Warren Buffett Thinks Stocks Are Expensive. Berkshire Hathaway CEO Greg Abel Seems To Disagree

Warren Buffett became one of the richest people in the world largely because of his stalwart commitment to value investing.

The philosophy, which essentially means buying dollars for 80 cents, guided Buffett to be a judicious investor, staying within his area of competency, and being disciplined enough to avoid overpaying for stocks, saving his money for a rainy day instead.

Before he stepped down as Berkshire Hathaway (NYSE:BRK.A) (NYSE:BRK.B) CEO at the end of 2025, the conglomerate had gone 13 straight quarters as a net seller of stocks, a clear sign that Buffett preferred to raise cash for future opportunities rather than invest it in the market in front of him.

The company ended 2025 with $373.3 billion in cash, cash equivalents, and Treasury bills, representing more than a third of its market cap.

Since stepping down, Buffett has indicated that he continues to believe the market is overvalued, saying in a CNBC interview in May that the market is behaving like a casino.

Image source: The Motley Fool.

Greg Abel seems to be taking a different approach

Greg Abel replaced the 95-year-old Buffett at the beginning of the year, and the former head of Berkshire Hathaway Energy seems to be putting his own imprint on the company.

Under his watch, Berkshire was a net buyer of stocks in the second quarter for the first time since 2022, and the conglomerate made some major moves.

The company made a significant purchase of Alphabet, adding $17 billion worth of the tech giant in the quarter, a stock that Buffett had long admired, but his company didn't begin buying Alphabet until the third quarter of 2025, when it was already worth around $4 trillion.

Among Berkshire's other top buys in the quarter were Delta Air Lines, at $1.64 billion, Lennar at $273 million, and Macy's at $101 million.

What's notable about those purchases is that they are all cyclical stocks. Investors would typically buy those if they expected the bull market to continue, but each one has a different thesis behind it.

Alphabet is delivering strong growth as its cloud business is surging, and it's established itself as a top AI company. Delta is benefiting from the ongoing travel boom. Lennar should capitalize on an eventual turnaround in the housing market, and Macy's may have evolved into a real estate play, though it's clearly sensitive to consumer spending.

Berkshire's biggest sales in the quarter were a mix of stocks with its top two being financials. It continued to cut its stake in Bank of America, reducing it by $1.7 billion, and it sold Capital One Financial by $830 million. Its biggest remaining sales include Kroger for $610 million, Nucor for $456 million, and Davita for $272 million.

Of those five stocks, two of them, Kroger and Davita, are defensive holdings that Berkshire would be likely to hold if it were preparing for a downturn.

What it means for investors

One quarter's worth of activity isn't enough to establish a pattern, but the days of value investors looking to Berkshire Hathaway as a beacon may be coming to an end, even though stocks like Delta, Lennar, and Macy's can all be considered value plays based on their valuations and histories.

While Abel may be departing from Berkshire's traditional philosophy, that doesn't mean the moves are a mistake. In fact, Buffett himself initiated the company's investment in Alphabet last year.

Paying attention to the moves that Berkshire and other hedge funds are making can provide some insight into the market, but individual investors shouldn't follow these fund managers blindly.

Many of their stock purchases and sales turn out to be mistakes. As Abel's shopping spree shows, there's also plenty of room for disagreement, even between Warren Buffett and his successor.

Bank of America is an advertising partner of Motley Fool Money. Jeremy Bowman has positions in Bank of America. The Motley Fool has positions in and recommends Alphabet, Berkshire Hathaway, and Lennar. The Motley Fool recommends Capital One Financial, Delta Air Lines, and Kroger. The Motley Fool has a disclosure policy.