Key Takeaways
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Warren Buffett on Saturday assured Berkshire Hathaway investors that despite the company's record cash pile and recent stock sales, "the great majority" of their money remained invested in equities.
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Buffett praised the leadership of the five Japanese conglomerates in which he began investing in 2019 and said Berkshire would likely increase its stakes in the firms.
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Buffett expressed confidence Greg Abel, his appointed successor to lead Berkshire, would carry on the tradition of giving investors frank annual updates.
Warren Buffett’s hotly anticipated annual letter to Berkshire Hathaway (BRK.A)(BRK.B) shareholders dropped on Saturday, alongside better-than-expected fourth-quarter results.
Below, we look at some of the key takeaways from Buffett’s letter.
Berkshire Sold Stocks, But Will Always Favor Equity
Berkshire Hathaway’s total cash, cash equivalents, and short-term U.S. Treasury holdings stood at $334.2 billion at the end of the year, more than double its $163.3 billion stash at the end of 2023.
Buffett on Saturday reassured investors that despite Berkshire’s swelling cash pile, “the great majority” of their invested money is in equities, not cash.
Berkshire was a net-seller of stocks last year, buying $9.2 billion of stock and selling more than $143 billion. However, Buffett explained that the value of Berkshire’s non-marketable securities—that is, equity in companies that do not trade publicly, including those Berkshire owns outright—“remains far greater than the value of the marketable portfolio.” (Emphasis Buffett’s.)
Buffett insisted Berkshire would always prioritize owning businesses over cash. “Paper money can see its value evaporate if fiscal folly prevails,” he wrote. “Businesses, as well as individuals with desired talents, however, will usually find a way to cope with monetary instability.”
Buffett warned in last year’s shareholder letter that investment opportunities fitting Berkshire’s philosophy—buy good businesses at fair prices—were few and far between. But the company did find some targets last quarter. Berkshire opened a new position in Modelo maker Constellation Brands (STZ) and increased its stakes in Dominos Pizza (DPZ), Occidental Petroleum (OXY) and Pool Corp. (POOL) in the fourth quarter.
Berkshire To Hold Japan Investments for Long Term
The vast majority of Berkshire’s investments are in U.S. firms, but the company last year increased its stakes in five Japanese companies that resemble Berkshire to a certain degree. ITOCHU, Marubeni, Mitsubishi, Mitsui, and Sumitomo are large conglomerates that own stakes in a variety of businesses operating across the globe.