OMAHA, Neb. (AP) — In his annual letter to shareholders Saturday, Warren Buffett celebrated the successes of Berkshire Hathaway’s firms final yr and within the 60 years since he took over a struggling New England textile firm and started changing it into a large conglomerate whereas providing some recommendation to President Donald Trump.
Buffett opened the letter by acknowledging that he has often made errors over time with out providing many particular examples, however he assured shareholders that the person he has chosen to sooner or later succeed him as CEO, Greg Abel, isn’t one among them. He wrote that Abel will likely be able to act each time he spots vital funding alternatives, and he’ll proceed writing an annual report like Buffett’s to replace shareholders. Buffett’s letters are at all times in style amongst traders due to the insights he gives and his exceptional observe file.
Buffett hardly mirrored on his lengthy tenure as CEO within the letter — in contrast to 10 years in the past when he and his longtime investing associate Charlie Munger, who died in 2023, issued separate reflections on the corporate after 50 years of their management. However Berkshire will provide a particular sixtieth anniversary ebook on the annual assembly with tales and classes from the corporate’s historical past.
Buffett cited the truth that Berkshire paid zero revenue tax within the decade earlier than he took over in 1965 as a positive signal the funding was a mistake, however over time the quantity Berkshire pays to the IRS has grown together with the conglomerate to hit $26.8 billion final yr — “way more in company revenue tax than the U.S. authorities had ever obtained from any firm — even the American tech titans that commanded market values within the trillions.”
AP correspondent Julie Walker reviews Warren Buffett gives Donald Trump some recommendation whereas celebrating Berkshire Hathaway’s success.
Buffett has hardly talked about politics and present occasions in his latest letters — preferring to steer clear of something controversial that may harm Berkshire’s firms — however Saturday he urged the federal government to be accountable with the cash he sends it.
“Thanks, Uncle Sam. Sometime your nieces and nephews at Berkshire hope to ship you even bigger funds than we did in 2024. Spend it correctly. Deal with the numerous who, for no fault of their very own, get the brief straws in life. They deserve higher. And always remember that we want you to take care of a steady foreign money and that consequence requires each knowledge and vigilance in your half,” Buffett wrote, reinforcing among the Democratic beliefs he has lengthy supported.
CFRA Analysis analyst Cathy Seifert mentioned, “I believed actually in a really delicate manner that was a strong message.”
Investing energy
Abel can have loads of assets to work with when he ultimately takes over provided that Berkshire now holds $334.2 billion money after promoting off a lot of its Apple and Financial institution of America inventory prior to now yr and persevering with to generate cash from all its subsidiaries that embrace Geico insurance coverage, BNSF railroad, a set of main utilities and an assortment of main producers and well-known retail companies that embrace manufacturers like Dairy Queen and See’s Sweet. That’s nearly double the $167.6 billion money Berkshire held a yr in the past.
Buffett did discover just a few issues to make use of a few of that money on final yr by spending $3.9 billion to accumulate the remainder of its utility enterprise from the property of a former associate and one other $2.6 billion to purchase the remainder of the Pilot truck cease chain it didn’t already personal. Buffett mentioned he additionally elevated Berkshire’s funding in 5 main Japanese conglomerates, and he’ll possible make investments extra in them as a result of these firms agreed to let Berkshire improve its possession past 10%. Berkshire has now spent $13.8 billion over the previous six years on these Japanese investments that at the moment are value $23.5 billion.
However whereas Buffett has struggled to seek out main acquisitions in recent times he affirmed that he has no plans to supply a dividend as a result of he believes reinvesting the cash will generate higher returns.
Investor Invoice Smead of Smead Capital Administration mentioned Buffett’s actions present he’s truly “bearish as hell however gained’t admit it.” He mentioned Buffett doesn’t need to scare folks, however shareholders can look to his previous writings and his actions to see that he possible thinks the inventory market is very costly. And among the greatest funding alternatives he’s discovered in recent times have been exterior america.
However Macrae Sykes, portfolio supervisor at Gabelli Funds, mentioned Berkshire’s money pile also needs to be seen as a key asset as a result of it ensures “the aggressive skill of Berkshire to reply with alacrity and at vital scale when motivated. Though rare, when the conglomerate does deploy it has traditionally led to measurable future returns.”
Softening outcomes?
Buffett mentioned Berkshire did higher than he anticipated final yr although 53% of the 189 firms it owns reported decrease earnings in 2024. That’s as a result of Berkshire collected extra curiosity on all of its short-term investments and its insurance coverage items reported a lot greater income.
The underside-line revenue numbers Berkshire reviews could make it arduous to see how its firms are actually doing as a result of the numbers embrace the paper worth of all the corporate’s investments, which might fluctuate broadly quarter to quarter. So Buffett has lengthy beneficial specializing in the working income.
Within the fourth quarter, Berkshire earned $19.69 billion revenue, or $13,695 per Class A share. That’s a bit of over half the $37.57 billion, or $26,043 per Class A share, it reported a yr in the past. However the working earnings inform a a lot totally different story. By that measure, working income had been up considerably at $14.5 billion, or $10,102.07 per Class A share, from the earlier yr’s $8.5 billion, or $5,878.21 per A share. The 4 analysts surveyed by FactSet Analysis predicted working earnings of $6,932 per share.
Edward Jones analyst Jim Shanahan mentioned the weak spot in Berkshire’s working firms is worrisome.
“There will not be a greater firm to take a look at for a diversified look into the power of the broader manufacturing, retail, shopper economic system than Berkshire. And these outcomes type of look mushy to me, and it makes me involved about how sturdy the economic system would possibly actually be proper now,” Shanahan mentioned.
And Berkshire’s earnings would possibly decline all through 2025 if that weak spot persists, he mentioned. The corporate additionally mentioned it expects to file a minimum of a $1.3 billion loss within the first quarter on insurance coverage claims associated to the devastating California wildfires.
Adjustments on the Woodstock for capitalists
In what could be a nod to the 94-year-old Buffett’s age, the legendary investor introduced that this yr’s shareholder assembly in Could that routinely attracts tens of 1000’s of individuals will likely be shorter. Buffett and Berkshire’s two vice chairmen will solely reply questions from 8 a.m. till 1 p.m. — a number of hours lower than ordinary. Buffett additionally acknowledged utilizing a cane nowadays to keep away from “falling flat on my face.”
Buffett mentioned this yr there gained’t be a humorous film that historically opens the assembly with an assortment of celeb cameos, sketches and adverts from Berkshire firms. However he assured shareholders there’ll nonetheless be loads of time for them to purchase merchandise from all of the Berkshire firms that arrange cubicles within the exhibit corridor adjoining the Omaha area the place the assembly is held.
