Jason Wang GOOGLE BLOGGER JASONMTG604 604-809-9264: February 2025

Sunday, February 23, 2025

Fw: Morning Brief: Buffett on Berkshire's better-than-expected year

2024 LETTER, PDF,

https://www.berkshirehathaway.com/letters/2024ltr.pdf

Sent: Saturday, February 22, 2025 at 08:03:27 AM PST

Subject: Morning Brief: Buffett on Berkshire's better-than-expected year

Saturday, Feb 22

👋 Good morning! Friday made for a rough end of the week, as the S&P 500 and Dow fell 1.7% and the Nasdaq lost even more ground, falling a further 2.2% as consumer sentiment nosedived.

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Today, we have a special Saturday Morning Brief from Myles Udland, our Head of News, on Warren Buffett's latest annual letter to Berkshire Hathaway shareholders.

📫 Buffett's latest reflections

Berkshire Hathaway (BRK-B, BRK-A) CEO Warren Buffett defended his company's growing cash pile, reflected on mistakes, and again touted what he called the "American miracle" of US economic growth over the last two centuries as the conglomerate reported record operating earnings of $47.4 billion last year.

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In his 2024 annual letter to Berkshire shareholders published Saturday, Buffett said these record profits came despite more than half (53%) of the company's operating businesses reporting a decline in earnings last year.

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"In 2024, Berkshire did better than I expected though 53% of our 189 operating businesses reported a decline in earnings," Buffett wrote.

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"We were aided by a predictable large gain in investment income as Treasury Bill yields improved and we substantially increased our holdings of these highly-liquid short-term securities."

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At the end of the year, Berkshire's pile of cash and other cash-like securities, such as Treasury Bills, stood at $334.2 billion, almost double the $167.6 billion seen at the end of 2023. The value of Berkshire's equity portfolio stood at $272 billion at year-end; at the end of 2023, these holdings were valued at $354 billion.

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Major sales of Berkshire's stake in Apple (AAPL) during the first, second, and third quarters of 2024 saw the value of its holdings in the tech giant fall by about $100 billion.

At the top of this year's annual letter, Buffett began with reflections on the many mistakes made at Berkshire Hathaway over the years, but kept his comments general on the advice of the late Tom Murphy: "praise by name, criticize by category."

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"Sometimes I've made mistakes in assessing the future economics of a business I've purchased for Berkshire – each a case of capital allocation gone wrong. That happens with both judgments about marketable equities — we view these as partial ownership of businesses — and the 100% acquisitions of companies.

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"At other times, I've made mistakes when assessing the abilities or fidelity of the managers Berkshire is hiring. The fidelity disappointments can hurt beyond their financial impact, a pain that can approach that of a failed marriage."

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"During the 2019-23 period, I have used the words 'mistake' or 'error' 16 times in my letters to you," Buffett added. "Many other huge companies have never used either word over that span."

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Buffett added that, given his advanced age it "won't be long" before Greg Abel takes his place as CEO and writes annual letters to Berkshire shareholders.

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"Greg shares the Berkshire creed that a 'report' is what a Berkshire CEO annually owes to owners," Buffett wrote. "And he also understands that if you start fooling your shareholders, you will soon believe your own baloney and be fooling yourself as well."

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In reference to Berkshire's current investments, Buffett also noted some of the "disappointments" that populate that portfolio.

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"We own nothing that is a major drag," Buffett wrote, "but we have a number that I should not have purchased."

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Read more here.

📰 Key stories for the weekend

📉 Dow, S&P 500, Nasdaq sink as consumers start to sour on US economy.

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📉 Reddit stock falls more than 20% since last week's earnings report as 6-month rally eases.

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🏆 Gold notches eighth weekly gain as precious metals shipments to US rise.