4 Key Takeaways From Warren Buffett’s Annual Letter

1. Berkshire Cash Pile Hits Record, Earnings Soar

Berkshire Hathaway’s $Berkshire Hathaway(BRK.A)$ $Berkshire Hathaway(BRK.B)$ ) cash pile swelled to a record in the fourth quarter of 2023 while earnings soared despite weakness in its railroad and energy businesses, according to its earnings report Saturday.

Buffett prefers operating earnings, which rose to $8.5 billion in the fourth quarter of 2023 from $6.6 billion the prior year. Full-year operating earnings totaled $37.4 billion, a 21% increase from 2022.

Berkshire's cash and U.S. Treasury holdings rose to a record $167.6 billion at the end of 2023 with $133.4 billion in Treasurys. In the third quarter, the company's cash hoard had totaled $157.2 billion.

Buffett called the cash and Treasury holdings "far in excess of what conventional wisdom deems necessary," but extolled the benefits of Berkshire's conservatism.

2. Berkshire in Occidental, Japan for the Long Haul

Berkshire's most recent 13-F filing showed it added to its existing holdings of $Occidental(OXY)$ , which Buffett said the firm plans to hold "indefinitely."

By the end of 2023, the company owned 27.8% of Occidental Petroleum’s common shares.

"We particularly like its vast oil and gas holdings in the United States, as well as its leadership in carbon-capture initiatives, though the economic feasibility of this technique has yet to be proven," Buffett said.

Buffett also heaped praise on the five Japanese firms in which Berkshire upped its stakes last year—Itochu, Marubeni, Mitsubishi, Mitsui, and Sumitomo.

"An additional benefit for Berkshire is the possibility that our investment may lead to opportunities for us to partner around the world with five large, well-managed and well-respected companies," Buffett said.

3. Insurance Buoys Earnings

Berkshire's insurance business "performed exceptionally well last year, setting records in sales, float and underwriting profits."

Insurance investment income surged more than 47% to $9.6 billion in 2023, while the underwriting business swung from a $30 million loss in 2022 to a $5.4 billion profit in 2023.

4. Buffett says American Express, Coke holdings likely 'untouched' in 2024

In his annual letter, Berkshire Hathaway's (BRK.A, BRK.B) Warren Buffett said, During 2023, we did not buy or sell a share of either $American Express(AXP)$ or $Coca-Cola(KO)$ - extending our own Rip Van Winkle slumber that has now lasted well over two decades.

Berkshire shares slip after hitting all-time high on big profit gain

This was Berkshire's first quarterly report since Vice Chair Charlie Munger, 99, died in November. Buffett led his much-anticipated shareholder letter with an homage to his right-hand man, dubbing him "The Architect of Berkshire Hathaway."

Class A and B shares of Berkshire closed at a record on Friday, up almost 17% and 15%, respectively, in 2024.