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.
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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