Warren Buffett’s Berkshire Hathaway outperformed the S & P 500 in 2024 and pulled off its greatest 12 months since 2021. Class A shares of the Omaha, Nebraska-based conglomerate rallied 25.5% final 12 months, beating the S & P 500’s 23.3% return. Berkshire shares topped $700,000 in the course of the 12 months and posted their ninth constructive 12 months in a row. BRK.A 1Y mountain Berkshire Hathaway The robust efficiency got here even because the “Oracle of Omaha” halted Berkshire’s inventory buyback program with the inventory getting pricier and pricier. Instead, the conglomerate relied on stable working earnings this previous 12 months, supported by robust funding earnings and underwriting earnings inside auto insurer Geico. $325 billion money Interest and different funding earnings reached $8 billion within the first three quarters of 2024, in contrast with the prior 12 months’s $4.2 billion. A giant issue was Berkshire’s gigantic struggle chest — some $325 billion as of the top of September, practically double the $168 billion stage on the finish of 2023. Higher rates of interest, albeit off their peak, nonetheless enabled the conglomerate to earn a aggressive return on the money hoard. The legendary 94-year-old investor amassed such a jaw-dropping amount of money in 2024 by promoting down his two largest holdings, Apple and Bank of America , a transfer that shocked many. He was in a promoting temper for many of 2024, offloading $133 billion value of inventory within the first three quarters of the 12 months. Winning Geico Geico, Berkshire’s insurance coverage crown jewel and what Buffett has known as his “favourite baby,” continued its turnaround story in 2024. The insurer recorded an underwriting revenue of $5.7 billion within the first three quarters of 2024, greater than doubling the $2.3 billion whole in the identical interval of 2023. As lately as 2022, Geico suffered a $1.9 billion pretax underwriting loss because it sacrificed market share to competitor Progressive as a result of sluggish adoption of telematics . Telematics software program packages permit insurers to gather purchasers’ driving information, together with their mileage and pace, to assist worth insurance policies. Geico helped offset the weak point in Berkshire’s different insurance coverage operations, together with Berkshire Hathaway Primary Group and Berkshire Hathaway Reinsurance Group, which each skilled an underwriting loss within the third quarter of 2024. ‘Wishful Thinking’ While Berkshire outpaced the S & P 500 final 12 months, Buffett has tempered expectations for future outperformance citing its monumental dimension. He famous that it’s extremely troublesome for any investments to maneuver the needle due to the sheer amount of money Berkshire is working with. Buffett mentioned Berkshire’s group of diversified, high quality companies — from BNSF Railway to See’s Candy —ought to present “barely higher” efficiency than the typical U.S. firm, however something greater than that’s unlikely. ‘With our current combine of companies, Berkshire ought to do a bit higher than the typical American company and, extra essential, also needs to function with materially much less threat of everlasting lack of capital,” Buffett mentioned in his 2023 annual letter. “Anything past ‘barely higher,’ although, is wishful pondering.” Still, Buffett’s long-term observe report is unparalleled. Berkshire, which cuts throughout 40 industries and 60 corporations, has doubled the typical annual return of the S & P 500 since Buffett first took management within the Sixties.
