As I complete my preparations to take the 24 hour trip from Dubai to Omaha to attend the Berkshire Hathaway AGM, I took time this weekend to review the 2024 Annual Report…

Berkshire Hathaway’s annual report, released for the year 2024, offers valuable insights into the company’s financial health, strategic vision, and the evolving market landscape. As always, the report is highly anticipated by investors, analysts, and anyone interested in Warren Buffett’s approach to long-term investing. Here’s a breakdown of the key takeaways from the latest annual report.

1. Strong Financial Performance

Berkshire Hathaway continued to show robust financial results in 2024, with total revenue reaching record highs. The company’s diversified portfolio of businesses contributed to steady growth, with particular strengths in its insurance operations, railroad businesses, and utility sectors. Operating income increased by a notable margin, driven by strong performances across multiple subsidiaries.

2. The Importance of Insurance Operations

One of the standout sections of the report was the ongoing success of Berkshire’s insurance division, which includes GEICO, Berkshire Hathaway Reinsurance Group, and General Re. The insurance business continues to generate significant “float” — the money held by the company for policyholders — which can be invested in high-return ventures. Buffett emphasized that the ability to manage and grow this float is a major competitive advantage for the company.

3. Investing Strategy and Portfolio Updates

Warren Buffett’s investment philosophy, based on acquiring high-quality companies at attractive prices and holding them for the long term, remains a core component of Berkshire Hathaway’s strategy. The company added several new investments to its portfolio, including stakes in energy and healthcare businesses. However, Buffett noted that, while he continues to find attractive opportunities, the current environment of high valuations makes finding bargains increasingly difficult.

Buffett also discussed the performance of Berkshire’s major equity holdings, such as Apple, Coca-Cola, and American Express. Apple, in particular, was highlighted as one of the key drivers of Berkshire’s equity gains, with Buffett praising the company for its innovation and cash flow generation.

4. Stock Buybacks

Berkshire Hathaway’s stock buyback program continued in 2024, with the company repurchasing a substantial amount of its own shares. Buffett reiterated that stock buybacks are an efficient way to return capital to shareholders when Berkshire’s shares are trading below their intrinsic value. The buybacks signal confidence in the company’s future prospects and its commitment to shareholder value.

5. Focus on Long-Term Growth and Succession Planning

Buffett, now 94 years old, touched on his long-term succession plans for the company. He expressed confidence in the leadership of his right-hand man, Greg Abel, who is set to succeed him as CEO. Buffett’s transition plan focuses on ensuring that Berkshire’s culture of long-term thinking and value investing remains intact even after he steps down.

In his letter to shareholders, Buffett also emphasized the importance of sticking to a long-term approach in the face of short-term market volatility. He advised investors to focus on the fundamentals of the businesses they own and avoid the temptation to react impulsively to market fluctuations.

6. Environmental and Social Responsibility

Berkshire Hathaway’s commitment to environmental sustainability and social responsibility continues to grow. The company highlighted its efforts to reduce carbon emissions through its energy and utility subsidiaries, with a focus on renewable energy sources. Additionally, Berkshire’s investments in companies with strong corporate governance were noted as key elements of its strategy to create long-term value.

7. Risks and Market Challenges

While Berkshire Hathaway’s performance remains strong, Buffett did acknowledge some potential risks and challenges. The company is exposed to fluctuations in the global economy, including inflationary pressures and geopolitical uncertainty. He also noted the growing competition in various sectors, particularly in the insurance and technology industries. However, Buffett reiterated his belief that Berkshire’s diversified portfolio and financial strength position it well to weather any economic downturns.

Conclusion

Berkshire Hathaway’s 2024 annual report highlights the company’s resilience in a complex and evolving market environment. With solid growth across its diverse business units, a prudent investment strategy, and a focus on long-term value creation, the company remains well-positioned for continued success. Buffett’s disciplined approach, combined with his commitment to transparent communication with shareholders, reassures investors that Berkshire Hathaway will remain a leader in the world of investing for years to come.

As always, Warren Buffett’s words serve as a reminder to investors of the power of patience, discipline, and long-term thinking. For those looking for a model of success in investing and business, Berkshire Hathaway’s annual report offers a blueprint to follow.