Buffett's Annual Letter to Shareholders Is Coming! What Highlights Should Not Be Missed?

According to the announcement released by Berkshire Hathaway earlier this week, the company is scheduled to release its 2024 annual report and Buffett's annual letter to shareholders at around 8 a.m. (Eastern Time) on Saturday, February 22.

 

This upcoming annual report will provide a comprehensive analysis of Berkshire Hathaway's financial performance and major development trends in 2024.

 

Buffett's letter to shareholders is an eagerly anticipated highlight for investors: It will serve as a window for the market to gain insights into the company's future strategic plans and reveal the latest views of this investment guru on the current market prospects.

 

The upcoming annual report will conduct an in-depth analysis of Berkshire Hathaway's financial performance and major developments in 2024. In addition to Buffett's letter, the report will also include insights into the company's diversified portfolio of investments, including insurance, energy, freight rail transportation, retail operations, and manufacturing services. Investors are eagerly awaiting Buffett's views on Berkshire's long-term strategy and market prospects.

 

The report will also highlight the plans for Berkshire Hathaway's annual shareholders' meeting, which is scheduled to be held on May 3, 2025. This letter will give investors an opportunity to gain a deeper understanding of the company's strategic planning. In addition, Berkshire Hathaway will also release its earnings statement, showcasing its financial performance from last year.

 

Interestingly, since Buffett hasn't made many new major buying arrangements in the U.S. stock market in the past year, it may actually be Japanese stock investors who are more eager to find positive signals from this annual letter to shareholders...

In the view of many industry insiders, Buffett's favor and increased holdings of the five major Japanese trading houses can be said to have contributed greatly to the Japanese stock market breaking through its historical high that had been dormant for more than 30 years in the first half of last year.

 

Buffett's shareholdings were first disclosed in 2020, attracting the attention of global investors to the undervalued Japanese stocks. Strong purchases by foreigners drove the Nikkei 225 index to reach an all-time high around this time last year.

 

According to financial disclosures, Berkshire holds an average of 8.1% stakes in Itochu Corporation, Sumitomo Corporation, Mitsubishi Corporation, Marubeni Corporation, and Mitsui & Co.

 

Given Buffett's huge influence in the financial market, any comments on Japanese stocks, trading houses, or other aspects are very important. These comments may provide some impetus to push Japan's benchmark stock index out of the narrow trading range it has been in for the past few months.

 

So, in addition to the position changes in Japanese stocks, what are the potential highlights of this year's Buffett letter to shareholders?

In terms of stock price performance, although Berkshire Hathaway's Class A shares outperformed the broader U.S. stock market last year, the margin of outperformance was actually very small: Its total return for the whole year was 25.5%, while the total return of the S&P 500 index was 25.0%.

 

As of the end of the fourth quarter of 2024, Berkshire Hathaway's top ten holdings were Apple, American Express, Bank of America, Coca-Cola, Chevron, Occidental Petroleum, Moody's, Kraft Heinz, Alleghany, and Dairy Queen. The concentration of the top ten holdings was 89.72%.

 

In fact, apart from further increasing its holdings in Occidental Petroleum and the relatively "mysterious" holding of Alleghany, Buffett didn't make many major buying moves in U.S. stocks throughout last year. Instead, his reduction of holdings in Apple and bank stocks mainly represented by Bank of America has attracted a great deal of attention from the outside world.

 

How Buffett will explain these changes in his shareholdings in the annual letter to shareholders may become one of the major highlights of the letter.

 

In addition to the shareholding trends and the logic behind them, one of the most closely watched data points in Berkshire's annual report is likely to be the size of its cash position. As of the end of the third quarter of 2024, the company's cash position had reached an astonishing $325.2 billion, the largest ever.

 

 

In any case, in the face of Trump's tariff policies, the disruptive trends of the AI era, and new geopolitical risks, how Buffett will interpret the balance between "fear and greed" in the market will once again become the focus of all market participants.$BRK.B $BRK.A