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Warren Buffett has sought to reassure Berkshire Hathaway shareholders that he would at all times want proudly owning companies, after his transfer to dump shares and the dearth of an enormous acquisition helped drive the group’s money pile to a file excessive final yr.
In his annual letter to shareholders, launched on Saturday, the billionaire investor mentioned he would “by no means want possession of cash-equivalent belongings over the possession of excellent companies”, a class that additionally contains the stakes Berkshire owns in US blue-chip corporations.
The 94-year-old’s resolution to deal with the money pile, which hit $334.2bn on the finish of final yr, comes as file valuations have dented the attraction of US shares and in addition made it tougher for Buffett to unearth the main offers which have lengthy been his trademark.
In his letter, Buffett mentioned: “Berkshire shareholders can relaxation assured that we’ll ceaselessly deploy a considerable majority of their cash in equities — largely American equities though many of those could have worldwide operations of significance.”
The letter was launched alongside Berkshire’s fourth-quarter outcomes, which confirmed its money pile grew by $9bn within the quarter, as Buffett trimmed stakes in shares, together with multibillion-dollar gross sales of shares in Citigroup and Financial institution of America.
The group’s money pile has nearly doubled over the previous yr because it ploughed the proceeds of inventory gross sales — together with tens of billions of {dollars}’ price of shares in Apple — into Treasury payments.
Berkshire, a sprawling conglomerate with companies starting from US insurer Geico to railroad BNSF, disposed of $143bn of shares in 2024, far surpassing the $9bn it invested in equities.
Berkshire’s rising shift into US authorities debt has been a boon for the corporate for the reason that Federal Reserve started lifting rates of interest in 2022.
Final yr, the corporate’s insurance coverage subsidiary reported $11.6bn of curiosity earnings from its holdings of Treasury payments, comfortably exceeding the dividends it receives from its portfolio of shares.
“We have been aided by a predictable giant acquire in funding earnings as Treasury Invoice yields improved and we considerably elevated our holdings of those highly-liquid short-term securities,” Buffett advised shareholders on Saturday.
The conglomerate reported working earnings of $47.4bn for 2024, up 27 per cent from 2023, led by a stronger efficiency by its insurance coverage enterprise.
The working outcomes exclude adjustments within the worth of Berkshire’s $272bn inventory portfolio, swings which Buffett has lengthy dismissed as largely meaningless. Berkshire disclosed that it made $101bn of beneficial properties on inventory gross sales final yr.
Buffett additionally pointed to the rise in worth of Berkshire’s almost 200 working subsidiaries, which additionally embrace Dairy Queen ice cream purveyor and underwear maker Fruit of the Loom.
The billionaire additionally warned shareholders of the hazard to the worth of a rustic’s debt and foreign money ought to “fiscal folly” prevail.
“Paper cash can see its worth evaporate if fiscal folly prevails,” he wrote. “In some international locations, this reckless apply has turn out to be ordinary, and, in our nation’s quick historical past, the US has come near the sting. Mounted-coupon bonds present no safety in opposition to runaway foreign money.”
The warning comes as bond traders weigh up Donald Trump’s pledge to slash federal spending in opposition to the inflationary risk from the tariffs the US president has promised to impose on America’s buying and selling companions.
