Warren Buffett leaves new CEO Greg Abel with a mountain of portfolio when he steps down at the end of 2025. Berkshire Hathawaywho (NYSE: BRK.A)(NYSE: BRK.B) The marketable equity portfolio is worth about $320 billion as of this writing, and the business has about $354 billion in cash to deploy on top of it. Many of the holdings in the portfolio are positions established decades ago by Buffett and his vice chairman, Charlie Munger.
Many are waiting to see how Hebel will handle the portfolio and whether he will make some big sales or purchases now that he is in charge. Recent Securities and Exchange Commission (SEC) filings show the first reported sale under Abel, and it’s a stock that Buffett bought more than 14 years ago.
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Berkshire Hathaway must disclose sales or purchases of stocks of most companies in which it owns 10% or more within three days of any trade. One of them is the company DaVita(NYSE: DVA)which operates a network of dialysis clinics. Berkshire filed a form with the SEC on Feb. 2, disclosing that it sold 1.7 million shares of the stock in late January.
But before investors start worrying about whether Abel is returning to the company, it’s important to understand Berkshire’s relationship with DaVita. Last year, DaVita signed an agreement with Berkshire limiting its beneficial ownership to 45% of the business. The deal allows DaVita to repurchase shares from Berkshire to maintain a 45% ownership stake before it reports its quarterly earnings.
Berkshire’s recent sale of DaVita shares falls under that agreement. DaVita disclosed in its quarterly report filed on Feb. 2 that it had repurchased $200 million worth of shares since late December. The transactions reported by Berkshire are correct.
That’s unfortunate for Berkshire because DaVita had great earnings results to share with investors. Revenue grew 10% and adjusted earnings per share (EPS) rose 52% year over year.
Many investors were concerned that a bad flu season would dampen results, and the impact of GLP-1 drugs on kidney disease and the need for dialysis treatment remained a concern for many. Recent earnings results may have tempered that cautious sentiment.
Management is certainly optimistic. Its 2026 forecast calls for a 45% increase in EPS for the full year and a 10% improvement in free cash flow. Despite the stock’s 20% rise since the stellar report, shares currently trade for just 9.3 times the midpoint of management’s EPS forecast, making it a value stock worth considering.
Some investors had expected DaVita Abel to be on the chopping block last year because of concerns that the stock had weighed on it. However, it looks even more attractive after the most recent earnings report.
Another possible stock Buffett might sell is Abel Kraft Heinz(NASDAQ: KHC ). Buffett oversaw the merger of Kraft Foods and HJ Heinz in 2015 after taking the latter private in 2013. After the deal closed, Berkshire ended up with about a 27% stake in the consumer staples business, and it has held onto its shares ever since.
This is despite Buffett’s comments that the merger did not work out as expected. Berkshire took a $3.8 billion write-down on its stake in the business last year.
But Abel seems willing to part ways with Stock. SEC filings reveal the company registered to sell 325,442,152 shares of Kraft Heinz, which is practically every share Berkshire owns.
Kraft Heinz is looking to reorganize and split the business into two entities: one focused on sauces and spreads and the other on staples like meat and cheese. Abel expressed disapproval of plans to split the company, so this could be an opportunity for Berkshire to shed some shares.
Berkshire’s Kraft Heinz position is not subject to the same reporting requirements as stocks acquired on the open market. As a result, investors won’t know whether Abel actually sold the stock until its first-quarter 13-F filing in mid-May. This will likely be our first glimpse at any major moves Abel is making with Berkshire’s portfolio as the new CEO.
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Adam Levy has no position in any of the stocks mentioned. The Motley Fool has positions on and recommends Berkshire Hathaway. The Motley Fool recommends Kraft Heinz. Motley Fool has a disclosure policy.
This longtime Berkshire Hathaway holding by Warren Buffett’s successor Greg Abel was originally published by The Motley Fool.
