Buffett's Letter Includes a Word for 'Uncle Sam'

Warren Buffett on Saturday celebrated the successes of Berkshire Hathaway's companies last year and in the 60 years since he took over a struggling New England textile company and began converting it into a massive conglomerate. His annual letter to shareholders also had suggestions for President Trump, the AP reports. Buffett acknowledged that he has made mistakes over the years, without offering many examples, but he assured shareholders that the person he has chosen to one day succeed him as CEO, Greg Abel, isn't one of them.

Abel will be ready to act when he spots significant investment opportunities, the letter says, and he will continue writing an annual report like Buffett's for shareholders. Buffett's letters are popular among investors, partly because of his remarkable track record. He hardly reflected on his long tenure as CEO in the letter. But Berkshire will offer a 60th anniversary book at the annual meeting with stories and lessons from its history. Other points Buffett made involved:

• Company taxes: Buffett cited the fact that Berkshire paid zero income tax in the decade before he took over in 1965 as a sign that the company "was headed for the ash can," per Business Insider. He pointed out that it paid $26.8 billion last year—"far more in corporate income tax than the US government had ever received from any company—even the American tech titans that commanded market values in the trillions." CFRA Research analyst Cathy Seifert said, "I thought honestly in a very subtle way that was a powerful message."
• Investing power: Abel will have plenty of resources to work with when he takes over, given that Berkshire now holds $334.2 billion cash after selling off much of its Apple and Bank of America stock in the past year and continuing to generate money from subsidiaries. They include Geico insurance, BNSF railroad, a collection of major utilities, and an assortment of major manufacturers and retail businesses that include brands like Dairy Queen and See's Candy. That's almost double the $167.6 billion cash Berkshire held a year ago.

• Dividend decision: While Buffett has struggled to find major acquisitions in recent years, he affirmed that he has no plans to offer a dividend because he believes reinvesting the money will generate better returns. Investor Bill Smead of Smead Capital Management said Buffett's actions show he's actually bearish "but won't admit it." He said Buffett doesn't want to scare people, but shareholders can look to his past writings and his actions to see that he likely thinks the stock market is terribly expensive. And some of the best investment opportunities he's found in recent years have been outside the US.
• His 2024 analysis: Buffett said Berkshire did better than he expected even though 53% of the 189 companies it owns reported lower earnings in 2024. That's because Berkshire collected more interest on all of its short-term investments and its insurance units reported much higher profits.

story continues below

• Fourth-quarter results: Berkshire earned $19.69 billion profit, or $13,695 per Class A share. That's a little over half the $37.57 billion, or $26,043 per Class A share, it reported a year ago. But the operating earnings tell a much different story. By that measure, operating profits were up substantially at $14.5 billion, or $10,102.07 per Class A share, from the previous year's $8.5 billion, or $5,878.21 per A share. The four analysts surveyed by FactSet Research predicted operating earnings of $6,932 per share. Edward Jones analyst Jim Shanahan said the weakness in Berkshire's operating companies is worrisome. Earnings might decline throughout 2025 if that weakness persists, he said.
• Political plea: Buffett has hardly mentioned politics and current events in recent letters, but he urged the government, addressed as "Uncle Sam," on Saturday to be responsible with the money he sends it. "Someday your nieces and nephews at Berkshire hope to send you even larger payments than we did in 2024. Spend it wisely. Take care of the many who, for no fault of their own, get the short straws in life."

(More Warren Buffett stories.)