Highlights from Warren Buffet’s shareholder letter for 2025 year.
In his 2024 letter to Berkshire Hathaway shareholders, Warren Buffett addresses several key topics:
Acknowledgment of Mistakes
Buffett candidly admits to errors in evaluating the future economic prospects of certain acquired businesses, both in stock investments and full company acquisitions. He emphasizes the importance of promptly correcting mistakes, referencing Charlie Munger’s advice against “thumb-sucking” (procrastination).
Succession Planning
At 94, Buffett discusses the succession plan, naming Greg Abel as his successor as CEO. He highlights Abel’s commitment to Berkshire’s values, including the belief that the annual report should serve as an honest communication to shareholders.
The Story of Pete Liegl and Forest River
Buffett shares the story of Pete Liegl, founder of Forest River, a recreational vehicle manufacturer. In 2005, Liegl approached Berkshire with an offer to sell his company. The deal was swiftly concluded, with Liegl agreeing to a modest base salary and a performance-based bonus. His dedication led to substantial value creation for Berkshire’s shareholders.
Financial Performance and Investment Strategy
In 2024, Berkshire Hathaway reported operating earnings of $47.44 billion, a 27% increase from the previous year. Despite holding a record $334.2 billion in cash and equivalents at year-end, Buffett underscores that the “substantial majority” of shareholders’ funds remain invested in equities. He expresses a preference for investing in well-performing businesses, primarily American, over holding cash assets.
Investments in Japanese Trading Companies
Berkshire plans to increase its stakes in five Japanese trading companies: Itochu, Marubeni, Mitsubishi, Mitsui, and Sumitomo. By the end of 2024, these investments totaled $23.5 billion. Buffett notes that these companies have agreed to relax ownership limits, allowing Berkshire to hold more than 10% in each. He emphasizes a long-term investment approach and indicates that his successor, Greg Abel, will continue to support and expand these investments.
Reduction of Holdings in U.S. Banks
In the fourth quarter of 2024, Berkshire significantly reduced its positions in major U.S. banks, selling nearly three-quarters of its Citigroup shares, amounting to over $2.4 billion, and decreasing its Bank of America holdings by 95 million shares. Despite these reductions, Berkshire acquired $1.2 billion worth of shares in Constellation Brands.
In summary, Warren Buffett’s 2024 letter reflects his ongoing dedication to transparency with shareholders, strategic investment decisions, and careful planning for Berkshire Hathaway’s future leadership.
Source:
https://www.berkshirehathaway.com/letters/2024ltr.pdf
