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Warren Buffett defended the size of Berkshire Hathaway’s (BRK.A-0.42%) cash hoard, which doubled last year to $334.2 billion, saying the majority of his investors’ money would always be invested in equities, mainly of American companies.
“Berkshire will never prefer ownership of cash-equivalent assets over the ownership of good businesses, whether controlled or only partially owned,” he wrote in his letter to shareholders that accompanies the conglomerate’s annual report.
While the firm’s holdings of listed securities fell to $272 billion in 2024 from $354 billion the prior year, the value of non-quoted controlled equities “increased somewhat and remains far greater than the value of the marketable portfolio,” Buffett wrote.
Buffett also said Berkshire is likely to increase its stakes in Itochu (ITOCY+0.17%), Marubeni (MARUY+0.09%), Mitsubishi (MSBHF-0.43%), Mitsui (MITSY-1.87%) and Sumitomo (SSUMY-0.33%) over time, as the Japanese trading firms have agreed to moderately relax their 10% ceilings on the company’s stakes. Berkshire made its first investment in the five in 2019.
“Our admiration for these companies has consistently grown,” Buffett wrote. They “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.”
The company’s operating earnings jumped by more than 25% in 2024 to $47.4 billion, driven by strong gains in insurance underwriting — mainly at GEICO, where pre-tax underwriting profit more than doubled to $7.8 billion — and increased investment income amid higher interest rates.
Berkshire estimated its preliminary pre-tax losses from last month’s wildfires in California at $1.3 billion.
“Property damage arising from hurricanes, tornadoes and wildfires is massive, growing and increasingly unpredictable in their patterns and eventual costs,” Buffett wrote.
Buffett also defended capitalism, saying that while its faults and abuses are “in certain respects more egregious now than ever,” it can work wonders unmatched by other economic systems.
The firm didn’t repurchase any of its shares in the fourth quarter.