Berkshire's Great Unwind: Greg Abel Starts Putting the War Chest to Work

Berkshire's cash falls to $366B as it buys Alphabet, Occidental, and VeriSign, while trimming other holdings. Stock lags, but strategy shifts under Greg Abel.

For years, the knock on Berkshire Hathaway was that it sat on too much cash. The criticism has now officially flipped. The conglomerate's liquidity buffer contracted from $397 billion to roughly $366 billion during the second quarter, even as the group trimmed equity holdings worth about $3.7 billion. That combination — deploying capital while paring existing stakes — marks one of the most tangible shifts in strategy since Greg Abel took the helm.

The stock itself trades at €653,000, sitting 4.8 percent below its August peak of €686,000. Over the past month the shares have slipped the same margin, though they remain roughly 10 percent above the late-January low. With a relative strength index of 49.6, the technical picture points to a market in equilibrium rather than one with conviction in either direction.

The Money Is Moving — But Where, and Why?

The clearest evidence of a more activist capital-allocation regime sits in the portfolio's upper ranks. Alphabet has climbed to Berkshire's third-largest equity position, with 106 million shares valued at approximately $37.8 billion at the end of the second quarter. That followed a $10 billion top-up three months earlier. Concentration among the top four holdings — Apple at 20.2 percent, American Express at 13.7 percent, Alphabet at 9.9 percent and Coca-Cola at 9.8 percent — now accounts for 53.6 percent of the entire equity book. Apple remains the dominant bet by a wide margin.

The buying spree extends well beyond Big Tech. Occidental Petroleum saw Berkshire add 264.9 million shares during the quarter, lifting its stake to roughly 26.5 percent — a position worth about $12.9 billion. VeriSign also drew fresh capital, with an addition of nearly 9 million shares valued at around $2.26 billion, pushing Berkshire's holding to almost 10 percent of the company.

Abel has been vocal about the rationale. In comments reported by CNBC and the Nikkei, he framed AI data centers as a defining growth opportunity, name-checking Microsoft and Nvidia as potential future targets. He also pointed to evidence closer to home: at Berkshire Energy's Iowa operations, data centers now account for eight percent of electricity load — a concrete sign that the AI boom is filtering into the conglomerate's real-economy businesses, not just its stock portfolio.

The Other Side of the Ledger

Yet this is not a one-way bet. Berkshire simultaneously trimmed positions in Ally Financial, Bank of America, Capital One, DaVita, Kroger and Nucor, and exited Constellation Brands entirely. That selective pruning suggests discipline rather than indiscriminate deployment — selling where valuations or fundamentals no longer justify the weight, while concentrating new money in fewer, higher-conviction ideas.

Abel's caution extends to the broader economy. He described the US consumer as under pressure and characterized the housing market as a "bumpy road." Those warnings did not stop Berkshire from agreeing in August to acquire Taylor Morrison for $6.8 billion, a move that looks contrarian given his own downbeat read on real estate. It fits a pattern of buying quality assets when sectors are out of favor.

Japan Remains the Quiet Pillar

Alongside the AI narrative, Berkshire continues to deepen its ties to Tokyo. The conglomerate holds more than ten percent in each of the five major trading houses — Itochu, Marubeni, Mitsubishi, Mitsui and Sumitomo — plus a 2.49 percent stake in Tokio Marine. Abel has publicly signaled interest in expanding those positions further, a commitment that investors will be watching closely in coming quarters.

The Japanese holdings offer something the AI bets cannot yet deliver: reliable, diversified income streams with a track record of shareholder returns. They also provide a hedge against the concentration risk inherent in the top-four US positions.

A Market That Isn't Convinced — Yet

For all the strategic repositioning, the equity market has yet to reward Berkshire with a re-rating. The stock's twelve-month return sits at roughly zero, and the price-to-earnings multiple holds at 13. That stands in stark contrast to the premium valuations attached to pure-play technology names riding the same AI wave.

Part of the skepticism may stem from the still-massive cash position. Even after the second-quarter drawdown, roughly $366 billion in liquid assets remains on the books — a level that would still rank as historically conservative by any measure. The question is whether the recent deployment marks the start of a sustained offensive under Abel or a one-off response to specific opportunities.

Supporting the bull case is the dividend income underpinning the entire structure. Coca-Cola, a core holding, raised its payout for the 64th consecutive year, delivering Berkshire an estimated $848 million in 2026 — a 65 percent yield on the original cost basis. Anchors like that give Abel the runway to make bold moves elsewhere without endangering the conglomerate's financial foundation.

The next test comes with the quarterly report, which will reveal whether the capital-allocation pattern of recent months represents a durable strategy or a temporary exception. If the cash pile resumes its growth, or the promised Japan expansion fails to materialize, the stock's sideways drift could easily persist. If the deployment continues, Berkshire may finally shed its reputation as a passive holder of excess liquidity — and start trading like a company putting its firepower to work.