Title: Warren Buffett’s Heartfelt Tribute to Charlie Munger and Berkshire Hathaway’s Impressive Financial Performance in 2023
Warren Buffett, the legendary investor and CEO of Berkshire Hathaway Inc., released his annual letter to shareholders on Saturday. This year’s message carried a more emotional tone in light of the passing of Buffett’s longtime business partner, Charlie Munger, who died at the age of 99 in November.
Throughout his career, investors have looked to Buffett for wisdom on markets, the economy, and life in general. However, in the 2023 annual report, Buffett began with a personal note dedicated to Munger, who he referred to as the “architect” of Berkshire Hathaway.
Buffett acknowledged that while he had led the construction crew at Berkshire, it was Munger who deserved credit for being the architect. The two first met in 1959, and three years later, Munger began working in money management. In 1978, he joined Berkshire Hathaway as vice-chairman and has been an indispensable part of the company ever since.
Buffett fondly recalled their relationship, stating that Munger was more than just a business partner; he was an older brother and a loving father figure. Despite his significant role in the company’s success, Munger preferred to remain behind the scenes and let Buffett take the spotlight.
With Munger’s passing, the question of succession at Berkshire Hathaway has arisen. In 2021, Buffett named Greg Abel as his heir apparent, who currently heads the non-insurance businesses, including energy, building materials, and even the candy divisions. Berkshire Hathaway’s stock, which closed at $628,930.18 on Friday, has a strong succession plan in place, according to Buffett.
Berkshire Hathaway reported a substantial increase in fourth-quarter operating earnings. Operating income totaled $8.5 billion, up from $6.6 billion or 28.8% year over year. For the entire year, operating income reached $37.3 billion, up from $30.8 billion in 2022.
The company’s net earnings amounted to $37.3 billion, and Berkshire closed the year with a net profit of $96.2 billion, a dramatic turnaround from the net loss of $22.8 billion in 2022. Berkshire’s insurance underwriting business made $848 million in the fourth quarter, a significant improvement from the same period a year prior, generating earnings of $5.4 billion for the entire year.
In the final three months of 2023, Berkshire repurchased approximately $2.2 billion in stock, bringing the year’s total to around $9.2 billion in stock repurchases. Buffett is currently sitting on a record pile of cash, with about $167.6 billion in cash and equivalents, surpassing last quarter’s record-high of $157.2 billion.
The considerable cash hoard has led some investors to speculate about potential acquisitions for Berkshire Hathaway. Berkshire sold off 10 million shares of Apple stock in the final three months of 2023, accounting for about 1% of its holdings in the tech giant. Apple has been one of Berkshire’s major holdings and a key contributor to its value, alongside its insurance, railroad, and energy operations, which Buffett calls the “four giants.”
Berkshire had also announced it sold 80 million shares of printer company HP in the fourth quarter of 2023, reducing its holdings by 78%. The company also reduced its holdings in media company Paramount by 32%.
Buffett and his team continue to seek opportunities for growth, both organically and through strategic acquisitions. Berkshire Hathaway’s solid financial performance, combined with Buffett’s unwavering investment acumen and the strong leadership of his successor, Greg Abel, position the company well for continued growth and success in the years ahead.
