Why Berkshire’s new boss just named four “forever” stocks — and quietly shrugged at two others
When a company built by Warren Buffett hands the reins to Greg Abel, investors listen. In his first shareholder letter as Berkshire Hathaway’s CEO (published in early March 2026), Abel did more than salute the past — he clarified which holdings he views as “forever” and which ones didn’t make that inner circle. The choices are equal parts reassurance and subtle signal about what matters when stewardship changes but the mandate to preserve value doesn’t.
This matters because Berkshire’s portfolio is enormous, concentrated, and iconic. What the company says about its biggest positions matters for markets and for anyone trying to think long term about durable businesses.
What Abel called “forever” — and why it matters
Abel described four holdings as core, long-term positions Berkshire expects to own for decades:
- Apple
- American Express
- Coca-Cola
- Moody’s
Why those four? The common thread is clarity: strong brand moats, predictable cash flow, management teams Berkshire trusts, and business models that have shown resilience across cycles. Abel’s naming of these companies signals continuity with Buffett’s playbook: identify exceptional businesses, buy sizeable stakes at attractive prices, and hold through time.
A few quick context points:
- These four companies make up a large portion of Berkshire’s equity portfolio — together they’re a center of gravity for the firm’s public-equity bets.
- Apple in particular is massive for Berkshire by market value; Coke and AmEx are classic Buffett examples of consumer and financial moats; Moody’s offers a high-margin, durable niche in credit-rating services.
The two notable omissions
Two of Berkshire’s other very large holdings were notably absent from Abel’s “forever” roster:
That doesn’t mean they’re being sold tomorrow. But omission is itself information. In Bank of America’s case, Berkshire has already trimmed its position significantly in recent quarters, and Buffett historically points to stakes he truly intends to “maintain indefinitely” — the omission hints at reduced conviction or simply a pragmatic reweighting. Chevron remains a huge position but is more exposed to commodity cycles and capital allocation debates than the four Abel singled out.
Why this distinction matters for investors
- Signaling vs. action: Naming a stock as “forever” is not a trade order, but it is a governance signal. It tells shareholders what management views as reliable anchors of capital allocation.
- Style clarity: The four “forever” names reinforce Buffett-era core principles — brands, margins, predictability — while the omitted names underscore that portfolio composition can shift even at a company famous for buy-and-hold.
- Succession risk and continuity: Abel’s list reassures those worried that Berkshire might abandon Buffett’s temperament. It also highlights the open question of who will make day-to-day portfolio choices; Abel inherited stewardship responsibilities but doesn’t have the same public track record as Buffett.
How to think about “forever” stocks for your own portfolio
- “Forever” for Berkshire ≠ forever for every investor. Berkshire’s stake sizes, tax position, and horizon are unique.
- Look for durable cash flows and pricing power, not just nostalgia. Coca-Cola’s brand vs. Chevron’s commodity exposure illustrates the difference.
- Be honest about concentration: Berkshire’s approach is concentrated bets. Most individual investors should balance conviction with diversification.
- Reassess when the business changes, not when the stock price does. Holding forever means monitoring the business — management quality, competitive edge, and capital allocation — not checking charts daily.
A few concrete investor takeaways
- If you admire Buffett-style investing, study why Apple, AmEx, Coke, and Moody’s fit that mold rather than simply copy the tickers.
- Treat the omission of Bank of America and Chevron as a reminder that even blue-chip holdings can be downgraded in conviction.
- For long-term investors, focus on business durability and management incentives; for traders, these signals may matter more for short-term flows than long-term fundamentals.
What this moment reveals about Berkshire itself
- Continuity with adaptation: Abel’s letter emphasizes sticking to durable businesses while acknowledging an evolving portfolio and new capital-allocation dynamics.
- Cash pile and patience: Berkshire still holds massive cash reserves — a tactical advantage if valuations wobble and buying opportunities appear.
- Uncertainty in day-to-day management: With the portfolio’s traditional stewards reshuffled, the market is watching how Berkshire will source new big ideas and allocate capital at scale.
My take
Abel’s naming of four “forever” stocks reads like a careful bridge: it comforts investors who feared a wholesale departure from Buffett’s philosophy, while also hinting that practical decisions — trimming, adding, and pivoting — will continue. For most individual investors, the lesson isn’t to buy these exact names blindly; it’s to adopt Berkshire’s discipline: buy strong businesses with durable advantages and hold them until the story truly changes.
Sources
Related update: We recently published an article that expands on this topic: read the latest post.
Related update: We recently published an article that expands on this topic: read the latest post.
When dividends take the wheel: why Bank of America thinks payouts matter in 2026
The market’s engines have been different lately. Price gains drove much of the S&P 500’s recent roar, but Bank of America’s research team — led by Savita Subramanian — is flagging a shift: dividend growth may pick up in 2026 and start reclaiming its traditional role in total returns. That’s a signal worth listening to if you own stocks for income, total-return compounding, or simply to reduce reliance on multiple expansion.
Why this matters now
- Bank of America’s strategists argue that valuation expansion (higher price-to-earnings multiples) has been a major driver of recent gains — and that this tailwind may fade. When multiple expansion stalls, dividends become a bigger piece of the returns puzzle. (investing.com)
- BofA projects stronger earnings breadth in 2026, and with payout ratios near historic lows for many firms, it expects dividend growth to rise year over year — providing more cash return to shareholders. (m.in.investing.com)
- CNBC highlighted the same theme in its roundup of stocks with payouts that beat the market, anchoring the media coverage that income-focused investors should watch dividend trends as we move into 2026. (archive.ph)
What Bank of America actually said (in plain language)
- The bank sees 2026 as a year when earnings growth broadens beyond a handful of mega-cap winners. That can support rising dividends across sectors. (m.in.investing.com)
- Historically, dividend contributions to total return were much larger than they’ve been in the past decade; reverting toward that longer-run role would meaningfully lift long-term total returns even if price appreciation is muted. (investing.com)
The investor dilemma: chasing growth vs. locking in cash
- If price returns slow, investors either must accept lower total returns or look to other sources of return — dividends are the obvious alternative.
- High dividend yields can cushion downside and provide deployable cash, but they can also mask company-specific risks (e.g., weak cash flow or one-off payouts).
- The smart move is not to fetishize a yield number; it’s to evaluate payout sustainability: earnings coverage, free cash flow, balance-sheet strength, and management’s capital-allocation priorities.
Sectors and stock types to watch (what typically leads when dividends matter)
- Financials: banks and insurers can boost payouts when earnings and capital tests permit — and Bank of America itself has been growing its dividend in recent quarters, illustrating how a healthy bank can combine buybacks and higher payouts. (investor.bankofamerica.com)
- Energy and commodities: mature producers often return excess cash via dividends when commodity markets cooperate.
- REITs and utilities: by design, these businesses distribute a large share of cash flow and tend to be dividend-heavy.
- Mature consumer and industrial companies: lower-growth, cash-rich firms frequently prioritize steady payouts.
(These are general tendencies; any specific company needs case-by-case scrutiny.)
How to think about building an income-aware portfolio for 2026
- Tilt for quality: prioritize companies with consistent cash flow, conservative payout ratios, and intact balance sheets.
- Check payout drivers: are dividends covered by operating cash flow or propped up by asset sales or one-time events? Coverage matters.
- Diversify across dividend sources: combine REITs, select financials, defensives (consumer staples), and high-quality dividend growers rather than concentrating in one sector.
- Reinvest thoughtfully: if your goal is compounding, dividend reinvestment can materially boost long-term returns — a point BofA emphasizes when prices don’t carry the full return load. (investing.com)
A small list of real-world reminders (not stock picks)
- Even large, well-capitalized banks have increased payouts when capital ratios and stress-test results permitted — showing how regulation and capital policy shape dividend outcomes. (investor.bankofamerica.com)
- Media coverage (CNBC and others) is already flagging individual stocks and groups where payouts “beat the market,” reflecting a broader marketplace focus on income as 2026 approaches. (archive.ph)
What to watch next (concrete signals)
- Corporate payout-ratio revisions and published dividend guidance.
- Federal Reserve and macro signals that affect corporate borrowing costs and capital allocation.
- Quarterly earnings breadth: are more companies showing EPS growth (not just the mega caps)? BofA links rising dividend growth to broader earnings strength. (m.in.investing.com)
My take
Dividends aren’t glamorous, but they’re practical. If Bank of America’s call about rising dividend growth in 2026 proves right, investors who prepare now — by favoring payout sustainability and quality — will be positioned to benefit from steadier cash returns even if headline price gains cool. That doesn’t mean abandoning growth, but it does mean giving dividends their due in portfolio planning.
Sources
Related update: We recently published an article that expands on this topic: read the latest post.
Related update: We recently published an article that expands on this topic: read the latest post.
Meta’s Rollercoaster Quarter: A $16B Tax Shock, Record Revenue — and a Lot to Parse
It’s not every day a single line in an earnings release can send a blue-chip tech stock tumbling after-hours. On October 29, 2025, Meta reported a quarter that looked like a tale of two narratives: record revenue and user growth on one side, and a near-$16 billion, one‑time tax charge on the other that slashed reported profit and knocked the stock down in extended trading.
This post walks through what happened, why investors reacted the way they did, and what the tax hit means for Meta’s financial story as it pours capital into AI.
Key takeaways
- Meta reported third-quarter 2025 revenue of $51.24 billion — up about 26% year-over-year — and user growth across its apps. (investopedia.com)
- A one-time, non-cash income tax charge of roughly $15.9 billion tied to the “One Big Beautiful Bill” Act (signed into law earlier in 2025) pushed reported net income down sharply and depressed EPS in the quarter. (investopedia.com)
- Excluding the tax charge, Meta’s adjusted results would have shown much stronger profitability — an EPS that beat street estimates — highlighting the difference between cash/operational performance and GAAP accounting effects. (thewrap.com)
- Market reaction—stock decline in after-hours trading—reflects short-term sensitivity to headline GAAP drops, ongoing heavy AI and capex spending, and investor focus on near-term returns. (investopedia.com)
The headline numbers (the short, readable version)
- Revenue: $51.24 billion (up ~26% vs. Q3 2024). (investopedia.com)
- Reported net income: ~$2.7 billion (down ~83% vs. year-ago), largely due to a $15.93 billion one-time tax provision. (prnewswire.com)
- GAAP diluted EPS: $1.05; adjusted EPS excluding the tax impact would be roughly $7.25 — a material difference that changes the narrative. (investopedia.com)
What exactly happened with the tax charge?
When the One Big Beautiful Bill Act (OBBBA) was enacted in mid‑2025, it changed U.S. corporate tax dynamics: it accelerated certain expensing rules and changed the treatment of deferred tax assets while also introducing or modifying provisions like a Corporate Alternative Minimum Tax (CAMT). Because of that, Meta recognized a valuation allowance against some U.S. federal deferred tax assets and booked a one-time, non-cash charge of about $15.93 billion in Q3 to reflect those accounting impacts as of the law’s enactment date.
Important nuance:
- The charge is non-cash and one-time for accounting (GAAP) purposes in this quarter.
- Meta expects—based on its public statements—a meaningful reduction in future federal cash tax payments because of provisions in the law (e.g., immediate expensing of certain R&D and capex). (prnewswire.com)
Why did the stock fall, if revenue was strong?
Markets have a short attention span for nuance. A few reasons the share price dropped in after-hours trading:
- GAAP EPS matters to many investors and funds that track indexes or have mandates tied to reported earnings. Seeing EPS slump from multi‑dollar levels to $1.05 is alarming at face value. (investopedia.com)
- The timing and size of the charge created headline risk: $16 billion is a big number, and it dominated the narrative despite being non‑cash. (thewrap.com)
- Meta continues to spend heavily on AI infrastructure and capex (Meta raised capex guidance), which keeps questions alive about near-term cash allocation and returns on those investments. Even with revenue strength, investors worry about a future where spending outpaces near-term monetization. (investopedia.com)
The bigger picture: revenue and AI investments still matter
Peeling back the accounting charge, the underlying business showed strength:
- Ad revenue and user metrics continue to grow; daily active user counts climbed and overall monetization improved. (thewrap.com)
- Meta reiterated aggressive investment in AI: increased capex guidance (now projected between $70–$72 billion for the year), plus continued R&D in generative and infrastructure play. That’s a conscious bet on future dominance in AI-driven products and services. (investopedia.com)
So the story isn’t “Meta collapsing.” It’s “Meta’s financials were distorted this quarter by a one‑time accounting entry tied to tax-code changes, at the same time the company is doubling down on expensive, long‑range AI builds.”
What investors should watch next
- Cash tax payments and the actual cash-flow timing implications of OBBBA — the law may reduce future cash taxes even while producing a one-time GAAP hit. Watch future guidance and cash tax line items. (prnewswire.com)
- Capital allocation signals: will Meta sustain the raised capex path? Will buybacks or dividends reappear if cash taxes drop materially? (investopedia.com)
- Execution on AI monetization: product traction (advertising on new ad surfaces, premium features, enterprise AI products) will determine whether heavy spending turns into durable returns. (thewrap.com)
Investor dilemma (short reflection)
There’s a perennial tug-of-war here. On the one hand, GAAP numbers matter — they shape headlines, index flows, and short-term positioning. On the other, long‑term investors care about underlying cash generation and whether today’s bets (huge AI infrastructure and R&D outlays) create proprietary advantages down the road. This quarter is a textbook case where accounting rules and policy shifts can temporarily cloud a company’s growth story.
Bottom line
Meta’s Q3 2025 report is both reassuring and jarring: revenue and user growth are robust, but a one‑time $15.9 billion tax accounting charge tied to the One Big Beautiful Bill knocked reported profits and spooked investors. The real questions now are about cash-tax outcomes, the discipline of capital allocation, and how quickly today’s AI investments will translate into predictable, scalable returns. For long-term observers, this is a pause for recalculation — not necessarily a plot twist.
Sources
Related update: We recently published an article that expands on this topic: read the latest post.
Related update: We recently published an article that expands on this topic: read the latest post.