Greg Abel Just Sold Berkshire Hathaway's Stake in Visa and Mastercard and Initiated a New Position in a Stock That Warren Buffett Sold 6 Years Ago

Over the past six decades, there's been no bigger change at Berkshire Hathaway (BRKA 0.34%)(BRKB 0.19%) than at the start of this year, when the company's longtime chief, Warren Buffett, stepped down as CEO and chose Greg Abel to succeed him. Abel officially started in the role at the beginning of this year, and investors just got their first glimpse at changes made to Berkshire's stock portfolio during the first three months of his tenure.

There were certainly some big moves, according to the company's 13F filing. Notably, Berkshire eliminated its stake in Visa (V +0.19%) and Mastercard (MA +0.32%) and initiated a new position that it sold in 2020, when Buffett was CEO.

Image source: The Motley Fool.

Selling Visa and Mastercard

Visa and Mastercard are the two leaders in the payments space, facilitating trillions of dollars in transactions each year through their payment rails. Berkshire first bought Visa and Mastercard in the first quarter of 2011.

While the position sizes have changed, they have been long-term holdings.

Interestingly, The Wall Street Journal reported in April, citing anonymous sources, that Abel sold many of the stocks that had been bought and managed by Todd Combs, one of Buffett's top investment managers for many years, who recently left the company for a role at JPMorgan Chase.

While it's hard to know exactly what stocks Combs managed, based on media reports, it appears that's exactly what Abel did in the first quarter. Visa and Mastercard were part of the group of stocks believed to have been bought and managed by Combs.

However, it is widely known that Buffett loved stocks with impenetrable moats, and Visa and Mastercard have massive networks that have long boasted this very quality. Both stocks have also performed quite well since 2011.

Data by YCharts.

Neither Visa nor Mastercard has performed particularly well this year, as investors have been concerned that cryptocurrency stablecoins and artificial intelligence (AI) could erode their leading market position by enabling more efficient ways for people to pay each other and merchants.

This could also cut into the fees that Visa, Mastercard, and other players involved in facilitating payment transactions charge for executing these tasks.

Still, few have been better at warding off competition than Visa and Mastercard, and both companies have recently talked up how artificial intelligence will enhance their businesses, so I think it will be more difficult than some believe to dislodge these two giants.

Are the airlines finally ready to fly again?

During the first quarter, Berkshire also took a new stake in Delta Airlines (DAL +2.10%), now valued at about $2.8 billion as of this writing, consuming slightly less than 1% of Berkshire's total portfolio.

It's an interesting play for Abel because Buffett dumped all of Berkshire's airline stocks, including Delta, during the brunt of the COVID-19 pandemic in 2020.

"The world has changed for the airlines. And I don't know how it's changed, and I hope it corrects itself in a reasonably prompt way," Buffett said at Berkshire's annual shareholder meeting in May of 2020.

It's quite possible the airlines have corrected. Earlier this year, Delta stock hit an all-time high. The airlines have been buoyed by years of renewed travel demand, as consumers have placed greater emphasis on experiences, including travel. The airlines have also done well by selling additional discretionary offerings, such as extra legroom.

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NYSE: DAL

Delta Air Lines

Today's Change

(2.10%) $1.56

Current Price

$75.68

Key Data Points

Market Cap

$50B

Day's Range

$72.64 - $75.69

52wk Range

$45.28 - $76.39

Volume

209

Avg Vol

11.5M

Gross Margin

16.93%

Dividend Yield

0.99%

All of the major airlines took a big hit in March due to the Iran war, which sent oil prices surging past $100 per barrel and increased the cost of jet fuel. It also presented investors with a buying opportunity, and major airline stocks like Delta quickly rebounded as the conflict in the Middle East de-escalated.

While the situation remains fluid, the market seems to believe the worst is now behind us, as airline stocks have remained resilient.

I still think the airline stocks could be volatile in the near term, especially with oil and gas prices likely to remain high, regardless of how soon the Iran war is resolved.

But in the long term, I think Delta can continue to benefit from the momentum it had prior to the Iran war.