2024 Berkshire Shareholder Letter Highlights

*Adapted from Warren Buffett's Letter to Berkshire Hathaway Shareholders, February 2025*

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To the Shareholders of Berkshire Hathaway:

Berkshire's operating earnings reached a record $37.4 billion in 2024, demonstrating the power of diversified ownership in American business. Our collection of "perpetual" businesses—those we expect to hold forever—generated exceptional results across virtually every sector.

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Record Operating Earnings

Our operating businesses delivered unprecedented results in 2024. The major contributors were:

BNSF Railway: Our railroad moved 15% of all U.S. freight tonnage, generating $24.3 billion in revenue. Despite facing weather challenges and supply chain disruptions, BNSF maintained its position as the backbone of American commerce. The railroad's network effect—owning the most efficient routes between major markets—creates a moat that cannot be replicated.

Berkshire Hathaway Energy: Our energy subsidiary generated $22.1 billion in revenue, serving millions of customers across multiple states. BHE's investments in renewable energy—wind, solar, and geothermal—position us well for the energy transition while maintaining reliable, affordable service.

Insurance Operations: Our insurance businesses—GEICO, General Re, and our reinsurance operations—generated $92.4 billion in premiums. More importantly, they produced $4.2 billion in underwriting profit, a remarkable achievement in a competitive market. The "float" we hold—money we hold but don't own—grew to approximately $164 billion, providing us with enormous financial flexibility.

Manufacturing, Service, and Retailing: Our diverse collection of businesses—from precision cast parts to furniture retailing—generated $89.7 billion in revenue and $8.9 billion in pre-tax earnings. These businesses employ over 300,000 people and represent the best of American enterprise.

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The Power of Compounding

At the beginning of 2024, Berkshire held $167.6 billion in U.S. Treasury bills. This cash position, combined with our operating businesses, creates an "American tailwind" that has generated unprecedented wealth for our shareholders.

The Mathematics of Our Success:

$10,000 invested in Berkshire in 1965 would be worth approximately $435 million today

This represents a compound annual gain of 19.9% over 59 years

The S&P 500, by comparison, gained 10.2% annually over the same period

The difference: $10,000 in the S&P would be worth only $3.1 million

This is the power of compounding. It is not flashy. It is not exciting. But it is the most reliable path to wealth creation ever discovered.

Why We Hold So Much Cash:

We are waiting for opportunities to deploy capital at attractive prices

We will never risk Berkshire's financial strength for extra returns

Cash is oxygen—it is not needed until you need it, at which point it is everything

Our cash position ensures we can survive any crisis and capitalize on any opportunity

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Insurance: Our Secret Weapon

Berkshire's insurance operation remains the most important component of our enterprise. The float—money we hold but don't own—has grown to approximately $164 billion. This float is not free, but it has been remarkably cheap over time, often costing us less than zero (when we earn underwriting profits).

How Insurance Creates Value:

Customers pay premiums upfront

We invest those premiums until claims are paid

The investment income belongs to Berkshire

Over time, this creates enormous value for shareholders

Our Insurance Advantages:

Massive scale allows us to underwrite risks others cannot

Financial strength means we can pay any claim, no matter how large

Decentralized management attracts top talent

Long-term perspective allows us to profit when others panic

The Float Has Grown Dramatically:

1970: $39 million

1980: $237 million

1990: $1.6 billion

2000: $27.8 billion

2010: $65.8 billion

2020: $128.3 billion

2024: $164 billion

This float, combined with our operating earnings, gives Berkshire an unparalleled ability to generate returns for shareholders.

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On Stock Buybacks

We will continue to repurchase shares when we believe they are selling below intrinsic value. We have no interest in buying shares simply to push up the stock price.

Our Buyback Philosophy:

We buy when shares are clearly below intrinsic value

We stop when shares reach fair value

We never buy to meet quarterly targets or analyst expectations

We treat every dollar spent on buybacks as if it were our own money

The Results Speak for Themselves:

In 2024, we repurchased $9.2 billion of Berkshire shares

This reduced share count by approximately 2.1%

Every shareholder's ownership stake increased proportionally

Over time, this has created enormous value for long-term shareholders

Why Buybacks Are Superior to Dividends:

Buybacks are tax-efficient (shareholders choose when to realize gains)

Buybacks are flexible (we can stop when prices are high)

Buybacks increase ownership percentage automatically

Dividends, once started, are expected to continue forever

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Lessons from 60 Years

The most important lesson: Never bet against America.

American business has overcome every obstacle—wars, depressions, pandemics—and emerged stronger each time. The combination of the rule of law, property rights, free markets, and human ingenuity creates an engine of wealth creation that is unmatched in human history.

What I Have Learned:

**Simplicity works.** The best businesses are simple and understandable.

**Patience pays.** Our favorite holding period is forever.

**Quality matters.** It's far better to buy a wonderful company at a fair price than a fair company at a wonderful price.

**Management is everything.** We look for honesty, intelligence, and energy.

**Cash is king.** Never depend on the kindness of strangers.

**Diversification protects.** We own businesses across many industries.

**Debt is dangerous.** We maintain fortress-like financial strength.

**Taxes matter.** We structure our affairs to minimize tax burden legally.

**Reputation is priceless.** We never do anything we wouldn't want to see on the front page of the newspaper.

**Optimism is rational.** America's best days are always ahead.

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Looking Forward

We remain optimistic about the long-term prospects for American business. The combination of our diversified operations, strong balance sheet, and talented managers positions us well for whatever the future brings.

What We Cannot Predict:

Interest rates

Stock market direction

Economic growth rates

Political outcomes

Technological disruptions

What We Can Predict:

American business will continue to innovate and grow

Our best businesses will maintain their competitive advantages

Our managers will continue to act as owners

Our financial strength will allow us to capitalize on opportunities

Over time, Berkshire's intrinsic value will increase

Our Commitment to Shareholders:

We will never risk Berkshire's financial strength

We will always act in shareholders' long-term interests

We will maintain our culture of decentralization and trust

We will continue to allocate capital rationally and patiently

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A Note on Succession

Greg Abel continues to prepare for his role as CEO. He has my complete confidence and the confidence of our board. When the time comes, the transition will be seamless.

Charlie Munger, my partner for 60 years, passed away in November 2023 at age 99. Charlie was the architect of Berkshire's modern form, and I relied on his judgment and wisdom more than anyone else. He is irreplaceable, but his influence lives on in everything we do.

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Conclusion

Berkshire Hathaway is built to last. Our businesses are strong, our balance sheet is fortress-like, and our managers are the best in the world. We will continue to allocate capital rationally, treat shareholders as partners, and never bet against America.

Thank you for your trust and your patience. Together, we will continue to build value for generations to come.

Warren E. Buffett

Chairman of the Board

February 22, 2025

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*This article is adapted from Warren Buffett's 2024 Letter to Berkshire Hathaway Shareholders. The full letter is available at berkshirehathaway.com.*