Berkshire Hathaway Chairman and CEO Warren Buffett reminded shareholders in his annual letter Saturday that, at age 94, "it won't be long" before he steps down as chief executive to make way for his designated successor, Greg Abel.
"Greg shares the Berkshire creed that a 'report' is what a Berkshire CEO annually owes to owners. And he also understands that if you start fooling your shareholders, you will soon believe your own baloney and be fooling yourself as well," Buffett wrote.
In a wide-ranging letter touching on his personal beliefs and relationships as well as the global conglomerate's performance, Buffett noted with pride that Berkshire Hathaway last year "paid far more in corporate income tax than the U.S. government had ever received from any company — even the American tech titans that commanded market values in the trillions."
Last year, Berkshire made four payments to the Internal Revenue Service that totaled $26.8 billion. "That’s about 5% of what all of corporate America paid. In addition, we paid sizable amounts for income taxes to foreign governments and to 44 states," Buffett said.
"If Berkshire had sent the Treasury a $1 million check every 20 minutes throughout all of 2024 — visualize 366 days and nights because 2024 was a leap year — we still would have owed the federal government a significant sum at year-end. Indeed, it would be well into January before the Treasury would tell us that we could take a short breather, get some sleep, and prepare for our 2025 tax payments," he added.
Buffett encouraged "Uncle Sam" to use the funds wisely and take care of those who "get the short straws in life."
When Buffett took over Berkshire Hathaway, then a struggling textile business, 60 years ago, the company didn't pay a dime in income tax, he noted.
As far as the company's performance, "In 2024, Berkshire did better than I expected though 53% of our 189 operating businesses reported a decline in earnings. We were aided by a predictable large gain in investment income as Treasury Bill yields improved and we substantially increased our holdings of these highly-liquid short-term securities," Buffett wrote.
Berkshire reported $47.4 billion in operating earnings, compared with $37.35 billion in 2023. The company's annual meeting is scheduled for May 3, when Buffett, Abel and Ajit Jain, vice chairman for Berkshire's insurance operations, will answer shareholders' questions.
In the meantime, here are nine nuggets of investing and business wisdom from Buffett's latest letter to shareholders, which introduces Berkshire's annual report. The company logged a 19.9% compounded annual gain from 1965 through 2024, compared with the S&P 500's 10.4%, the report says.
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