How Greg Abel's approach compares to Warren Buffett's

Berkshire Hathaway (BRKA -1.42%)(BRKB -1.24%) ended June with roughly $365 billion in cash and U.S. Treasury bills. While that’s less than the $380.2 billion three months earlier, it still leaves new CEO Greg Abel with an enormous amount of money to work with.

And this latest report makes it clear he’s not shy about putting it to work.

During the second quarter, Berkshire became a net buyer of stocks for the first time in 14 quarters, buying nearly $20 billion more than it sold. The company also, once again, spent a significant amount of cash buying back its own shares — $4.5 billion.

And after the quarter ended, the company completed a $6.8 billion acquisition of the homebuilder Taylor Morrison and reportedly bought back even more shares — more than $3.3 billion.

So, is Abel simply more aggressive than Warren Buffett?

How Greg Abel’s approach compares to Warren Buffett’s

The clearest difference so far is activity. Buffett spent his final several quarters as CEO selling stocks and allowing Berkshire’s cash pile to climb, while Abel’s second quarter broke that pattern decisively.

Still, Abel appears to be using Buffett’s rule book, by and large. He continues to stress that Berkshire evaluates all of its deals — acquisitions, stock purchases, buybacks — with one clear measuring stick: Does this increase the company’s intrinsic value per share? In other words, does it maximize what the business is really worth, divided by its total shares, over the long haul?

He’s also emphasized maintaining a “fortress-like” balance sheet and said that Berkshire doesn’t need to spend money simply because it has it. The faster pace as of late may simply mean that Abel sees more opportunities in the market, rather than revealing a more reckless attitude than Buffett had.

Where the real changes may emerge under Abel’s leadership

I think the more meaningful change may come not in how Abel thinks about investing, but in how Abel thinks about managing Berkshire’s own businesses.

Buffett famously took a very hands-off approach, preferring to acquire a strong stand-alone company, keep its managers in place, and let them do their thing. Abel, who was the CEO of Berkshire Hathaway Energy for many years, seems to be more willing to take an active role.

The Taylor Morrison acquisition may provide an example. Berkshire is combining the company with Clayton Properties Group, its existing collection of 15 regional builders, into a single unified platform.

Taylor Morrison’s existing CEO remains in place, but Abel will expect her to “pursue operational excellence relentlessly and close performance gaps” with “rigorous execution — measured by results, not intentions,” as he has said he expects of all of his CEOs.

The core remains the same

While Abel has moved faster than Buffett did during his final years as CEO, I think the differences are at the margins. Berkshire’s underlying discipline and value-oriented approach haven’t changed.

In my opinion, Abel is not a departure from Buffett, but a continuation — especially on the investing side. The core philosophy that guided Buffett and Berkshire to success over the years is still the core philosophy under Greg Abel — and that’s a great thing.