Shh, everybody be quiet: The Oracle of Omaha is speaking.

Warren Buffett dropped some wisdom on a whole range of topics in his latest shareholder letter published Saturday—from why it’s important to admit mistakes, to why he couldn’t care less about what fancy school you went to.

But his most prescient message for investors was directed toward those (cough, cough, us) who extrapolated some bearish meaning from his growing cash hoard amid an overvalued market.

Last year, Berkshire Hathaway sold more equities than it purchased, and its cash reserves grew to a record $334.2 billion.

While Buffett didn’t give us a comprehensive breakdown of his strategy, he made sure to defend his bull street cred, emphasizing that he sees success long-term for US equities. “Despite what some commentators currently view as an extraordinary cash position at Berkshire, the great majority of your money remains in equities. That preference won’t change,” he wrote.

Keep in mind: On top of Berkshire’s famous portfolio including American Express, Coca-Cola, and Kraft Heinz, ​​Berkshire operates a number of subsidiary businesses in sectors like insurance and utilities. Us mere mortals may not be able to invest in these non-public companies, but Buffett can and does. “While our ownership in marketable equities moved downward last year from $354 billion to $272 billion, the value of our non-quoted controlled equities increased somewhat and remains far greater than the value of the marketable portfolio,” he wrote.

The strategy seems to be working: Berkshire’s operating profits jumped 71% to $14.5 billion.

Buffett’s receipts

One thing Buffett’s not investing in: Apple. Berkshire Hathaway offloaded a staggering 605 million shares of the tech company during the first three quarters of last year, though Buffett still maintains a solid $75.1 billion stake in the company.

Apple wasn’t the only victim of Buffett’s epic selling spree in 2024. Berkshire Hathaway also shed 352 million shares of Bank of America, a 34% decline in Buffett’s stake.

So, what is the Oracle of Omaha buying? Beyond investing in Berkshire Hathaway’s non-public subsidiaries, the conglomerate boosted its stake in Domino’s Pizza, Constellation Brands, and SiriusXM Holdings in the last quarter of 2024, to name just a few.

In his letter to shareholders, Buffett also said he was increasing his stake in five Japanese companies: ITOCHU, Marubeni, Mitsubishi, Mitsui and Sumitomo.

One more thing: Berkshire’s 2024 tax bill of $26.8 billion singlehandedly accounted for about 5% of all corporate taxes paid to the IRS—and you thought your tax bill was bad.—LB

🟢 What’s up

• Nike isn’t usually in this section, but the struggling footwear titan popped 4.94% after Jefferies analysts dubbed it a good turnaround investment.
• Speaking of Jefferies, analysts there wrote that healthy pet food retailer Freshpet could rise 50% this year. Shares climbed 7.28%.
• Sweetgreen rose 3.62% ahead of the salad purveyor’s earnings announcement later this week.
• Piper Sandler analysts lowered their price target on beauty retailer Coty from $9 to $8, and apparently investors thought that was much more achievable—shares rose 4.90%.

What’s down

• What goes up, must come down: MicroCloud Hologram plummeted 21.02%, while MicroAlgo dropped 28.30%, after the two quantum computing companies soared late last week.
• Palantir Technologies fell another 10.53%, extending its losses after reports that the US defense budget will be slashed took a toll on the hot tech/defense stock.
• Alibaba sank 10.23% after the Chinese e-commerce giant announced it will pour a hefty investment of $52 billion into AI and cloud infrastructure over the next three years.
• Rivian Automotive fell 79% thanks to a downgrade from Bank of America analysts citing uncertain demand for electric vehicles.
• Domino’s Pizza’s earnings disappointed investors more than the chain’s Mediterranean Veggie sandwich disappointed diners. Shares slipped 1.46%.

While all eyes will be on the key PCE report dropping Friday, there’s another piece of economic data that Wall Street is suddenly paying close attention to: initial jobless claims.

Readers of this newsletter will recognize this as a weekly report detailing how many Americans filed for unemployment insurance in the previous week. It’s usually just one small piece of the labor market puzzle, but it’s gaining importance as President Trump and Elon Musk take a buzzsaw to the federal bureaucracy in Washington, DC.

Economists estimate that, if Musk gets his way, approximately 300,000 government jobs will be lost in the coming weeks—but the actual tally, according to Apollo Chief Economist Torsten Sløk, will be much higher.

“However, studies show that for every federal employee, there are two contractors,” Sløk recently wrote. “As a result, layoffs could potentially be closer to 1 million. Any increase in layoffs will push jobless claims higher over the coming weeks, and such a rise in the unemployment rate is likely to have consequences for rates, equities, and credit.”

So far, mass firings in DC haven’t made themselves felt in weekly jobless claims. And with 160 million Americans employed across the country, 300,000 jobs lost is a drop in the bucket. But if Sløk is right and the number is closer to 1,000,000, that could have a very real effect on the economy—and on the stock market.

Looks like the SEC’s brand-new cryptocurrency task force was formed not a moment too soon.

Crypto exchange Bybit suffered the biggest crypto hack in history last Friday when $1.5 billion was stolen during a routine internal transfer of funds. Hackers intercepted the transfer and funneled the money to an unknown address, and are no doubt living it up right about now.

Although ByBit CEO Ben Zhou posted on X Sunday assuring users that these losses would be covered and the company remained solvent, more than a few freaked out, and a $4 billion bank run ensued.

While a heist of this magnitude is a gut-punch to an industry hoping for more legitimacy, we can’t say we were all that surprised—crypto hacks are about as common as stick-em-ups were in the Wild West. Crypto thieves have swiped over $19 billion during the last 15 years or so, according to Crystal Intelligence. The last big burglary occurred in March 2022, when $600 million was stolen from Ronin Network, very little of which was ever retrieved.

‘Law & Order,’ crypto edition

Clearly, the SEC’s new task force has its work cut out for it. Commissioner Hester Peirce released a statement on Friday saying, “Five years ago, I remarked that ‘figuring out how to deal with the SEC on crypto issues [was] like a regulatory version of an escape room.’ Now it is time to help open the door.”

Although Peirce’s task force aims to draw up some regulatory guidelines, as far as Trump-appointed task forces go, this one has set a remarkably crypto-friendly tone—particularly compared to past presidential regimes. Under the Biden administration, the SEC filed lawsuits against both Coinbase and Robinhood, which were both recently dropped. Peirce’s warm embrace of the industry has even earned her the affectionate nickname “crypto mom.”

As for the impact this task force and the recent hack may have on the crypto market, that remains to be seen. But experts are cautiously optimistic.

“I think the Bybit hack and SEC cryptocurrency task force could add increased regulatory scrutiny, which could lead to stricter compliance requirements similar to traditional financial institutions,” says Custom Fit Financial certified financial planner Chad Gammon. “Short-term, it may negatively impact the crypto market, but long-term, it could help to bring in institutional investors which would have a positive impact as it would increase security and transparency. The biggest risk would be over regulation, which could push innovation overseas.”—JD

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It’s a slow start for economic data this week, with just the S&P Case-Shiller home price index tomorrow. Annual home-price growth increased 3.8% in November, up from October’s 3.6% to notch the 18th all-time high in a row—and it should come as no surprise that economists expect home prices will continue to rise, particularly considering the bad news we got last week.

Hopefully, investors will get some good news on the earnings front, with numbers from Home Depot, Intuit, Cava, AMC, Caesar’s Entertainment, American Tower, Workday, First Solar, and Viking Holdings. Here’s what to expect from two companies on the complete opposite sides of the business spectrum:

Before the open

• Planet Fitness is looking pretty ripped these days, with shares up over 59% in the last 12 months. The gym chain has endured first Covid crushing revenue, then higher interest rates sapping consumer spending power, and come out the other end stronger than ever. A franchisee model keeps costs low, while the rising importance of healthy living keeps customers coming in. However, shareholders will want to hear more about management’s plans to contend with weight-loss drugs in order to justify the stock’s high valuation. Consensus: $0.62 EPS, $323.77 million in revenue.
• Krispy Kreme may churn out sugar-coated goodies by the dozen, but its returns lately have been anything but sweet. Sales have sagged and shareholders have punished the stock, driving it down 28% in the last 12 months. However, there’s hope on the horizon: Krispy Kreme has not only sold its stake in Insomnia Cookies, which padded the bottom line but dragged down revenue, it also partnered with McDonald’s to sell donuts at McDonald’s locations. That could be an enormous boon for shareholders, and they’ll want to hear all about it on tomorrow’s call. Consensus: $0.11 EPS, $421.27 million in revenue.