Berkshire Hathaway 2024: Buffett’s Letter & Key Takeaways

1. Strong but Selective Growth – $47.4 billion in profits, but 53% of businesses saw declines.

2. Insurance as a Core Strength – Profitable underwriting and float provide a major edge.

3. Long-Term Investing Focus – Patience, compounding, and strong brands drive success.

4. Global Expansion – Increasing investments in undervalued Japanese trading houses.

5. Commitment to Reinvestment – Record $26.8B tax paid, prioritizing long-term growth.

Introduction: A Look into Berkshire’s Success

Warren Buffett’s annual letter is more than just a financial update, it’s a way for investors to learn from one of the best. Each year, people look forward to his insights on Berkshire Hathaway’s performance and his thoughts on the economy. The 2024 letter gave a clear view of how the company did and reminded everyone of Buffett’s steady investing principles. If you want to understand smart investing, Buffett’s words are a great place to start.

Berkshire’s 2024 Performance: Strong but Selective Growth

Berkshire Hathaway had a strong year, earning $47.4 billion in operating profits, mostly from its insurance and utility businesses. But not every part of the company did well: 53% of its 189 businesses made less money than the year before. One big reason for success was investing in short-term Treasury bonds, which brought in more income because interest rates were higher. Buffett’s strategy remains simple: stay financially strong, be patient, and wait for good deals.

The Engine Behind Berkshire

Insurance is the foundation of Berkshire’s success, and 2024 showed why. The company’s insurance businesses made strong profits and created “float”, money that Berkshire can invest before it needs to pay out claims. Buffett stressed how important it is to price insurance correctly and avoid offering discounts just to compete. Because of its strong finances, Berkshire can handle big losses without worry, which gives it a major advantage over other companies.

Buffett’s Investment Wisdom: Lessons for Shareholders

Buffett has always believed that the best way to grow wealth is to invest for the long term. He warns against trying to time the market or chase short-term profits, emphasizing patience and the power of compounding. He also critiques EBITDA, a popular financial metric, because it ignores key expenses like depreciation and taxes. Instead, he focuses on businesses that generate real, sustainable profits. His investments in companies like Apple, American Express, and Coca-Cola show his preference for strong brands with durable competitive advantages.

The Japanese Bet

One of the more surprising moves in recent years has been Berkshire’s growing investment in five major Japanese trading houses: Itochu, Marubeni, Mitsubishi, Mitsui, and Sumitomo. Buffett was attracted to these businesses because they were undervalued, well-managed, and had smart capital allocation. Unlike many U.S. companies, these firms prioritize long-term shareholder value and avoid excessive executive pay. By using yen-denominated debt to fund these investments, Berkshire has also taken advantage of Japan’s low interest rates while minimizing currency risks.

Record-Breaking Tax Contributions and Reinvestment Strategy

Berkshire made history in 2024 by paying $26.8 billion in corporate taxes, more than any other U.S. company. This massive tax bill reflects the company’s strong earnings and its long-standing strategy of reinvesting profits rather than paying dividends. Buffett believes that reinvesting in great businesses creates far more value over time than distributing cash to shareholders. He also highlights the importance of capitalism in driving economic growth, while reminding the government to spend tax revenues wisely to support those who are less fortunate.

Berkshire’s Future and Buffett’s Legacy

Buffett remains optimistic about Berkshire’s future, calling it a company that is still young and full of potential. He credits its long-term success to smart investing, financial discipline, and a culture of reinvestment. At the same time, he offers a word of caution to policymakers, urging them to maintain fiscal responsibility and avoid reckless spending. For investors, his message is clear: focus on owning great businesses, stay patient, and trust in the power of compounding. As Berkshire moves forward, it will continue to embody these principles, ensuring its place as a pillar of American capitalism.

Happy investing!
Josh

The information is provided for educational purposes only and does not constitute financial advice or recommendation and should not be considered as such. Do your own research.