Warren Buffett’s annual letter to Berkshire Hathaway (BRK.A) (BRK.B) shareholders is always a highlight, and this year was no different. He kept his comments on the stock market brief but reinforced his long-standing investment philosophy: Berkshire prefers owning great businesses over holding cash, even as its cash reserves hit a record $321.4 billion, equivalent to more than most American big companies’ market cap.
Discover the Best Stocks and Maximize Your Portfolio:
- See what stocks are receiving strong buy ratings from top-rated analysts.
- Filter, analyze, and streamline your search for investment opportunities with TipRanks’ Stock Screener.
Buffet’s Key Takeaways
Buffett emphasized that Berkshire is not shying away from stocks. “Despite what some commentators see as an extraordinary cash position at Berkshire, most of your money remains in equities,” he wrote. While it’s rare to find outstanding businesses for sale in full, Buffett noted that investors can still buy shares of these companies on Wall Street, though genuine bargains are slim pickings.
A notable part of the letter was his update on Berkshire’s investment in Japan. Since 2019, the company has invested in five Japanese trading firms: Itochu (ITOCF), Marubeni (MARUY), Mitsubishi (MSBHF), Mitsui (MITSY), and Sumitomo (SSUMF). Initially, Berkshire promised to keep its stakes under 9.9%, but these companies have now allowed it to buy more. Buffett praised their efficient use of capital and shareholder-friendly policies, indicating that Berkshire’s investment will continue to grow.
Financially, 2024 was a solid year for Berkshire, though slightly less profitable than 2023. The company reported an $89 billion profit, down from $96.2 billion the previous year. However, operating earnings rose to $47.4 billion. Buffett urged investors to focus on operating earnings rather than net income, which fluctuates with stock market changes. Despite a quiet quarter for stock buybacks, suggesting Buffett doesn’t see Berkshire stock as a bargain, shares have risen 5.6% this year, outperforming the S&P 500’s 2.2% gain. Buffett’s message remains clear: patience, discipline, and quality investments are the keys to long-term success.
Should You Buy BRK.A or BRK.B?
Based on one five-star analyst, Brian Meredith’s rating, both BRK.A and BRK.B are considered Moderate Buy. The average price target for BRK.A is $803,444, signaling an 11.78% upside potential. The average price target for BRK.B is $536, signaling an 11.96% upside potential.
