Warren Buffett could wait forever. His successor may not be so patient.
Michael Burry of "The Big Short" fame said his "biggest fear" for a post-Buffett Berkshire may have come true.
Michael Burry, a long-time follower of Warren Buffett, believes that Berkshire Hathaway's new CEO, Greg Abel, might not possess the same patience as the legendary investor. Burry's primary concern is that Abel's handling of Berkshire's substantial cash reserves may not be driven by a strategic vision, but rather by a desire to demonstrate competence and reassure shareholders.
In the company's latest earnings report, it was revealed that Berkshire's cash reserve had decreased from a record $380 billion to $365 billion in the three months ending June 30. This reduction was largely due to Abel's aggressive stock purchases and buybacks, which amounted to $20 billion in the quarter. Furthermore, Abel made a significant $4.6 billion stock repurchase, marking the largest quarterly buyback since 2021.
Moreover, Berkshire spent another $3.4 billion on buybacks between July 1 and July 29, putting the company on track for another busy quarter of buybacks. Despite Berkshire's stock performance reaching all-time highs, Burry worries that Abel's actions appear more promotional than genuinely investment-driven.
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