Warren Buffett wasn’t always the Warren Buffett so many people admire.
When he started assembling his Berkshire Hathaway conglomerate in the 1960s, he bought not-great companies at bottom-of-the-barrel prices and replaced the management.
Not long after, he became partners with the late Charlie Munger, who pointedly said cheap companies sold cheaply are cheap for a reason.
💰💸 Don’t miss the move: SIGN UP for TheStreet’s FREE Daily newsletter 💰💸
Better, to buy great companies at fair prices, Munger said. And here’s the kicker: Whenever possible, keep the existing managers.
The result: Berkshire Hathaway (BRK.A) and (BRK.B) became a hugely successful company that has enriched investors far and wide. And it continues to make money. And, at least for now, Buffett will remain chairman.
Related: Is buying Palantir’s stock now dumb?
But, as Buffett noted in his annual letter to shareholders, “At 94, it won’t be long before Greg Abel replaces me as CEO and will be writing the annual letters. “
However, Buffett intends to attend the company’s annual meeting in Omaha, Neb., on May 3 as usual.
Fourth-quarter operating earnings (which don’t include investment gains and losses) were up 71% to $14.5 billion. Full-year 2024 profit was $47.4 billion, up 27%.
Berkshire’s Class A shares were off 0.6% to $718,750 on Friday, as stocks overall slumped. The Class B shares were down 0.6% to $478.74.
The shares for both classes are still up 5.6% year, ahead of the Standard & Poor’s 500 Index’s 2.2% gain.
Fair does not equal cheap
Does fair mean cheap? Not necessarily. Fair means the price for a business should reflect its value. If the results are solid, thus reflecting able management, and continue to do well, the value of the business (or investment) will increase and be reflected in the stock price.
Berkshire also invests in shares of companies and, given its size, takes big positions.
Lately, Berkshire Hathaway has unloaded a lot of stock, especially Apple (AAPL) , and is sitting on a cash horde of about $321.4 billion. That’s roughly the size of the gross domestic product of the Czech Republic, according to the International Monetary Fund.
Berkshire had owned as many as 915 million shares of Apple as late as September 2023 and has cut the total to 300 million shares. As of Friday, the stake was worth $73.4 billion.
In all, Berkshire sold $143 billion in stocks it held for investment in 2024, up 253% from a year earlier, according to its annual report.
So, why cut the Apple stake? Maybe because Berkshire Hathaway was sitting on such huge gains in that one stake that Buffett and Greg Abel concluded prudence dictated it was time to look for new opportunities.
Apple is, in fact, down 1.9% in 2025 after a 30% gain in 2024.
Berkshire Hathaway Chairman Warren Buffett , left, with his partner the late Charlie Munger, at Berkshire’s 2019 annual meeting in Omaha, Neb.
JOHANNES EISELE/Getty Images
More Warren Buffett:
Warren Buffett raises eyebrows with new beverage stock pickBuffett’s Berkshire reveals major homebuying mistakes to avoidWarren Buffett buys $54 million of bargain-bin media stock
To build a winning stake takes time
So, what will Berkshire buy? Not saying. The company’s 2024 annual report, released Saturday, says it may take upwards of a year to decide on a target, and, typically, a company like Berkshire slowly builds a position in a stock so as not to blow up the normal daily buying-and-selling.
What kind of a target is a separate question. Berkshire owns everything from Geico Insurance (a core holding) to See’s Candies to Mid-American Energy to the Burlington Northern Santa Fe Railroad.
The Berkshire Hathaway that Buffett took control of in 1962 originally made shirts, a business that was fading fast. Buffett exited the business quickly and has steered clear of anything having to do with textiles ever since
But in his shareholder letter, Buffett wrote that, while the cash position at Berkshire Hathaway is huge, its equity holdings — direct ownership of companies and stock holdings — is far larger. And will stay that way, adding:
“Berkshire shareholders can rest assured that we will forever deploy a substantial majority of their money in equities – mostly American equities although many of these will have international operations of significance.”
It owns 21% of American Express (AXP) , as global a business as one can ask for. American Express’s dividend stream is useful in managing Berkshire’s huge insurance operations.
It does have a big position in Occidental Petroleum (OXY) , but that has not been a big win for Buffett, mostly because of the erratic nature of oil prices.
It recently bought into Constellation Brands (STZ) , Dominos Pizza (DPZ) and SiriusXM Holdings (SIRI) . It also cut stakes in Bank of America (BAC) , Citigroup (C) and Charter Communications (CHTR) .
Berkshire does have a sizable set of holdings in Japanese companies — ITOCHU, Marubeni, Mitsubishi, Mitsui and Sumitomo. These are passive investments, although Berkshire has been permitted to boost its holdings beyond 10%.
Related: Veteran fund manager issues dire S&P 500 warning for 2025
