Warren Buffett Successor Greg Abel Made 3 Big Purchases Last Quarter, and They're All Exceptional Performers

Greg Abel’s first quarter as Berkshire CEO included three major capital deployments: the $9.7 billion OxyChem acquisition, a $1.8 billion strategic stake in Tokio Marine, and an estimated $11 billion added to Alphabet. The article says all three have worked well so far, with OxyChem benefiting from cyclical pricing, Tokio Marine supported by underwriting and capital return potential, and Alphabet up about 35% since quarter-end amid strong AI-driven results. Berkshire also continues to receive an 8% dividend on roughly $8.3 billion of Occidental preferred shares.

Analysis

The common thread is not “good stock picking” but capital allocation into assets with asymmetric reinvestment optionality. Berkshire is effectively buying cash-generative infrastructure in three different forms: a cyclical chemicals asset near trough economics, an insurance platform that can compound float and underwriting edge, and a mega-cap AI beneficiary where size reduces timing risk. The second-order implication is that Berkshire is leaning harder into businesses where operating leverage can show up quickly, which should support near-term reported earnings even if the broader economy softens.

The most important competitive dynamic is in chemicals and insurance, where Berkshire’s scale can change the game. In chemicals, a tighter global supply backdrop can let a low-cost, domestically anchored producer capture pricing power faster than peers that are more exposed to export channels or leverage. In insurance, the Tokio Marine tie-up is less about equity returns and more about permanently lowering cost of float while creating data and underwriting feedback loops; that can crowd out smaller reinsurers and specialty carriers that lack distribution depth.

Alphabet is the cleanest barometer of market mispricing. The market is still discounting AI capex as a drag, but the evidence points to the opposite: AI is already improving unit economics in cloud and search while expanding the addressable monetization surface. If that continues for the next 2-4 quarters, the stock can re-rate without requiring heroic revenue assumptions; the real risk is not execution but regulatory pressure or an AI capex reset if returns on incremental spend stall.

The contrarian view is that the market may be underestimating Abel’s willingness to be more active than Buffett on strategic stakes and operational partnerships. That creates a subtle regime shift: Berkshire could become a more visible allocator into large public equities and structured insurance-linked deals, which would be positive for compounding but could also raise concentration risk. Near term, the bigger risk is that investors extrapolate one strong quarter into a permanent pattern; the more durable signal will be whether these positions continue to expand over the next 6-12 months.

Key Decisions for Investors

• Long BRK.B on 6-12 month horizon; use any post-runup consolidation to add, with downside limited by embedded cash generation and upside from continued deployment into compounders rather than low-return buybacks.
• Overweight GOOGL versus the megacap basket for 3-6 months; the setup favors earnings revisions over multiple compression, and the risk/reward is attractive if AI monetization continues to outpace capex growth.
• Pair trade: long GOOGL / short a basket of AI spend beneficiaries with weaker monetization visibility (e.g., high-beta semis or unprofitable AI software) to isolate the “AI converts to earnings” winner versus the “AI as expense” losers.
• Long OXY versus chemical peers for a 2-4 quarter trade; Berkshire’s ownership and the cyclical floor in chemicals create a cleaner cash-flow rerating path, but exit if commodity supply normalizes and pricing power rolls over.
• Avoid chasing Tokio Marine at current premium; if expressing the theme, prefer a basket of smaller Japanese insurers on book-value re-rating potential rather than paying up for the strategic premium embedded in the headline name.