In his letter to the shareholders, Warren Buffett announced a new record Berkshire Hathaway(NYSE: BRK.A)(NYSE: BRK.B) Set in 2024: It paid more taxes than any company ever paid the US government in one year. And that is despite the in recent years despite the considerably lower tax rates than in the history of Berkshire Hathaway.
Paying a large tax account of course means that you have earned a lot of money for your investors. For Berkshire Hathaway, however, many of that income came in the form of capital profits in the sale of listed shares. In total, Buffett and his colleague portfolio managers sold for $ 143 billion in shares from the Berkshire portfolio. This resulted in $ 101.1 billion in taxable profits, which every amount of dwarfs that the company realized in the past, as well as its normal business income.
In the fourth quarter, Buffett was sold considerably chunks of its interests in financial shares, including Bank of America And Citigroup. At the same time, he has piled up cash after the massive tax assessment of Berkshire in one investment with a high efficiency.
This is what investors need to know.
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In the course of 2024, Buffett sold at least a few shares of about half of the shares and ETF’s Berkshire at the start of the year. Apple Saw the greatest reduction in the portfolio, but the importance of Berkshire in the technical shares still remains the largest general position. After he had picked up more than two -thirds of his participations, Berkshire seems happy to hold his remaining 300 million shares. He no longer sold Apple shares in the fourth quarter.
Instead, he focused his attention on the financial shares of Berkshire. Bank of America and Citigroup saw by far the biggest cuts. But Berkshire is also trim in his interest Capital One Financial and Brazilian fintech supply Now Holdings.
Berkshire originally achieved Bank of America shares through Warrants who received it when it received $ 5 billion in preferential shares in 2011. Buffett exercised those warrants in 2017 to buy 700 million shares when Bank of America increased its dividend, so that the possession of the common shares paid more than the desired shares. Berskshire Hathaway has added to the position until 2020, but from the end of 2024 it now has less than the 700 million shares that were originally purchased in 2017.
Some have speculated that Berkshire continued to sell the Bank of America in early 2025. The name of the company was noticeably absent in a short list of “profitable companies with well -known names” Buffett set out in his letter to shareholders.
The position of Berkshire in Citigroup is relatively new and acquires it in early 2022. The financial shares got away in 2022 and 2023, because it was confronted with permission assignments of regulators, started a large restructuring effort and at the same time had a challenging economic environment. Buffett and Hist team may not be impressed by the progress in Citi’s Turnaround and decided to start cutting it.
Buffett has suggested that 2024 and 2025 are a good time to sell some of the largest companies in Berkshire. Not only are many of the largest companies on the market expensive in terms of appreciation, but Berkshire can also retain more of the income due to historically low tax rates. Berkshire’s $ 101 billion in profits made only 21% tax in 2024. Before 2017, that profit would have been 35% taxes. That is an extra $ 14 billion along the Berkshire treasury.
Buffett can continue to sell in 2025, because the valuations remain high and the congress has to extend the current tax cuts after the end of the year. From the end of 2024, the Berkshire portfolio was appreciated at $ 271.6 billion with non -realized capital wins of $ 196 billion. If he keeps selling, he clearly has a favorite place to place that money now.
While in 2024 Berkshire sold around $ 143 billion in shares, the total stock purchases amounted to only $ 9.2 billion for the year. Buffett and his team have not bought much else that also appears outside of Berkshire’s portfolio of public shares. The CEO stopped taking Berkshire shares in May and invested limited amounts in non -marketable shares, such as interests in pilot travel centers and Berkshire Hathaway Energy.
Without good stock investments to buy, Buffett has a large stack of money.
The best thing he can do with that money at the moment is, in his opinion, to buy the American treasury accounts in the short term. Buffett is in favor of government bonds in the short term as a place to maintain surplus capital. Every quarter he writes to shareholders: “We continue to believe that maintaining sufficient liquidity is of the utmost importance and that we insist on the safety of revenue with regard to short -term investments.”
Buffett was burned by long -term bonds in the 1970s and has since preferred short -term bonds. Bonds in the short term usually have lower yields, but they ensure the preservation of capital, because they are not so sensitive to the interest rate risk of the kind we have seen in the 1970s, as well as in recent years.
Buffett increased Berkshire’s Treasury Bill Holdings with more than $ 166 billion in 2024. Despite his insistence on short-term accounts, Buffett is currently receiving a considerable return on those treasury accounts. T-Bills that mature within six months currently offer yields on the same footing with 10-year-old Treasury notes-hevanger 4.3%, from this letter. As a result, Berkshire is beautifully paid while Buffett is waiting for an attractive investment of shares.
But Buffett said that he would be happy to keep treasuries, even if they did not offer such attractive yields. Speaking during last year’s shareholders’ meeting, he said: “I don’t think anyone here has any idea how to use [the cash] Effective, and that’s why we don’t use it. “
Buffett and the team of Berkshire Hathaway face a unique challenge: with more than $ 334 billion in biased capital, only a handful of shares remain viable candidates to move the needle for the Berkshire portfolio. The preference of Buffett in the past year, and especially the last quarter, leaned to smaller companies. But even investing a few billion dollars in those shares, buying significant interests of them all, can hardly compensate for the sale of gigantic companies from the gigantic companies that Buffett has decided that they are not worth the prices of today.
As such, Buffett has piled money in Treasury accounts and will probably continue to do so in 2025 until MegaCap shares, in which Buffett can really make movements, can again present good value to the shareholders.
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Citigroup is an advertising partner of Motley Fool Money. Bank of America is an advertising partner of Motley Fool Money. Adam Levy has positions in Apple. The Motley Fool has positions and recommends Apple, Bank of America and Berkshire Hathaway. The Motley Fool now recommends holdings. The Motley Fool has a disclosure policy.
Warren Buffett sells Bank of America and Citigroup shares and is stacking in this high-yield investment instead was originally published by the Motley Fool
