Source: Barron Chinese

For a long time, people have been speculating who will become Buffett's successor, Buffett wrote in his annual letter to shareholders released on the morning of February 22 local time. , "I am 94 years old, and soon Greg Abel will take over as CEO and write an annual letter to shareholders."

Buffett clearly confirmed two things in the letter: Abel, CEO of Berkshire Hathaway Energy and vice chairman of Berkshire's non-insurance business, is his successor; the handover will come soon.

Buffett's letter to shareholders has attracted the attention of investors around the world not only because Berkshire often makes some groundbreaking moves, but also because Buffett's investment and Economics – sometimes even a profound insight into society, and marriage. The 15-page open letter continues the trend of fewer pages than the previous year, and does not contain much content related to these two groups of topics. (Click "Read original text" to view the full text of the letter to shareholders)

But then again, Buffett is already 94 years old, as he said in a recent interview with Fortune magazine, "I still enjoy it very much." There are some things that can be done quite well in the work, but other activities have been cancelled or have greatly reduced them."

The fourth quarter financial report released with a letter to shareholders shows that Berkshire Cash reserves hit a record $334.2 billion, but Buffett said Berkshire is more willing to hold shares than cash.

Buffett wrote in his letter, "If the financial reckless winds get stronger, the value of paper money will evaporate. Some have regarded this kind of reckless practice as a habit, and the United States has also been in its short history. Close to that edge. Fixed coupon bonds cannot prevent exchange rates from getting out of control. "

Buffett also wrote, "Berkshire will never be more willing to hold cash and not invest in good companies, whether through the whole Capital Holdings is still the way to hold some shares. "

Buffett pointed out in the letter that operating profit is his most concerned about performance measurement indicator. Berkshire's operating profit in 2024 will be from US$37.4 billion in 2023 It increased to US$47.4 billion, an increase of 26.7%. Buffett said the strong performance of Geico's insurance business, which has maintained a turnaround in recent quarters, is one of the reasons for Berkshire's operating profit growth. Buffett attributes Geico's growth to Geico CEO and Berkshire investment manager Todd Combs.

Buffett wrote, "Geico is a long-standing gem that Berkshire has to be re-sanded, and Todd worked tirelessly to do the work. Although the work is not over, it is achieved in 2024. The progress is amazing. ”

The price increase in property insurance and accident insurance businesses, which Buffett calls “very important”, “reflects a significant increase in losses caused by convective weather.” Insurance companies often go outIncrease the price after the loss is now available.

Buffett wrote, "Climate change may have arrived, and insured losses of astonishingly large one day, may occur on any day, and no one can guarantee that such losses will only occur once a year."

Buffett also wrote in the letter that Berkshire paid more taxes to the U.S. Treasury Department than any other company. Berkshire paid $26.8 billion in taxes in 2024, he wrote, "far more than the corporate income tax collected from any company in the United States... about 5% of all corporate taxes paid in the United States." Hill has paid $101 billion in taxes over its 60-year history.

Berkshire had strong performance last year, but the company encountered obstacles in doing what it is best at—investment. With stock prices high, Buffett and his two deputy thought no company's share price was attractive enough, and last year Berkshire sold about $134 billion worth of stock, mostly Apple (AAPL) stocks.

As Berkshire does not pay dividends, its cash reserves surged from $168 billion at the end of 2023 to $334.2 billion, roughly equivalent to the market value of Berkshire's long-term investment target Coca-Cola (KO).

Buffett said in his letter that Berkshire has increased its investment in five Japanese trading companies: Itochu, Marubeni, Mitsubishi, Mitsui and Sumitomo. Buffett said the five companies are similar to Berkshire because they all "hold stakes in companies in different industries."

Buffett said the total cost of investment in the five Japanese trading companies was $13.8 billion (Berkshire started buying their shares in 2019), and is now worth $23.5 billion. Buffett wrote, "As time goes by, you may see Berkshire's stake in these five companies further increase."

The letter ended with a somewhat heavy tone, Buffett said this year, The Berkshire Annual Meeting—often known as the "Woodstock Festival of Capitalists"—will be a "redesigned party." Before the annual meeting begins, the funny videos will not be played like in the past, nor will it last until the evening. This year's annual meeting will end at 1 pm.

Berkshire's 2025 Annual General Meeting will be held on Saturday, May 3, local time at the CHI Health Center in Omaha, Nebraska.