Warren Buffett released his annual letter to Berkshire Hathaway shareholders on Saturday. The letter offers insights into investing and lessons from Buffett’s six decades at the helm of Berkshire. In the letter, Buffett praised the company’s performance in 2024.
He said Berkshire did better than he expected despite 53% of its 189 operating businesses reporting a decline in earnings. Buffett attributed the company’s success to a significant gain in investment income. Treasury Bill yields improved and Berkshire increased its holdings of these highly-liquid short-term securities.
At the end of the year, Berkshire’s cash and cash-equivalent pile stood at $334.2 billion. This was nearly double the $167.6 billion from the previous year. Buffett emphasized that, despite holding a substantial cash position, the majority of Berkshire’s assets remain in equities.
He reassured shareholders that this preference for equities would not change. For the full year of 2024, Berkshire’s total revenues reached $371.4 billion, up from $364.5 billion the prior year. However, investment gains fell to $41.6 billion, down from $58.9 billion in 2023.
Net earnings, inclusive of investment gains, were $89 billion, down from $96.2 billion in 2023.
Buffett reflects on Berkshire’s gains
Buffett opened his letter by reflecting on past mistakes.
He acknowledged errors in capital allocation and in assessing the capabilities or fidelity of hired managers. He likened the emotional impact of these disappointments to that of a failed marriage. Buffett hinted that Greg Abel, Berkshire Hathaway’s next-in-line for CEO, would soon be taking over many responsibilities.
This includes writing the annual shareholders’ letter. As he has done in previous years, Buffett extolled the virtues of the US economic system. He attributed much of Berkshire’s success to it.
He also proudly noted that Berkshire paid $26.8 billion in taxes, the highest ever for any individual company. Buffett also noted changes to the annual shareholders’ meeting, scheduled for May 3. The famed Q&A session will start and end earlier than in previous years.
It will begin at 8:00 a.m. and conclude by 1:00 p.m. Buffett will be accompanied by vice chairmen Greg Abel and Ajit Jain for part of the session. In summary, Buffett’s letter celebrated Berkshire Hathaway’s resilience and record operating earnings amidst broader economic challenges. It acknowledged past errors and reinforced a commitment to maintain the company’s robust equity position.
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