Warren Buffett’s eagerly anticipated annual letter lands Saturday. Here’s what to expect
Warren Buffett is about to address shareholders and countless admirers following a series of market-moving events — a fresh trade war, devastating wildfires as well as a shocking stock-selling spree at his own Berkshire Hathaway . The 94-year-old “Oracle of Omaha’s” must-read annual letter will be released Saturday at 8 a.m. ET along with Berkshire’s fourth-quarter earnings. Investors are more eager than ever to hear from Buffett about his thinking on the broader market as well as any impact he sees from President Donald Trump ‘s punitive tariffs and the California wildfires on Berkshire’s sprawling businesses. Wildfire exposure While Berkshire, an insurance giant, doesn’t have a huge footprint in the California markets, its large reinsurance business could still see a hit as it absorbs some of the insured losses from the Los Angeles wildfires, which are likely to be the costliest in U.S. history. “It appears that insured losses are going to be in excess of $40 billion. So that’s pretty substantial losses here that are yet to be disclosed,” said James Shanahan, Berkshire analyst at Edward Jones. “Berkshire could have some exposure here to the California wildfires, and it could be large.” Analysts and investors are watching closely for disclosures related to the wildfires in the earnings report. UBS’ Brian Meredith estimated $1 billion in insured loss for Berkshire Reinsurance and a $150 million loss for Berkshire Primary, whose coverage includes commercial property, health-care liability and business owners’ insurance. CFRA analyst Catherine Seifert expects that Geico, a leading auto insurer in California, will incur claims from the California wildfires, but it will be manageable. Tariff impact Buffett, who opined at length in 2018 and 2019 about the trade conflicts that erupted during Trump’s first term, could again comment on the president’s latest high-stakes battle. Trump slapped 25% tariffs on goods from Mexico and Canada , and 10% tariffs on goods imported from China . (The Mexico and Canada tariffs were paused for 30-days on Feb. 3.) A 25% tariff on steel and aluminum imports is set to take effect in March. Years ago, the CEO and chairman of Berkshire called tariffs “a tax on consumers” in an interview. He said back then that aggressive trade policies could cause negative consequences globally, including triggering inflation that could hurt consumers. Investors will also be looking for any color on tariffs in the 10K from Berkshire’s portfolio companies. For example, a materials and construction business may be experiencing a challenging time importing lumber from Canada. Dumping stocks It appears Buffett is not yet done with his stock-selling spree as Berkshire offloaded more Bank of America shares in the fourth quarter. The stake, about 680 million shares at the end of 2024, is now below the important 700 million threshold, which is the number of shares Berkshire acquired through low-priced warrants in 2011. “The thought has been that if the stake fell below 700M, then there might be more to go,” Piper Sandler’s analyst R. Scott Siefers said in a note. BAC 1Y mountain Bank of America Overall, Berkshire’s stock sales have exceeded stock purchases for nine consecutive quarters, according to Shanahan. As a result, the conglomerate’s monstrous cash pile topped a record $300 billion in the third quarter of 2024. “There hasn’t been any opportunity to buy any operating company and he hasn’t been making substantial investments in new public stocks. The cash balance continues to grow and grow and grow,” Shanahan said. “I think he’s telling us here that he thinks that markets are expensive, stocks are expensive, even his own stock.” Succession Buffett also spent the past year or so settling outstanding litigations and issues on Berkshire’s balance sheet, paving the way for his successor Greg Abel to eventually take over. Berkshire bought out the remaining 8% of Berkshire Hathaway Energy from Walter Scott’s family, now owning 100% of the utility unit. Meanwhile, the Haslam family has sold its remaining 20% ownership interest in truck-stop giant Pilot Travel Centers to Berkshire after settling a billion-dollar lawsuit. “He could be setting up the company for transition and leadership,” Shanahan said. “He’d want to give Greg Able an opportunity to be successful by reducing outsized investments in the equity portfolio, by settling outstanding litigation, by building a big cash balance to be able to immediately go to the market and make some major investments that would put his fingerprints all over the business.”
