Key takeaways

  • In his annual letter to shareholders, Warren Buffett defended Berkshire Hathaway’s cash holdings and reiterated his preference for owning “good businesses.”
  • Buffett also discussed the strong performance of Berkshire’s insurance arm, which was responsible for a large portion of the firm’s earnings gains last year.
  • Buffett said he remains confident in the firm’s Japanese holdings, which could increase in the coming years.

Berkshire Hathaway BRK.A Chairman Warren Buffett released his closely watched annual letter to shareholders on Saturday.

In his 60th year at the helm of the massive conglomerate, Buffett offered reassurance to investors concerned about Berkshire’s massive cash pile along with insight into the firm’s Japanese holdings and the strong performance of its insurance business in 2024.

The letter was accompanied by the firm’s 2024 financial results, which showed operating earnings rise to $47.4 billion, a 27% increase compared with the prior year. That’s despite the fact that more than half of the company’s operating businesses saw their earnings decline last year, Buffett said.

Strong earnings from Berkshire’s insurance segment helped drive a large portion of the overall gains. Buffett also cited “predictably large” gains in investment income from Treasury bills.

Berkshire’s stock is up 5.6% so far this year and 17.2% over the past 12 months. The Morningstar US Market Index has returned 2.31% since the beginning of January 2025 and 21.76% over the past year. Berkshire crossed the threshold of $1 trillion in market capitalization for the first time late last summer.

Here are a few key takeaways for investors.

Buffett on his growing cash pile

Berkshire’s cash reserve has been the subject of mounting speculation from market watchers in recent months. As of the end of the fourth quarter, the firm’s cash holdings amounted to an eye-watering $334 billion, a sum that has been augmented by the sale of holdings in Apple AAPL and Bank of America BAC and a slowdown in stock buybacks.
Investors have been itching for answers: What kind of opportunity is Berkshire waiting for?

Are there no bargains to be found? The Oracle of Omaha didn’t offer insight into his reasoning, but he had these words of reassurance for investors about his lasting preference for equities over cash:

“Despite what some commentators currently view as an extraordinary cash position at Berkshire, the great majority of your money remains in equities,” Buffett wrote. “That preference won’t change.”

Buffett noted that while the firm’s holdings in stocks fell last year, the value of its private holdings rose “and remains far greater than the value of the marketable portfolio.”

He continued: “Berkshire shareholders can rest assured that we will forever deploy a substantial majority of their money in equities—mostly American equities although many of these will have international operations of significance. Berkshire will never prefer ownership of cash-equivalent assets over the ownership of good businesses, whether controlled or only partially owned.”

Insurance outperforms

Buffett highlighted the success of Berkshire’s property-casualty insurance business, which he called the “core” of the firm’s business model. Berkshire’s operating earnings from insurance underwriting jumped 66% to $9 billion in 2024 compared with the prior year.

He pointed specifically to the performance of Geico under CEO Todd Combs, describing the firm’s improvement in 2024 as “spectacular” even though more work remains to be done.
Buffett argued that Berkshire is uniquely suited for the rare financial model of the industry, where payment is received upfront and the true cost to the business is only determined years or even decades down the line.

“Berkshire can financially and psychologically handle extreme losses without blinking,” he wrote. “We are also not dependent on reinsurers and that gives us a material and enduring cost advantage. Finally, we have outstanding managers (no optimists) and are particularly well-situated to utilize the substantial sums P/C insurance delivers for investment.”

Berkshire’s growing investment in Japan

Buffett also highlighted what he calls a “small but important exception” to Berkshire’s US-focused strategy: the firm’s growing investment in Japan through share purchases in five companies: Itochu, Marubeni, Mitsubishi, Mitsui, and Sumitomo. The five companies are conglomerates not unlike Berkshire itself; they own interests in a wide range of businesses both within Japan and globally.

“We simply looked at their financial records and were amazed at the low prices of their stocks,” Buffett wrote.

Buffett added that “our admiration for these companies has consistently grown” in the years since Berkshire began investing in them in 2019. The companies increase their dividends and repurchase shares when appropriate, he said, and their executive compensation programs are “far less aggressive” compared with their American counterparts.

Buffett says he expects Berkshire to continue holding this Japanese position for decades to come. Berkshire had previously agreed to limit its holdings to no more than 10% of each company’s shares, but that limit could increase.

On Berkshire’s tax bill

Buffett used Berkshire’s growing tax bill as a benchmark for the firm’s success over the past six decades.

Berkshire paid no income tax in 1965, the year Buffett took the reins. Sixty years later, Buffett said, Berkshire wrote the US government four tax checks totaling $26.8 billion, which accounted for about 5% of what all of corporate America paid in taxes last year. That’s the most any company has ever paid in income tax to the US government, “even the American tech titans that commanded market values in the trillions.”

Over time, according to Buffett, the firm’s tax payments to the Treasury Department have exceeded $101 billion.

What Buffett left out

Perhaps just as notable as Buffett’s words of wisdom for investors was what he didn’t address. He was tight-lipped on today’s stock market conditions, though he did offer his lasting optimism on the earnings power of American companies over time. “I have depended on the success of American businesses, and I will continue to do so,” he said.

While Buffett offered no concrete details on any plans to transition away from his role at the company, he noted that at his age of 94, it “won’t be long” before Greg Abel, the vice chairman of Berkshire’s noninsurance operations, takes over as CEO.

Buffett reiterated his confidence in Abel’s ability to identify good investments when they arise: “Often, nothing looks compelling; very infrequently we find ourselves knee-deep in opportunities,” Buffett wrote. “Greg has vividly shown his ability to act at such times as did Charlie.”

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