The 2024 annual letter from #WarrenBuffett may be the last one he sends to shareholders as CEO, as Greg Abel is expected to take over this position. Buffett acknowledges this and emphasizes that Abel will continue to uphold Berkshire Hathaway's core values:

"At 94, it won’t be long before Greg Abel takes over as CEO and will write the annual letters. Greg will continue to share Berkshire's philosophy through an 'annual report', which is something a Berkshire CEO must send to shareholders each year. And he also understands that if you start lying to your shareholders, you will soon believe those lies yourself and deceive yourself."

Buffett continues to emphasize transparency in the company's financial reporting, especially the acknowledgment of both successes and mistakes, adhering to the principle: "praise by name, criticize by category."

1. Acknowledging mistakes - A rare culture on Wall Street

Throughout his career, Buffett has always been known for his honesty in admitting mistakes, which he continues to emphasize in this letter:

He acknowledges that some of the business acquisition deals from #Berkshire were poorly capital allocation decisions. He also admits mistakes in assessing management capabilities, which can have serious consequences, similar to a failed marriage. Buffett highlights the importance of quickly recognizing and addressing issues, rather than hiding or delaying.

Notably, Buffett has used the words "mistakes" or "errors" 16 times in the annual letters from 2019 to 2023 – a stark contrast to other large corporations, which rarely acknowledge any errors in their financial reports.

2. Dividend policy: Loyal to the inherent philosophy

Berkshire Hathaway has only paid a dividend once in its history – in 1967, with a payment of $101,755 (equivalent to 10 cents per Class A share).

Buffett recalls this event with regret:

"I don't remember why I proposed this action to the Berkshire board. Now, it feels like a bad dream."

The decision not to pay dividends reflects Buffett's long-standing philosophy: reinvest profits instead of directly sharing them with shareholders, helping Berkshire expand and maintain long-term growth.

3. The insurance sector – The main driver behind Berkshire's growth

The insurance business model remains one of the strongest pillars of Berkshire Hathaway, providing a significant advantage in capital allocation.

Premiums are paid upfront, while claims are processed later, providing the company with significant cash flow for investment. Buffett states that estimates of Berkshire's insurance losses have remained accurate to date, proving its tight risk management capabilities.

This reinforces Buffett's view that insurance is one of the most effective business sectors, helping Berkshire maintain a strong financial position even in times of instability.

4. Expanding investments beyond the U.S. – A long-term strategy

One notable new point in the letter is Berkshire Hathaway's expansion of investment in Japan.

Since 2018, the company has invested in five leading trading conglomerates in Japan, including:

ITOCHU Marubeni Mitsubishi Mitsui Sumitomo

These companies have a diverse portfolio across many global industries, similar to how Berkshire operates. This can be seen as Buffett's strategic move to reduce dependence on the U.S. market and capitalize on investment opportunities in Asia, which still has significant growth potential.

Conclusion: A farewell from a legend

This year's letter is not only a financial summary but also carries the meaning of a generational transfer. Buffett affirms that Greg Abel will continue to uphold Berkshire's culture of transparency and financial discipline.

With sustainable investment principles, focusing on intrinsic value and honesty in corporate governance, Berkshire Hathaway will remain one of the strongest companies in the world, even when Buffett is no longer in control.

This may be Buffett's farewell letter, but his investment philosophy will certainly continue to influence the financial world for decades to come. #anhbacong