Honesty, innate talent, and mortality are just some of the topics Warren Buffett discussed in this year’s Berkshire Hathaway (BRK.A) shareholder letter, published over the weekend (Feb. 22). The 94-year-old investor’s annual writing, a must-read for investors and the general public alike, not only details his investment firm’s financial performance but is also famed for Buffett’s sage advice and reflections.
In past annual letters, the “Oracle of Omaha” has offered frank statements like “price is what you pay; value is what you get” (2008) and “be fearful when others are greedy and greedy only when others are fearful” (1986). He has also inserted poetic musings like “it’s only when the tide goes out that you learn who’s been swimming naked” (1992), referencing how turbulent economic conditions can expose a company or industry’s weaknesses.
This year’s edition touches upon a litany of topics ranging from corporate taboos to policy suggestions to Buffett’s eventual successor. Here’s a look at some of the key takeaways:
Own up to your mistakes
Between 2019 and 2023, two words appeared 16 times throughout Buffett’s annual letters. The terms “mistake” and “error” frequently dotted the past five reports, noted Buffett in his newest letter, where he conceded that his business missteps over the years have included poor capital allocation and hiring decisions.
“Many other huge companies have never used either word over that span,” noted Buffett, who pointed to a “brutally candid” 2021 letter from Amazon (AMZN) as a rare exception. Such avoidance is common at board meetings and on analyst calls for large public companies, according to Buffett, who described this taboo as one that makes him “nervous” as it implies “managerial perfection.”
The real failure doesn’t occur when mistakes are made but when they aren’t addressed—a piece of advice Buffett said he learned from his late business partner, Charlie Munger. “Problems, he would tell me, cannot be wished away,” said Buffett. “They require action, however uncomfortable that may be.”
Education isn’t everything
When it comes to CEO selections, prestigious schools will only get you so far at Berkshire Hathaway. “I never look at where a candidate has gone to school. Never!” declared Buffett in this year’s letter. While Buffett himself attended the University of Nebraska-Lincoln, University of Pennsylvania and Columbia University, he maintains that “a very large portion of business talent is innate with nature swamping nurture.”
The billionaire pointed to Pete Liegl, the late CEO of the recreational vehicle maker Forest River. Despite lacking a prestigious education, Liegl was a “natural,” Buffett said. He also praised the success of his friend Bill Gates, the Microsoft co-founder who dropped out of Harvard, and described Ben Rosner, a former Berkshire Hathaway executive, as a “retailing genius” despite the fact he stopped school after the 6th grade.
Spending advice for “Uncle Sam”
In this year’s letter, Buffett addressed the U.S. government while touching upon Berkshire Hathaway’s sizable tax payments. The company paid the IRS a staggering $26.9 billion last year—about 5 percent of what all of corporate America paid, noted the executive.
“Spend it wisely,” said Buffett in a note addressed to “Uncle Sam” that subtly urged the administration to act responsibly with Berkshire Hathaway’s contributions. “Take care of the many who, for no fault of their own, get the short straws in life. They deserve better,” he added.
A gift to the Stephen Center in remembrance of Charlie Munger
A major philanthropist with plans to disperse the majority of his wealth to charity, Buffett’s newest donation will have a direct connection to Munger, who died in November of 2023. While detailing plans for Berkshire Hathaway’s upcoming shareholder meeting, Buffett’s letter revealed that 5,000 copies of a new Munger-themed edition of a 60th anniversary Berkshire Hathaway book will be available for purchase at the event.
Curated by former Berkshire Hathaway staffer Carrie Sova, the title will include photos, quotes and stories of Munger that have “seldom been made public,” said Buffett. Of the 5,000 books, 20 will be signed by Buffett and Sova and made available for shareholders willing to contribute $5,000 to the Stephen Center, a homeless shelter in South Omaha. Buffett promised he would match any funds raised for the center.
The annual shareholder letter will have a new author soon
It’s hard to imagine Berkshire Hathaway without Buffett at the helm. But at age 94, the investor is aware that this reality isn’t too far off. Buffett touched upon “the joys of old age” within his new report, revealing that he now uses a cane.
“It won’t be long before Greg Abel replaces me as CEO and will be writing the annual letters,” said Buffett, referencing the Berkshire Hathaway Energy head who has been selected as his eventual successor. Buffett said that Abel will be sure to maintain the same honesty and candor in future shareholder letters.
“Greg shares the Berkshire creed that a ‘report’ is what a Berkshire CEO annually owes to owners,” he said. “And he also understands that if you start fooling your shareholders, you will soon believe your own baloney and be fooling yourself as well.”
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