CEO Greg Abel Starts Making His Mark at Berkshire
Speakers
Matthew Palazola
— Senior Analyst, Bloomberg Intelligence
Summary
Bloomberg Intelligence analyst Matthew Palazola discusses Berkshire Hathaway's recent earnings and the early marks CEO Greg Abel is making. He highlights increased share repurchases, large investments in Google and Tokyo Marine, and a focus on improving railroad operations. While the stock has lagged the S&P 500 and faces post-Buffett overhang, Palazola sees long-term value in its industrial businesses.
- Berkshire repurchased $4.5 billion in shares but less than Palazola expected.
- Greg Abel is more communicative and focused on operational improvements.
- Berkshire deployed billions into Alphabet, Tokyo Marine, and homebuilder Taylor Morrison.
- Insurance earnings were strong, boosted by GEICO's auto rate increases.
- Abel aims to improve margins at the Burlington Northern railroad.
- The stock is seen as an anti-AI play and has underperformed this year.
- Palazola expects the value of Berkshire's industrial and manufacturing businesses to emerge over time.
Ideas
Berkshire undervalued, value to manifest over time
Under new CEO Greg Abel, Berkshire Hathaway is putting its enormous cash reserves to work with increased share repurchases and investments. Abel views intrinsic value higher because insurance gains are sustainable and railroad margins will improve. The stock currently lags the market as an anti-AI name and suffers from post-Buffett overhang, but the underlying value of its industrial and manufacturing businesses will manifest more over time, presenting a long-term opportunity.
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