TLDR
- Berkshire Hathaway reported record operating earnings of $47.4 billion for 2024, despite 53% of operating businesses seeing earnings decline
- Cash reserves nearly doubled to $334.2 billion, while equity portfolio value decreased from $354 billion to $272 billion
- Berkshire sold significant portions of its Apple stake across three quarters in 2024
- Buffett paid $26.8 billion in taxes in 2024, about 5% of all corporate America payments
- Buffett acknowledged making investment mistakes but emphasized the lasting impact of winning decisions
Berkshire Hathaway posted record operating earnings in 2024, with CEO Warren Buffett sharing insights on the company’s performance, investment strategy, and business philosophy in his eagerly anticipated annual letter to shareholders.
The conglomerate reported operating earnings of $47.4 billion for 2024, setting a new record despite challenges across many of its businesses. Buffett noted that 53% of Berkshire’s 189 operating businesses experienced declining earnings during the year.
“In 2024, Berkshire did better than I expected though 53% of our 189 operating businesses reported a decline in earnings,” Buffett wrote in his letter published on Saturday. This success came partly from increased investment income as Treasury Bill yields improved and the company substantially increased its holdings of these liquid short-term securities.
The company’s cash position grew dramatically over the past year. At the end of 2024, Berkshire’s cash and cash-like securities, including Treasury Bills, reached $334.2 billion, nearly double the $167.6 billion reported at the end of 2023. This massive increase in liquidity came as Berkshire reduced some of its equity positions.
Most notably, Berkshire significantly reduced its stake in Apple during the first three quarters of 2024. These sales caused the value of its Apple holdings to fall by approximately $100 billion. Overall, the value of Berkshire’s equity portfolio decreased from $354 billion at the end of 2023 to $272 billion by the end of 2024.
Despite this reduction in publicly traded stocks, Buffett reassured shareholders about Berkshire’s investment approach. “Despite what some commentators currently view as an extraordinary cash position at Berkshire, the great majority of your money remains in equities,” he wrote. “That preference won’t change.”
Buffett emphasized that Berkshire’s non-quoted controlled equities increased somewhat and remain far greater in value than the marketable portfolio. He promised shareholders that Berkshire would “forever deploy a substantial majority of their money in equities — mostly American equities although many of these will have international operations of significance.”
Total revenues reached $371.4 billion
For the full year, Berkshire’s total revenues reached $371.4 billion, up from $364.5 billion in the previous year. The company’s investment gains totaled $41.6 billion, down from $58.9 billion in 2023, reflecting the volatility that can occur in investment results from year to year. Including these investment gains, Berkshire’s net earnings were $89 billion for 2024, down from $96.2 billion in 2023.
In his letter, Buffett devoted considerable space to discussing mistakes made at Berkshire over the years. He acknowledged errors in both assessing the future economics of businesses and in evaluating the abilities or loyalty of managers. “During the 2019-23 period, I have used the words ‘mistake’ or ‘error’ 16 times in my letters to you,” Buffett noted. “Many other huge companies have never used either word over that span.”
Regarding Berkshire’s current investments, Buffett admitted that while there are no major underperformers, “we have a number that I should not have purchased.” However, he balanced this honest assessment by highlighting the power of successful decisions, writing that “a single winning decision can make a breathtaking difference over time.”
Buffett pointed to key moments in Berkshire’s history that proved transformative, including the acquisition of GEICO, hiring former McKinsey consultant Ajit Jain, and partnering with Charlie Munger, who served as vice chairman for more than four decades before his passing.
The letter also included Buffett’s thoughts on talent assessment. He stated firmly: “I never look at where a candidate has gone to school. Never!” He believes that “a very large portion of business talent is innate with nature swamping nurture,” citing the case of Pete Liegl, founder of Forest River, an RV manufacturer acquired by Berkshire in 2005, who has outperformed competitors despite not having prestigious educational credentials.
Buffett highlighted Berkshire’s tax contributions, noting that the $26.8 billion in taxes paid by the company in 2024 represents the largest amount ever paid by a single company to the U.S. government. “That’s about 5% of what all of corporate America paid,” Buffett wrote.
As in previous letters, Buffett praised the “American miracle” of economic growth that has benefited his businesses and investments. He credited the culture of saving and reinvestment as key factors in American capitalism’s success, noting that Berkshire shareholders have participated in this growth by foregoing dividends and reinvesting profits.
Looking to the future, Buffett acknowledged his advanced age and indicated that “it won’t be long” before Greg Abel, his designated successor, takes over as CEO and begins writing annual letters to shareholders. He expressed confidence that Abel understands the importance of honest communication with shareholders.
Buffett also announced changes to the format of Berkshire’s annual meeting, scheduled for May 3. The famous Q&A session will start and end earlier than in previous years. Buffett will be joined by vice chairmen Greg Abel and Ajit Jain for two-and-a-half hours starting at 8:00 a.m., after which only Abel will join Buffett on stage, with the session concluding by 1:00 p.m.
In closing his letter, Buffett looked toward the future, writing, “Someday your nieces and nephews at Berkshire hope to send you even larger payments than we did in 2024. Spend it wisely.”
Warren Buffett’s 2024 letter continues his tradition of sharing both financial results and business wisdom, offering shareholders and the business community insights into the thinking of one of the world’s most successful investors during another year of strong performance for Berkshire Hathaway.
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