Warren Buffett’s annual letters to Berkshire Hathaway’s shareholders have a huge following. The letters, written in Buffet’s direct and often humorous style, are closely read by investors, journalists, academics, and others seeking insight into the performance and key trends of markets and of the economy. This year’s letter, published on Saturday, February 24, 2024, as part of Berkshire’s 2023 annual report, is distinguished by its opening tribute to the company’s late Vice Chairman, Charlie Munger, who died in December 2023 at the age of 99. The letter itself covers a number of topics that will be familiar to students of Buffett’s past letters, but it also includes a few interesting (and arguably even surprising) topics as well, as I discuss below. Full disclosure:  I own BRK.B shares, although not as many as I wish I did.

In his tribute, posted as a separate prologue to the shareholder letter, Buffett extolled Munger as the “architect” of Berkshire Hathaway, referring to himself as “general contractor” for the construction of the company. Buffett also referred to Munger as his “partner,” as well as being “part older brother, part loving father.” Buffett recalled in the tribute that after Buffett had purchased Berkshire Hathaway (well before Buffett and Munger became business partners), Munger told Buffett that “now that you control Berkshire, add to it wonderful businesses at fair prices and give up buying fair businesses at wonderful prices.” He also credited Munger with having “jerked me back to sanity when my old habits surfaced.”

The shareholder letter itself, in characteristic Buffett style, is framed as if it were a letter written to Buffett’s sister, Bertie. He says of his writing to Bertie that “My job is to anticipate her questions and give her honest answers.” Buffett adds at the end of the letter the interesting note that Bertie had managed to make herself “very rich” (to the point of making nine-figure charitable donations) through her wise decision in 1980 to cease active investment activity and instead limit her investments to mutual funds and Berkshire stock.

Bertie’s investment performance illustrates a point Buffett makes earlier in the letter that “America is a terrific country for investors. All they need to do is sit quietly, listening to no one.” Wall Street, by contrast, wants “feverish activity” for investors, as a result of which these days the markets “now exhibit far more casino-like behavior than they did when I was young.”

In addressing Bertie in his letter, Buffett sounded a number of familiar themes:

1. Buffett describes, as had has done in numerous prior letters, what Berkshire is looking for in its investors. Buffett explains that he wants investors, like Bertie, who are “lifetime” investors who take a long-term view.

2. Buffett also recites Berkshire’s investment approach – Berkshire is looking to own either all or a portion of businesses that “enjoy good economics that are fundamental and enduring” and that “can deploy additional capital at high rates of return.”  

3. Buffett also replays his complaint about the GAAP accounting rule requiring the company to include its unrealized investment gains and losses in its statement of earnings. Buffett refers to the “net income” figure this rule produces as “worse-than-useless.” In its February 24, 2024, earnings press release (here), the company says of the inclusion of unrealized gains and losses as “earning” as “meaningless” and says that the figure be “extremely misleading” to investors. Instead of this rule-required figure, Buffett refers to what he calls “operating earnings” (that is, what the company actually makes) – which show that the company made $37.4 billion in 2023, up from $30.9 billion in 2022.

4. Buffett also describes the value of Berkshire’s insurance business (which by the way had a blowout year in 2023 – Buffett says the insurance businesses “performed exceptionally well.”) After describing the insurance businesses’ results and exceptional management, he says in aside to Bertie “you can feel good about the fact that you own a piece of an incredible P/C operation that now operates worldwide with unmatched financial resources, reputation, and talent.”

5. Buffett also points to a number of the companies in which Berkshire invests, citing, as he often has in the past, the value to Berkshire of its long-standing investments in Coca-Cola and American Express. Buffett also identifies for special mention two other investments that “we expect to maintain indefinitely”: Occidental Petroleum; and five Japanese companies (Itochu, Marubeni, Mitsubishi, Mitsui, and Sumitomo), of each of which Berkshire owns about 9% of outstanding shares. (I discuss Buffett’s mention of these Japanese investments further below.)

Buffett also addresses, somewhat indirectly, a question that many observers have been asking – as the Wall Street Journal asked in an article in its Friday edition: what is Berkshire planning to do with the mountain of cash it has amassed? As of year-end, the company was carrying cash, cash equivalents, and short-term investments totaling over $167 billion. Buffett refers in the letter to this cash pile as Berkshire’s “not-so-secret weapon,” noting that the company “holds a cash and U.S. Treasury bill position far in excess of what conventional wisdom deems necessary.” Buffet’s answer to the question of what he intends to do with this money is simple — he plans to sit on it and wait.

The financial markets, Buffett notes, can “unpredictably seize up and even vanish,” as they have in the past. Berkshire, with its cash resources, has the “ability to respond” to market seizures, which could represent “large scale opportunity” for the company. (Buffett refers to the company’s response to the global financial crisis in 2008 as an example of the way the company can respond it troubled times.) In a note with some pretty grim overtones, Buffett observes that Berkshire “can handle financial disasters of a magnitude beyond any heretofore experienced.” He concludes his discussion by telling Bertie that “extreme fiscal conservatism” is a “corporate pledge” the company makes to its shareholders.

In addition to the frequent themes that recur in Buffett’s latest letter and that I noted above, there were also a number of new observations that are interesting and, in some cases, arguably surprising. One of the interesting things is Buffett’s discussion of the Japanese investments, to which I referred above and that I discuss further below. Another of the interesting things is his discussion of Berkshire’s now-gigantic size. And even more interesting is Buffett’s examination of the earnings disappointment at two of the company units, amidst overall great company results, as I discuss below.

It is no secret that Berkshire is now a HUGE company. Buffett refers to the company’s size as a complicating factor as it looks for investment opportunities. There are very few companies left out there large enough that Berkshire’s acquisition of them would result in “moving the needle at Berkshire.” So how big is Berkshire? Buffett says that the company now has “by far” the largest GAAP net worth recorded by any American business. Record operating income and a strong stock market means that Berkshires year-end GAAP net worth was $561 billion; by way of comparison, the total GAAP net worth of the remaining 499 companies is about $8.9 trillion. Buffet calculates that Berkshire “now occupies 6% of the universe in which it operates.” As a result of Berkshire’s size, the company’s prospects for acquisitions that might produce “eye-popping performance” are non-existent. Nonetheless, Buffett says, managing Berkshire is “mostly fun and always entertaining.”

Buffett also does something in this year’s letter that, while arguably characteristic of Buffett’s style and approach, would not be modeled in very many other CEO statements to their shareholders. Buffett devotes several pages in his letter, in the part in which he is discussing Berkshire’s overall blow out 2023 performance, to explaining why two key business units – BNSF and BHE – performed below his expectations during the year.

BNSF, Berkshire’s massive rail unit, operates in a very capital-intensive industry, one which is beset by a growing number of challenges – rising costs, labor shortages, government mandates – as a result of which the company’s earnings “declined more than I expected,” and its profit margins slipped relative to its five largest competitors. The margins, Buffett says, “can and should improve.”

The second “earnings disappointment,” which Buffett said is “more severe,” took place at BHE. Climate change issues (including wildfires) and changing governmental regulation have “raised the specter of zero profitability and even bankruptcy (which is an actual outcome in California and a current threat in Hawaii). As a result of these changes, “the final result for the utility industry may be ominous” – Buffett suggests that many jurisdictions may be forced to adopt a “public-power model.” Buffett concedes that “I did not anticipate or even consider the adverse development in regulatory returns and … I made a costly mistake in doing so.” What does this mean for Berkshire and its investment in energy companies? I don’t know for sure; Buffett’s letter says cryptically that “Berkshire can sustain financial surprises, but we will not knowingly throw good money after bad.”


Buffett’s letters to Berkshire shareholders are always a good read, and this year’s letter does not disappoint. Honestly, for me, reading and writing about Buffett’s letters are about as much fun as I get to have (at least within my blogging identity).

I have attended the Berkshire shareholders meeting in the past, but I do not plan to attend this year. If I were to attend, and if I were to have a chance to ask Buffet some questions, there are some things I want to know:

1. Mr. Buffett, in your shareholder letter this year, you repeated your frequent theme about the power of the U.S. economy and its ability to create wealth for investors. Because the sheer power of the American economy is such a recurring theme in your shareholder letters over the years, I was particularly interested in your discussion elsewhere in the letter about the company’s relatively recent and sizeable investment in the five Japanese companies. I find this investment initiative interesting and a little surprising, especially because, as your letter notes, the Japanese investments introduce currency exchange uncertainty into the mix. Please explain the Japanese investment strategy to me – how did it come about, what are the objectives, how do the Japanese investments fit within the overall investment strategy? Why those five businesses? And what did you mean when you said in the shareholder letter that the Japanese investments “may lead to opportunities for us to partner around the world” with the five companies?

2. I have another question based on your comments in the shareholder letter, Mr. Buffet. In your letter you describe in some detail the2023 earnings disappointment at two company units, BNSF and BHE. With respect to BHE, you described the challenging circumstances utilities face, particularly from a regulatory standpoint. Your comments seem to foreshadow troubling future prospects for the utilities industry. Among other things, with respect to the conditions for the utilities industry, you said specifically that “Berkshire can sustain financial surprises but we will not knowingly throw good money after bad.” What financial surprises are you referring to? What do these comments mean for Berkshire’s energy investments? Are there forthcoming changes to Berkshire’s energy investments?

3. Sorry, Mr. Buffett, if I may, I do have another question. In the discussion in your letter about Berkshire’s conservative approach to its cash resources, and the fact that it holds cash and cash equivalents “far in excess of what conventional wisdom deems necessary,” you allude to the opportunities for Berkshire that could arise in the event of a market “seizure.” You also said in that connection that “Berkshire can handle financial disasters of a magnitude beyond any heretofore experienced.” This comment frankly frightens me. Is there something specific you are worried about? Do you foresee financial disasters ahead and if so why? What about the current situation makes you anticipate the possibility of financial disasters of an unprecedented magnitude?


The shareholder letter does end on something as a sad note; Buffett closes his letter with his usual invitation for shareholders to attend the upcoming annual meeting in Omaha. He notes with respect to the upcoming meeting that “missing from the stage this year will be Charlie.”

It is hard to imagine the meeting without Munger. It is even harder to imagine a meeting without Buffett — nevertheless, one day, likely within the next few years, there will be a Berkshire shareholder’s meeting from which Buffett himself will be absent. Years ago, when I was working for a Berkshire company, I asked one of my company’s senior executives what he thought would happen to Berkshire when Buffett dies. He said, without hesitation, the first thing that will happen is that the price of Berkshire shares will drop like a rock. And, he added, when that happens, he is going to buy as many Berkshire shares as he can. Because, his comment implied, Buffett has built such a great company of such enduring value. Still, is hard to imagine someone other than Buffett writing the annual letter to Berkshire’s shareholders.

For those trying to imagine Berkshire without Buffett, there was a note of reassurance in this year’s letter. In describing who will be at the upcoming annual meeting, Buffett mentions Greg Abel, currently Berkshire’s Vice-Chair for all non-insurance operations. Buffett says of Abel that he is “in all respects ready to be the CEO of Berkshire tomorrow.” In this remark, Buffett not only showed his confidence in Abel, but also provided reassurance to the company’s shareholders. The statement also could be one part (an important part) of the case favoring buying Berkshire shares if the company’s share price dips on the future day that Buffett passes on.