In the past year, Berkshire Hathaway’s cash reserves have nearly doubled. According to the company’s fourth-quarter financial report for 2024 released on Saturday, the cash reserves of Berkshire Hathaway skyrocketed to a record-breaking $334.2 billion.
Berkshire Hathaway stated on Saturday that its cash position increased by $9 billion in the fourth quarter as Warren Buffett cut holdings of blue-chip U.S. stocks, including selling billions of dollars worth of shares in Citigroup and Bank of America. In addition, interest income from the company’s holdings of U.S. Treasury bonds also contributed significantly.
This marks Buffett’s tenth consecutive quarter of increasing cash holdings, indicating that the billionaire continued to avoid major stock trades in the fourth quarter. At the same time, the company also did not repurchase any shares for the second consecutive quarter, signaling Buffett’s belief that stock trading prices are above intrinsic value.
The report states that the operating profit in 2024 was $47.4 billion, an increase of 27% compared to 2023, with strong performance in the insurance business.
The operating performance does not include changes in the value of Berkshire’s $272 billion stock investment portfolio, which Buffett has long believed to be fundamentally meaningless.
In 2024, Berkshire sold $143 billion in stocks, far exceeding its $9 billion investment in stocks, while most of the proceeds were invested in short-term government bonds.
Furthermore, Berkshire also released Buffett’s annual letter to shareholders.
In the letter, Buffett wrote: “In 2024, Berkshire’s performance exceeded my expectations, despite 53% of our 189 operating businesses reporting a decrease in earnings.”
“Due to the increase in U.S. Treasury yields and a substantial increase in holdings of highly liquid short-term securities, our investment income realized a predictably substantial growth,” he said.
Berkshire owns a range of subsidiary companies, spanning industries such as railways, utilities, and insurance.
Buffett pledged to continue investing in stocks. “Although some commentators currently believe that Berkshire’s cash position is unusually large, the vast majority of your funds are still invested in stocks,” Buffett wrote. “This investment preference will not change.”
“Berkshire shareholders can rest assured that we will always deploy most funds into the stock market—primarily U.S. stocks, many of which include significant international businesses,” he wrote. “Berkshire will never prioritize holding cash equivalents over good businesses, whether fully or partially owned.”
Year-to-date, Berkshire’s stock price has been on the rise, with both Class A and Class B shares increasing by approximately 5.6%, while the S&P 500 index rose by 2.2%. Both categories of Berkshire’s stocks hit historic highs this week.
Since the end of last month, Berkshire’s market value has remained above $1 trillion.