Warren Buffett, Chairman and CEO of Berkshire Hathaway
Lacey O'Toole | CNBC
Berkshire HathawayAmazon CEO Warren Buffett said his sprawling conglomerate may only marginally outperform the average U.S. company because of its sheer size and lack of buying opportunities that could make an impact.
The Omaha-based giant — owner of everything from BNSF Railway to Dairy Queen and 6% of Apple — has the largest net worth ever recorded by any U.S. company, and now stands at 6% of all companies on the index. S&P 500. Buffett said in his annual letter issued on Saturday.
“There are only a few companies in this country capable of making a real difference at Berkshire, and they have been chosen by us and endlessly by others,” Buffett wrote. “Some we can value, some we can't value. And if we can, they should be attractively priced.”
Berkshire's last big deal was to buy insurance company and conglomerate Alleghany for $11.6 billion in 2022. The “Oracle of Omaha” also acquired a 28% stake in the energy giant. Occidental PetroleumExcluding the purchase of the entire company. These moves, while significant, fell short of expectations of an “elephant-sized” target that Buffett had wanted to achieve for years.
Berkshire held a record $167.6 billion in cash in the fourth quarter.
“Outside the US, there are essentially no candidates that represent meaningful options for deploying capital in Berkshire. Overall, we have no potential for eye-catching performance,” Buffett said.
Berkshire has built a 9% stake in five Japanese trading companies – Itochu, Marubeni, Mitsubishi, Mitsui and Sumitomo, which Buffett intends to own in the long term.
The 93-year-old Buffett said Berkshire's collection of diversified, quality companies should perform “a little better” than the average US company, but anything more than that is unlikely.
“With our current mix of companies, Berkshire must do a little better than the average American company and, more importantly, it must also operate with a materially lower risk of permanent loss of capital,” Buffett said. Anything beyond “a little better,” Buffett said. Despite that.” “It is wishful thinking.”
Berkshire recently hit back-to-back record highs, trading more than $620,000 in Class A shares and boasting a market capitalization of more than $900 billion.
The group's stock gained about 16% in 2024, more than double the S&P 500's return, after rising 16% in all of 2023.
