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Source: Barron Chinese
For a long time, people have been speculating who will become Buffett’s successor. In his annual letter to shareholders released on the morning of February 22 local time, “I am 94 years old, and soon Greg Abel (Greg Abel will take over as CEO and write an annual letter to shareholders.”
Buffett clearly confirmed two things in the letter: Abel, CEO of Berkshire Hathaway Energy and vice chairman of Berkshire’s non-insurance business, is his successor; the handover will come soon.
Buffett’s letter to shareholders has attracted attention from investors around the world not only because Berkshire often makes groundbreaking moves, but also because Buffett’s investment and economy – sometimes social, political and marriage -profound insights.The 15-page open letter continues the trend of fewer letter pages than the previous year, and does not contain much content related to these two groups of topics.(Click “Read original text” to view the full text of the letter to shareholders)
But then again, Buffett is 94 years old, as he said recently in a Fortune magazine interview, “I still enjoy the work very much, there are some things that can be done quite well, but other activities have been cancelled orThese activities have been greatly reduced.”
The fourth-quarter financial report released together with the shareholder letter showed that Berkshire’s cash reserves reached a record $334.2 billion, but Buffett said that Berkshire is more willing to hold shares than cash.
Buffett wrote in his letter, “If the winds of fiscal recklessness get stronger, the value of paper money will evaporate. Some countries have regarded this kind of recklessness as a habit, and the United States has approached that edge in its short history. Fixed interestNotes and bonds cannot prevent exchange rates from getting out of control.”
Buffett also wrote, “Berkshire will never be more willing to hold cash instead of investing in a good company, whether through wholly-owned holdings or holding some shares.”
In the letter, Buffett pointed out that operating profit is his most concerned performance measurement indicator. In 2024, Berkshire’s operating profit increased from US$37.4 billion in 2023 to US$47.4 billion, an increase of 26.7%.Buffett said the strong performance of Geico’s insurance business, which has maintained a turnaround in recent quarters, is one of the reasons for Berkshire’s operating profit growth.Buffett attributes Geico’s growth to Geico CEO and Berkshire investment manager Todd Combs.
“Geico is a long-standing gem that Berkshire has owned and needs to be re-sanded, and Todd has worked tirelessly to do the work. Although the work is not over yet, the progress made in 2024 is amazing.”
The rising pricing of property insurance and accident insurance businesses, which Buffett calls Berkshire’s “very important” priced, “reflects a significant increase in losses caused by convective weather.”Insurance companies tend to raise prices after losses occur.
“Climate change may have arrived, and insured losses of amazing scale will occur one day, any day, and no one can guarantee that such losses will occur only once a year,” Buffett wrote.
Buffett also wrote in the letter that Berkshire paid more taxes to the U.S. Treasury Department than any other company.Berkshire paid $26.8 billion in taxes in 2024, he wrote, “far more than the corporate income tax collected by the U.S. government from any company… accounts for about 5% of all corporate taxes in the U.S..”Over the 60-year history of Khsier, the company has paid $101 billion in taxes.
Berkshire had strong results last year, but the company encountered obstacles in doing what it is best at — investing.With stock prices high, Buffett and his two deputy thought no company’s share price was attractive enough, and last year Berkshire sold about $134 billion worth of stock, mostly Apple (AAPL)stocks.
As Berkshire does not pay dividends, cash reserves surged from $168 billion at the end of 2023 to $334.2 billion, roughly equivalent to the market value of Berkshire’s long-term investment target Coca-Cola (KO).
In the letter, Buffett talked about Berkshire’s increased investment in five Japanese trading companies: Itochu, Marubeni, Mitsubishi, Mitsui and Sumitomo.Buffett said the five companies are similar to Berkshire because they all “hold stakes in companies in different industries.”
Buffett said the total cost of investing in the five Japanese trading companies was $13.8 billion (Berkshire started buying their shares in 2019) and is now worth $23.5 billion.”You may see further increase in Berkshire’s stake in these five companies over time,” Buffett wrote.
The letter ends with a somewhat heavy tone, and Buffett said that this year’s Berkshire Annual Meeting—often called the “Woodstock Festival of Capitalists”—will be a “redesigned party.”Before the annual meeting begins, the funny videos will not be played like in the past, nor will it last until the evening. This year’s annual meeting will end at 1 pm.
Berkshire’s 2025 Annual General Meeting will be held on Saturday, May 3, local time at the CHI Health Center in Omaha, Nebraska.
