Warren Buffett’s annual letter to Berkshire Hathaway shareholders was full of its usual folksy charm, but his latest missive was more notable for what it didn’t say than what it did (disclosure: I own shares in Berkshire).
Buffett has been selling stocks and raising cash over the last year. Does he think stocks are overvalued? Does he think Berkshire Hathaway itself is overvalued, given how share buy-backs have dried up? Or is Buffett, who is 94, raising cash so his designated successor, Greb Abel, will have the flexibility he needs when he takes over?
Buffett tried to sound dismissive about “what some commentators currently view as an extraordinary cash position”. Yes, Berkshire’s public stock investments fell in 2024 from $354 billion (€340 billion) to $272 billion, but the value of its (much bigger) holdings in private, non-quoted companies rose.
“The great majority of your money remains in equities,” Buffett wrote. “That preference won’t change.”
Maybe, but Buffett downplays Berkshire’s stock sales by noting its portfolio fell from $354 billion to $272 billion. This framing masks the scale of his selling – a net $134 billion in stock sales – since rising markets softened the impact.
Buffett didn’t discuss why Berkshire’s cash pile doubled, from $167.6 billion to $334.2 billion, in 2024, and why cash accounts for almost a third of Berkshire’s assets – the highest percentage since 1990.
Nor did he explain why Berkshire hasn’t bought back its own stock since May 2024, its longest pause since Buffett gained greater flexibility to repurchase shares in 2018.
Buffett may insist he isn’t hoarding cash, but his actions suggest growing caution about valuations – or that he’s positioning Berkshire for something big.
