US investment giant Berkshire Hathaway (BRK-B:NYSE) continued to raise cash from its marketable equites portfolio in the final quarter of 2024, pushing its cash hoard to a record $334 billion by year-end and making it a net seller of equities for nine consecutive quarters.
Overall, Berkshire sold $134 billion worth of shares in 2024, mainly through reducing its stakes in Apple (AAPL:NASDAQ) and Bank of America (BAC:NYSE).
The value of Berkshire’s partial-ownership holdings has consequently reduced to $272 billion yet in his eagerly-anticipated annual letter to shareholders on Saturday (22 Feb) 94-year-old Buffett insisted he had not lost his enthusiasm for holding stocks.
‘Despite what some commentators currently view as an extraordinary cash position at Berkshire, the great majority of your money remains in equities. That preference will not change,’ said Buffett.
‘Berkshire will never prefer ownership of cash-equivalent assets over the ownership of good businesses, whether controlled or only partially owned,’ emphasised Buffett.
All that was offered by way of explanation for the cash pile was that ‘often, nothing looks compelling; very infrequently, we find ourselves knee-deep in opportunities.’
It was also noteworthy that Berkshire again halted share buybacks in the final quarter, suggesting Buffett doesn’t believe the stock is undervalued, and there was no hint the firm would pay a dividend.
The shares have gained 25% and 16% respectively in the last two years and are already up by a tenth so far in 2025, taking Berkshire’s market capitalisation to slightly north of a trillion dollars, yet despite this strong run gains have undershot the S&P 500’s two-year total return of almost 58%.
Outside of the quoted equities portfolio, Berkshire owns 189 businesses operating across a diverse range of industries. Just over half of these companies reported an annual decline in earnings in 2024.
What really drives earnings at Berkshire is its collection of insurance operations, which delivered a 66% increase in operating earnings to $9 billion driven by improvements at car insurer Geico and strong pricing in property and casualty.
Over the last 20 years, the insurance business has generated $32 billion of after-tax profit from underwriting and the float has grown from $46 billion to $171 billion.
Float is the money Berkshire receives in annual premiums that does not need to be paid out immediately. One interesting recent development highlighted by Buffett is that auto insurers have generally abandoned one-year policies and switched to six-month policies, reducing float.
Berkshire’s railroad and utility operations are its next largest businesses and in aggregate these increased operating earnings by 18% to $8.76 billion. Group operating earnings for 2024 were up 27% to $47.44 billion.
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