Greg Abel takes over Berkshire Hathaway's $1.1 trillion portfolio from Buffett.

Berkshire Hathaway has outperformed the S&P 500 over the past 60 years, largely under the leadership of Warren Buffett. Now, with Greg Abel stepping into the role of CEO, investors are watching closely to see if this trend will continue. Abel's challenge is to manage the company's vast portfolio, which stands at around $1.1 trillion, while making strategic capital allocation decisions.

This scrutiny comes at a pivotal time for Berkshire Hathaway. The company's long-term track record is impressive, with an annualized stock price growth of 19.7% over the last six decades, compared to the S&P 500's 10.5%. However, in recent years, Berkshire's shares have not kept pace with the broader market, rising 236% over the last decade but still trailing the S&P 500's total return. Critics are questioning the firm's investment strategies, particularly its large cash reserves, which some believe could hinder share-price performance.

A significant factor in Berkshire Hathaway's portfolio is its investment in Apple, which remains the company's largest public equity holding. Since first buying shares in 2016, Apple’s stock has soared by 1,140%. Although Berkshire has trimmed its Apple holdings, the tech giant still represents over 20% of the company's portfolio, valued at approximately $73.8 billion. This hefty stake means Apple can significantly influence Berkshire's returns under Abel's leadership, despite concerns over its current valuation, which stands at a price-to-earnings ratio of 37.2.

Looking ahead, the performance of Apple will be crucial for Berkshire Hathaway's future. As Abel takes the helm, he will need to navigate a challenging market landscape while maintaining the company's legacy of strong returns. Investors are hopeful that he can leverage this key holding to continue the streak of outperforming the S&P 500 and uphold the reputation built by Buffett over decades.