Berkshire Hathaway’s 2024 Report: Buffett’s Moves And Market Outlook

Warren Buffett released his widely anticipated annual letter to Berkshire Hathaway shareholders yesterday. Investors hoped to find insights into operating performance, plans for Berkshire’s cash stockpile, and major changes in portfolio composition. Here are the highlights.

Operating Performance

Berkshire Hathaway reported strong operating earnings of $47.44 billion in 2024, a 27% increase from $37.35 billion in 2023. Fourth-quarter operating earnings jumped 71% year-over-year to $14.53 billion, driven by significant gains in its insurance underwriting and investment income.

Not all businesses are growing at the same pace. In his usual humble way, Buffett highlighted that “53% of our 189 operating businesses reported a decline in earnings,” but higher Treasury yields and strong insurance results offset these losses.

Cash Reserves At Record Levels

Berkshire ended 2024 with a record $334.2 billion in cash, up from $325.2 billion in Q3 2024 and significantly higher than the previous year. Buffett addressed this massive cash pile, stating, “While some analysts may see our cash position at Berkshire as extraordinary, the vast majority of your funds remain invested in equities.”

The growing cash pile, which rose primarily from sales of publicly traded stocks, is viewed as a defensive weapon in turbulent times. As he has done in previous letters, Buffett emphasized that this strategy ensures flexibility for future opportunities while maintaining a strong equity focus.

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Some investors were hoping that Berkshire would break tradition and distribute some of the excess cash as a dividend. Buffett poured cold water on that idea, reiterating Berkshire’s preference for long-term compounding of capital rather than returning cash to shareholders.

Portfolio Adjustments

One of the most notable moves in 2024 was Berkshire’s reduction in its Apple and Bank of America holdings. By year-end, the company trimmed its Apple stake from over 900 million shares to just 300 million, according to SEC filings. It sold another 117 million shares of Bank of America, retaining about 9% ownership. These sales contributed to the rise in cash reserves, but Buffett did not elaborate on the reasons for the sales in his note. Overall, Berkshire’s holdings of marketable securities dropped from $354 billion in 2023 to $272 billion at the end of 2024.

Buffett reiterated his long-term investment philosophy of preferring equities to other asset classes. “Berkshire shareholders can be confident that a significant majority of their funds will always be allocated to equities—primarily American stocks, although many will have substantial international operations,” Buffett said in his letter.

Buffett’s letter emphasized his commitment to his five largest Japanese holdings: ITOCHU, Marubeni, Mitsubishi, Mitsui, and Sumitomo. He respects that “Each of the five companies increase dividends when appropriate, they repurchase their shares when it is sensible to do so, and their top managers are far less aggressive in their compensation programs than their U.S. counterparts.”

Impact Of Tariffs

Berkshire’s portfolio remains heavily tilted toward U.S.-based businesses, with limited exposure to international markets compared to other global conglomerates. This domestic focus positions Berkshire advantageously amid ongoing trade tensions and tariffs. As of 2023, roughly 85% of Berkshire’s revenue was generated domestically, reducing exposure to any potential disruptions in trade.

The U.S.-centric approach has also shielded Berkshire from geopolitical uncertainties over the years. Buffett noted, "Our preference for American businesses has historically shielded us from geopolitical disruptions.” However, he acknowledged that some subsidiaries with international operations face challenges from fluctuating tariffs and foreign currency rates.

Looking Ahead

Like previous iterations, this year’s letter highlighted Berkshire’s ability to adapt to changing economic conditions while sticking to its core principles of value investing and financial prudence.

Steven Check, president of Check Capital Management in Costa Mesa, CA, touts Berkshire Hathaway as its largest holding. Check has attended Berkshire meetings since 1996. When asked about his takeaways from the letter, he said, “As always, it is so refreshing to hear directly from Buffett. He is always teaching, with wisdom unmatched in today’s business world. I advise everyone to read and learn from Buffett’s letters.”