Warren Buffett’s mighty Berkshire Hathaway pulled ahead of the S&P 500 in 2024, marking its brightest performance since 2021. Last year, the conglomerate’s Class A shares, based out of Omaha, Nebraska, made an impressive jump of 25.5%, outshining the S&P 500’s 23.3% return. During the year, Berkshire’s shares soared past the $700,000 mark, securing their ninth consecutive year of positive growth.
Despite Buffett pausing the company’s stock buyback program as prices climbed, they still achieved strong results, thanks largely to robust operational earnings. Geico, their auto insurance gem, played a significant role with solid investment income and underwriting earnings boosting Berkshire’s success.
By the close of September 2024, Berkshire’s war chest had swelled to an eye-popping $325 billion, almost double the $168 billion at the end of 2023. The uptick in interest rates, though shy of their peak, still allowed Berkshire to earn notable returns on their cash reserves. This mammoth cash pile was largely accumulated through surprising reductions in their stakes in Apple and Bank of America, Buffet’s two largest holdings at the start of the year. Throughout much of 2024, he sold stocks worth $133 billion.
Geico, often fondly referred to by Buffett as his “favorite child,” continued its impressive recovery in 2024. It achieved an underwriting profit of $5.7 billion in the first three quarters, more than doubling the $2.3 billion from the same period in the previous year. Back in 2022, Geico was shouldering a $1.9 billion pretax underwriting loss due to relinquishing market share to Progressive, who had gained ground with telematics—technology that uses driving data to adjust insurance pricing.
Geico’s gains were crucial, as they helped balance weaknesses in other parts of Berkshire’s insurance sector, such as the Primary Group and Reinsurance Group, which faced an underwriting loss in the third quarter of 2024.
Though Berkshire managed to outdo the S&P 500 last year, Buffett has been careful to set modest expectations for the future, given the colossal size of his company. He pointed out that it’s tough to make substantial gains with such extensive financial resources. Still, he reassures that Berkshire’s broad and high-quality portfolio—from railways like BNSF to delightful businesses like See’s Candies—should deliver slightly better results than the average American corporation, albeit with notably reduced risk of permanent capital loss. “Anything beyond ‘slightly better,’ though, is wishful thinking,” Buffett mentioned in his 2023 annual letter.
Nonetheless, Buffett’s long-term performance remains unmatched. Since he took the helm in the 1960s, Berkshire Hathaway, spanning 40 industries and 60 companies, has consistently doubled the average annual return of the S&P 500.
