Let's Dive Into Berkshire Hathaway's 10-K
All of the little (and big) details from Berkshire's annual report
I’ve spent the past week slowly making my way through Berkshire Hathaway’s annual report — jotting down all of the little (and big) details that caught my eye.
This cannot claim to be an exhaustive list — the report is 150 pages long, after all — but merely a collection of facts and figures that might be of interest to shareholders.
Starting Off
Warren Buffett always points towards operating earnings as his preferred metric for judging Berkshire Hathaway’s performance. In Q4 2024, Berkshire racked up $14.5 billion in this category — which many reported as being a 71% increase year over year. That’s true enough on its face, but ignores the boost that last quarter’s results got from foreign currency exchange. Factor that out and Berkshire’s Q4 gain in operating earnings drops to a still very impressive 45%. As we’ll see later, the lion’s share of the credit for this performance goes to insurance.
Berkshire’s cash mountain — after the proper adjustments — totaled $318 billion at year end. One big reason for this eye-popping number is that share repurchases came to a dead halt in the second half of 2024. In all, Buffett shelled out just $2.9 billion on repurchases during the entire year. That’s not too surprising — Berkshire’s stock price soared to new all-time highs over the past six months — but it has closed off a reliable avenue for allocating excess capital.
On the first page of the 10-K, Berkshire shows the current number of shares outstanding as of February 10, 2025. That converts into 1,438,223 Class A equivalents — meaning no repurchases in the first six weeks of the new year, either.
It’s probably important to note that a lack of repurchases does not necessarily mean that Buffett sees Berkshire’s stock as overpriced. Just that it is no longer “below intrinsic value, conservatively determined”.
Two additions to Buffett’s list of recommended reading: In his letter, the Berkshire CEO praised Bill Gates’s new memoir Source Code — as well as Amazon’s 2021 shareholder letter for its “brutally candid observations”.
Another cool tidbit from the letter: Buffett credited Berkshire director Steve Burke — son of former Cap Cities exec Dan Burke — with the idea for CNBC’s invaluable Warren Buffett Archive.
It was a big year at Berkshire’s corporate headquarters. The number of employees onsite at Kiewit Plaza (as it will always be known) increased from 26 to 27.
Investments
2024 will probably be remembered as the year that Buffett sold a lot of Apple and Bank of America stock. It’s not every day that a company the size of Berkshire drastically cuts back on its two largest common stock positions. As a result, investments in equity securities — basically, Berkshire’s stock portfolio — dropped from $353.8 billion in 2023 to $271.6 billion last year. Concentration among the top five holdings similarly fell from 79% to 71%.
These sales rebalanced Berkshire’s portfolio in another way, too.
2024: 33.7% in banks, insurance, and finance; 38.6% in consumer products; and 27.7% in commercial, industrial, and other.
2023: 22.1% in banks, insurance, and finance; 56.8% in consumer products; and 21.0% in commercial, industrial, and other.
Buffett devoted an entire section of his annual letter to Berkshire’s investments in the five largest Japanese trading houses. “Over time,” he wrote, “you will likely see Berkshire’s ownership of all five increase somewhat.” He also wryly noted, “We like the current math of our yen-balanced strategy as well.” I like it, too. Berkshire will bring in $812 million of dividends from the sogo shosha this year — while paying just $135 million in interest on its yen-denominated debt. No wonder Charlie Munger called this trade a “no brainer” and likened it to “God opening a chest and just pouring [in] money”.
Buffett continues to avoid long-term bonds. Berkshire held just $15.4 billion in fixed maturity securities at year end — down from $24 billion in 2023. And, among those bonds he did buy, $10.1 billion of them mature in one year or less.
In his letter, Buffett revealed that Berkshire’s federal tax bill totaled $26.8 billion last year. “That’s about 5% of what all of corporate America paid,” he wrote, “[and is] far more in corporate income tax than the U.S. government had ever received from any company.” Over the past sixty years, Berkshire has paid $101 billion to the U.S. Treasury in taxes. Meaning that 2024 alone makes up more than 25% of the conglomerate’s entire six-decade tax bill.
Buffett put the magnitude of this number into perspective. “If Berkshire had sent the Treasury a $1 million check every 20 minutes throughout all of 2024, we still would have owed the federal government a significant sum at year-end.”
Berkshire’s taxable investment gains went from $769 million (2022) to $5 billion (2023) to $101.1 billion (2024).
Insurance
Insurance underwriting continued its dramatic turnaround in 2024 — finishing the year at $9 billion of after-tax earnings. Just two years ago, underwriting was in the red.
Berkshire estimates its Hurricane Helene and Hurricane Milton claims at $1.2 billion after tax. As for the SoCal wildfires in January 2025, the preliminary estimate is for a pre-tax loss of approximately $1.3 billion.
GEICO — and CEO Todd Combs — earned the plaudits from Buffett in his letter. “Though not yet complete,” he wrote, “the 2024 improvement was spectacular.” GEICO earned $7.8 billion pre-tax, more than double the previous year’s result and a far cry from the $1.9 billion underwriting loss in 2022. Something to watch, though, is the 0.5% decline in policies-in-force — though this number started to grow again in the second half of the year. On a related note, GEICO’s advertising expenses increased, too, which likely spurred policies-in-force back to growth.
According to the latest A.M. Best data (for 2023), GEICO’s market share among auto insurers came in third at 12.3%.
And, no question, GEICO’s levitation act has been helped along by a robust auto insurance market in the United States. Still, it was an impressive year.
BH Primary Group earnings fell to $855 million in 2024 — a 37.8% decline — as its combined ratio ballooned upwards by three-and-a-half points. The problems at GUARD basically dragged down the whole group’s performance. GUARD experienced 16.3% reduction in premiums written as new management decided to exit admitted homeowners’ insurance and to tighten underwriting guidelines in all areas of the business. GUARD had a significant increase in loss estimates, too.
BH Reinsurance Group’s pre-tax earnings increased by 42.1% to $2.7 billion. Expected losses in retroactive reinsurance and periodic payment annuity offset $3.8 billion of profits from property/casualty. In general, Berkshire accepts underwriting losses in those two areas because they generate “significant amounts of up-front premiums” that can be invested for years (or decades) before any claims must be paid. That’s the beauty of float.
Speaking of which, insurance float grew to $171 billion in 2024. And, due to intelligent underwriting on the part of Berkshire’s insurers, it comes cost-free.
BNSF Railway
Berkshire’s railroad posted $6.6 billion in pre-tax earnings, a very slight increase over 2023. Unfortunately, after those pesky income taxes, BNSF’s net profitability actually dropped 1.1% year over year.
BNSF achieved a 6.5% boost in volume — fueled by a 16.2% increase in consumer products and 7.4% in agricultural products. Coal, meanwhile, sank 17.9%. BNSF moved more freight in 2024, but average revenue per car fell 6.6%.
The operating ratio of 68.0% was a slight improvement over 2023, but still lags far behind competitor Union Pacific’s 59.9%.
Berkshire Hathaway Energy
BHE’s after-tax earnings increased by $1.4 billion — mostly due to a big drop in wildfire loss accruals at PacifiCorp. This sparked U.S. utilities to a 116.4% gain in net earnings, though natural gas pipelines (+14.2%) and other energy businesses (+30.3%) were no slouches, either. The real estate brokerage — HomeServices of America — lost $107 million as it continues to battle industry-wide litigation.
Wildfire loss accruals fell from $1.9 billion in 2023 to just $346 million last year. Estimated unpaid liabilities for said wildfires stood at $1.54 billion. “It is reasonably possible,” said the 10-K, “that PacifiCorp will incur significant additional wildfire losses beyond the amounts currently accrued.”
The overall $4 billion of profit for BHE is a nice reversal from a subpar 2023, but still lags behind 2022’s results.
Manufacturing, Service, and Retailing
We’re always somewhat at Berkshire’s mercy as to what information we receive on the many, many operating businesses that make up this sprawling corner of the conglomerate. Earnings across the entire MSR segment fell by 2.2% on the year — with increases at “several” manufacturing businesses drowned out by a sea of red ink in service and retailing. Worryingly, MSR’s overall profit margin has steadily eroded from 9.7% in 2022 down to 7.8% last year.
There’s at least some good news in manufacturing — which managed to grow pre-tax earnings by 3.9% in 2024. Digging a little deeper, that growth came from industrial products (+5.8%) and consumer products (+10.9%), while building products declined by 1.3%.
Precision Castparts continued its resurgence with $10.4 billion in revenue and a 24.4% increase in pre-tax earnings. A combination of higher sales and improving manufacturing and operating efficiencies.
Lubrizol brought in $6.4 billion of revenue — “relatively unchanged” from 2023 — though lower raw material and manufacturing costs resulted in a 30.7% boost to pre-tax earnings.
Marmon’s revenues declined by 1.7% to $12.2 billion. Earnings dipped even worse at 8.7%.
A similar story at IMC — where a 2.2% drop in revenue due to “sluggish customer demand across all major regions” turned into a 7.8% decrease in pre-tax earnings.
Clayton Homes grew revenue by 8.5% up to $12.4 billion, though pre-tax earnings actually fell by $115 million (5.6%). Clayton’s financial services division borrows from Berkshire affiliates — and interest expenses jumped by $203 million last year as overall borrowings increased by $6.6 billion.
Elsewhere in building products, Johns Manville increased its sales volume — while all others declined. Pre-tax earnings of the non-Clayton part of the segment increased by 2.9% in 2024.
Over in consumer products, revenue at Forest River (+6.4%), Brooks Sports (+9.1%), and Duracell (+2.5%) all increased. On the flip side, Fruit of the Loom and Richline fell on lower sales volume — while Garan struggled with lower average selling prices.
Forest River holds 35% market share in the RV industry. Duracell, meanwhile, is at 32% share of the global alkaline battery market.
In terms of earnings, apparel and footwear surged 37.0% — while Duracell also went up by an unnamed amount. And, sadly, Jazwares suffered a rare earnings decline “primarily due to increased amortization expenses” but also from reduced orders from retailers in the fourth quarter.
Services (-23.0%) and retailing (-19.2%) was just a total earnings bloodbath.
Aviation services grew revenue by 9.1% due to increased number of aircraft and flight hours at NetJets. But earnings dropped 10.9% on increased costs.
IPS revenue increased 14.4% because of increased project volume.
TTI finished off a miserable year on this note: “Sales in 2024 declined across most regions, markets, and product lines” due to increased inventory, lower sales, and pricing pressure. Not exactly a winning combination. As a result, earnings plummeted 51.0%. Better luck in 2025.
Berkshire Hathaway Automotive makes up 69% of the retailing group’s revenue — with home furnishings at 17%. Every retailer except BHA and Detlev Louis Motorrad (a German motorcycle accessories maker) suffered a decline in revenue last year. That didn’t save BHA, though, which ended up with a 7.9% decline in pre-tax earnings thanks to lower selling prices.
Revenue at home furnishings fell 6.4% — while all the other retailers combined experienced a 5.8% sales decrease.
Aggregate pre-tax earnings for the non-BHA contingent fell by $242 million (-40.2%) year over year. “Most of these other retailers generated significantly lower earnings in 2024,” the 10-K said ominously. Yikes.
It’s equally grim news over at Pilot. Pre-tax earnings sank to just $614 million, though it managed to reduce interest expense by 30.9% thanks to a $5.7 billion loan from Berkshire affiliates that was used to pay off third-party borrowings.
McLane is just about the only bright spot here — with 39.3% earnings growth. In fact, McLane’s $634 million of pre-tax earnings even surpasses that of Pilot. That’s quite a turnaround as Pilot’s 2023 profits were more than double those of McLane. The grocery and food service supplier — known for its high volume and rapid turnover — has steadily grown its profit margin from 0.5% in 2022 to 1.2% today. I figured it would be best to end this on a high note.
Previously, we read reports that the basic caliber was $334.2 billion in cash, and after adjusting with $318 billion, there was a space of more than $16.2 billion, mainly because of what reason?
In the BH Primary Group, what is GUARD?