. 2 holding behind Apple.

Greg Abel and Buffett are similar in their approaches to paring down large positions. Halving a 1.03-billion-share position in 18 months strongly suggests that Bank of America is no longer viewed as a core holding, let alone a long-term one.

Bank of America’s valuation no longer makes sense to a diehard value seeker

Last but not least, Bank of America stock is no longer the screaming bargain it once was.

The Oracle of Omaha initially took a position in BofA in August 2011, shortly after the worst of the financial crisis had passed. In exchange for $5 billion in capital to shore up Bank of America’s balance sheet, Berkshire received $5 billion in BofA preferred stock, yielding 6% annually.

However, the crown jewel of this deal was the stock warrants Berkshire received. In the summer of 2017, Buffett exercised 700 million stock warrants at $7.14 per share, netting his company an instant $12 billion windfall.

Aside from Bank of America being a brand-name company with strong leadership, it was likely BofA’s 62% discount to book value in August 2011 that enticed Buffett to act. However, when 2026 began, Bank of America shares were trading at a 43% premium to book value. While this isn’t egregiously pricey for a money-center bank, it’s also not a bargain amid a historically expensive stock market.

There may also have been concerns that BofA’s interest income would disproportionately suffer during a Federal Reserve rate-easing cycle. While this rate-easing cycle has likely been thrown out the window, courtesy of the inflationary effects of the Iran war, BofA’s heightened interest rate sensitivity can lead to knee-jerk reactions by its investors.

With Greg Abel unwilling to compromise when it comes to value, BofA’s notable premium to book value may cement its eventual exit from Berkshire Hathaway’s investment portfolio.

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Bank of America is an advertising partner of Motley Fool Money. American Express is an advertising partner of Motley Fool Money. Sean Williams has positions in Bank of America. The Motley Fool has positions in and recommends Apple, Berkshire Hathaway, and Moody’s. The Motley Fool recommends Occidental Petroleum. The Motley Fool has a disclosure policy.

Signs Point to Warren Buffett’s Successor, Greg Abel, Dumping the Oracle of Omaha’s Former No. 2 Holding at Berkshire Hathaway was originally published by The Motley Fool