In his annual letter to shareholders on Saturday (February 22), Warren Buffett highlighted the achievements of Berkshire Hathaway’s companies over the past year and reflected on the remarkable 60-year journey since he took over a struggling New England textile firm, transforming it into a vast conglomerate. Buffett began by admitting to making mistakes over the years, though he didn’t delve into specifics. Here are the key takeaways Warren Buffett’s 2024 Letter –
Greg Abell will soon replace Warren Buffet as CEO
Buffet confidently assured shareholders that his chosen successor, Greg Abel, is not one of those missteps mentioned in the letter. Buffett praised Abel’s leadership and affirmed that he will be well-prepared to seize significant investment opportunities when they arise. “At 94, it won’t be long before Greg Abel replaces me as CEO and will be writing the annual letters. Greg shares the Berkshire creed that a “report” is what a Berkshire CEO annually owes to owners. And he also understands that if you start fooling your shareholders, you will soon believe your own baloney and be fooling yourself as well,” the letter read.
“We are impartial in our choice of equity vehicles, investing in either variety based upon where we can best deploy your (and my family’s) savings. Often, nothing looks compelling; very infrequently we find ourselves knee-deep in opportunities. Greg has vividly shown his ability to act at such times,” Buffett wrote.
Buffett openly admits to making mistakes
Buffett candidly acknowledges having made errors in both capital allocation and personnel choices. “During the 2019-23 period, I have used the words ‘mistake’ or ‘error’ 16 times in my letters to you. Many other huge companies have never used either word over that span.”
“At other times, I’ve made mistakes when assessing the abilities or fidelity of the managers Berkshire is hiring. The fidelity disappointments can hurt beyond their financial impact, a pain that can approach that of a failed marriage. A decent batting average in personnel decisions is all that can be hoped for. The cardinal sin is delaying the correction of mistakes or what Charlie Munger called “thumb-sucking.” Problems, he would tell me, cannot be wished away. They require action, however uncomfortable that may be,” the letter read.
Berkshire Hathaway’s operating profit jumps
The conglomerate, led by Warren Buffett, reported a 71% surge in operating earnings for the fourth quarter, fueled by a boost in investment income due to higher interest rates. The conglomerate posted operating earnings of $14.5 billion for the three months ending in December, according to a statement released on Saturday. A key driver of this growth was a 48% rise in insurance investment income, which climbed to $4.1 billion, benefiting from elevated interest rates.
Buffett pledges to equity investments
“Berkshire shareholders can rest assured that we will forever deploy a substantial majority of their money in equities – mostly American equities although many of these will have international operations of significance,” the letter stated.
Buffett says his company has paid more taxes than ‘tech titans in trillions’
“If Berkshire had sent the Treasury a $1 million check every 20 minutes throughout all of 2024 – visualise 366 days and nights because 2024 was a leap year – we still would have owed the federal government a significant sum at yearend. Indeed, it would be well into January before the Treasury would tell us that we could take a short breather, get some sleep, and prepare for our 2025 tax payments,” he added.
Berkshire commits to long-term growth in Japanese investments
Berkshire Hathaway has reaffirmed its commitment to long-term growth in its Japanese investments, focusing on five major companies while continuing to support their boards of directors. The company initially pledged to keep its stake below 10% in each firm, but as it approached this limit, the firms permitted a slight relaxation of the cap. This adjustment paves the way for Berkshire’s ownership in these companies to gradually increase over time.
Berkshire to offer special 60th anniversary book at annual meeting
This year’s Berkshire Hathaway annual meeting will showcase the release of 60 Years of Berkshire Hathaway, a special anniversary book curated by former employee Carrie Sova. Initially assigned in 2015 to create a lighthearted company history, Sova has returned to produce an updated edition, enriched with rare photos, memorable quotes, and stories about Charlie Munger. A total of 5,000 copies will be available for purchase. Additionally, 20 autographed copies will be gifted to shareholders who donate $5,000 to the Stephen Center, a homeless shelter in South Omaha, with Warren Buffett pledging to match all contributions.