This Year’s Berkshire Annual Shareholders Meeting: Key Takeaways
This year’s Berkshire Hathaway annual shareholders meeting covered a range of topics, from investment strategies in Japan to the deployment of massive cash reserves, challenges in the insurance industry, the potential impact of artificial intelligence (AI), succession planning, and timeless life advice. Here, we provide a summary of the key points.
(Background: Coca-Cola’s stock price defies trends and reaches new heights! Can learning from Buffett protect your investments from economic downturns?)
(Context: Buffett holds a significant amount of U.S. Treasury bonds! Berkshire’s holdings exceed $300 billion, far surpassing the Federal Reserve; what calculations is the ‘Oracle of Omaha’ making?)
Buffett’s Announcement
The annual Berkshire Hathaway shareholders meeting has just concluded. In addition to the shocking announcement by the ‘Oracle of Omaha,’ Warren Buffett, that he will step down as CEO by the end of this year, with current Vice Chairman Greg Abel set to take over, the meeting featured hours of discussions. Buffett, along with his designated successor Greg Abel and insurance business head Ajit Jain, shared diverse perspectives on various topics, including investments in Japan, cash holdings, challenges in the insurance industry, the impact of AI, and comparisons between real estate and stocks. Below is a summary of the key points.
Investment Insights from Japan: The Dilemma of Value Discovery and Scale
Buffett began by discussing Berkshire’s notable investments in Japan in recent years. He acknowledged that investments in Japan’s five major trading companies (Itochu, Marubeni, Mitsubishi Corporation, Mitsui & Co., and Sumitomo Corporation) align perfectly with Berkshire’s investment style: understanding the business, trustworthy management, reasonable valuations, and long-term potential. Buffett even expressed a desire for these positions to grow significantly larger than their current size of around $20 billion, stating, “I would rather have $100 billion than $20 billion.”
The origin of these investments is quite legendary, stemming from Buffett perusing a thick directory of Japanese companies. He reiterated that this is a seemingly old-fashioned yet extremely effective treasure hunt. “What you can find is astonishing,” Buffett said. “Very few people actually flip through every page, and those who do won’t tell you what they discovered. So you have to do a bit yourself.”
However, Buffett also pointed out a sweet dilemma facing Berkshire: scale. “It’s a bit unfortunate that Berkshire has become so large,” he lamented, “Scale is the enemy of Berkshire’s performance, and I don’t know of any good way to address that issue.” Even large enterprises like Japan’s five trading companies have relatively limited impact on Berkshire, which has nearly a trillion dollars in assets. This indicates that achieving excess returns will be more challenging for Berkshire in the future.
Cash is King?
As of the end of the first quarter of 2025, Berkshire’s total cash and short-term Treasury bills reached a record $300 billion. Shareholders naturally wonder whether such a massive cash reserve is a hedge against the market’s high valuations or a way to provide flexibility for successor Abel.
Buffett made it clear that holding a large amount of cash is not intentionally paving the way for Abel. “I wouldn’t do anything so noble as to not invest myself in order to make Greg look better later,” he joked. In fact, holding substantial cash reflects Berkshire’s opportunistic strategy. “We run a very, very, very opportunistic business,” Buffett emphasized. “A problem in the investment industry is that things don’t appear in an orderly fashion, and they never will.”
He stated that Berkshire would rather wait for extremely attractive “pitches” to come along than be forced into mediocre decisions in pursuit of complete investment. “If you tell me I must invest $50 billion every year until we get down to $50 billion, that would be the dumbest investment strategy in the world.”
Buffett believes that market timing is unpredictable, and attempting to forecast short-term market trends is futile. “No one knows what the market will do tomorrow, next week, or next month.” Instead of listening to market noise, focus on “flipping through every page” to find undervalued opportunities.
He is confident that, although he does not know when, there will be attractive investment opportunities again, and when that happens, Berkshire’s ample cash will be very useful. “It could be next week. It could be five years from now, but it won’t be fifty years from now… We will be very happy we have cash.”
This strategy’s essence lies in the combination of patience and decisiveness. On one hand, one must be patient and unafraid of missing mediocre opportunities; on the other, when a real big opportunity arises, one must be ready to act quickly. “We’ve made a lot of money because we’ve been willing to act faster than anyone else around,” Buffett stated. “Sometimes you have to act quickly… If the opportunity arises, do something that afternoon. You don’t want to be patient when it comes to meaningful transactions.”
Abel added that while maintaining patience, Berkshire’s management team has not been idle; rather, they have been leveraging this time for extensive reading and research to prepare for the next decisive action. “Being patient means using it to prepare well.”
Challenges in the Insurance Empire: Competition, AI, and Autonomous Driving
The insurance business is one of Berkshire’s core engines, significantly contributing underwriting profits and investable float. Discussions on the insurance industry also took up a significant portion of the shareholders meeting.
GEICO’s Remarkable Transformation: Ajit detailed GEICO’s significant improvements in recent years. GEICO has caught up with competitors in two key areas: achieving “rate and risk matching” through more precise data analysis, and significantly developing telematics, transforming its disadvantages into advantages.
At the same time, GEICO has undertaken massive cost reductions, laying off a large number of employees, which has significantly improved operational efficiency. These measures have enabled GEICO to achieve extremely low combined ratios for several consecutive quarters, greatly enhancing profitability.
Private Equity: In recent years, large private equity firms (such as Blackstone, Apollo, and KKR) have surged into the insurance industry, particularly in the life insurance sector, attempting to replicate Berkshire’s model of investing using float. Ajit candidly acknowledged that these new players have made Berkshire less competitive in certain acquisition deals due to their higher leverage and more aggressive investment strategies. “We are no longer competitive in this area… In the past three or four years, I believe we haven’t completed a single transaction.”
Ajit pointed out that private equity firms, in a low-interest-rate environment, allocate insurance assets to riskier investments in pursuit of returns. He warned: “There is always this kind of…
Danger, at some point, regulators may become irritable… it could end in tears.
Berkshire Hathaway chooses to avoid such fiercely competitive fields based on a prudent assessment of risk and return. Buffett added that these imitators often merely replicate models but lack the long-term commitment and fiduciary responsibility to tie their wealth deeply to the company.
The Potential and Prudence of AI:
The impact of artificial intelligence on the insurance industry is another hot topic. Ajit believes that AI will undoubtedly become a “game changer,” bringing transformation in risk assessment, pricing, sales, and even claims processing. However, Berkshire has adopted a “wait and see” prudent approach. “We are not good at being the fastest or the first mover,” Ajit stated, noting that Berkshire would make substantial investments once opportunities become clear and risks manageable. Buffett expressed immense trust in Ajit’s capabilities: “I wouldn’t trade everything that will happen in AI over the next 10 years for Ajit… If given a choice… or let Ajit make the decision, I would always choose Ajit.”
The Future of Autonomous Driving:
Regarding the disruptive potential of autonomous vehicles on the auto insurance business, Ajit analyzed that with the proliferation of autonomous driving technology and a decrease in accident rates (mainly due to a reduction in operator errors), the demand for traditional auto insurance may decline. The focus of insurance will shift from underwriting “driver risk” to underwriting “product liability risk” (e.g., defects in car design or manufacturing). However, he also pointed out that while accident frequency may decrease, the repair costs per incident could significantly rise due to increased vehicle technology. How these two factors interact and their impact on overall insurance costs remains uncertain. Buffett viewed the changes from a more macro perspective, believing that all businesses will evolve, just as Berkshire transitioned from textiles; the key lies in continuous thinking and adaptation. “You will have to keep thinking about things… you should wake up every morning thinking about this question.”
Why is Abel the Successor?
Regarding the succession issue, a shareholder asked Buffett about the specific reasons for choosing him. Buffett took this opportunity to elaborate on his views on leadership and his trust in Abel. He emphasized that Berkshire’s success lies not only in its vast assets and unique business model but also in a culture built on trust. “It requires gathering a small group of core people around you… where you have mutual trust, and where people do more than their share.” Buffett praised past board members like Tom Murphy, Sandy Gottesman, and Walter Scott, considering them trustworthy and contributing partners. From Buffett’s perspective, Abel was chosen because he deeply understands and aligns with Berkshire’s culture, possesses a long-term vision, and demonstrates sound decision-making capabilities that can uphold and pass on the company’s core values. “We need someone like Abel, who understands how we operate… he understands capital allocation… he knows our business extremely well… and he is a very good person.” Although Buffett did not list Abel’s specific traits, the message he conveyed was clear: Abel not only possesses outstanding abilities, but more importantly, he is highly aligned with Berkshire’s culture and values. Abel humbly responded, expressing immense honor in being part of Berkshire and working with Buffett, Jain, and other colleagues for over 25 years. “When you find something as special as Berkshire, you fall in love with it, and it becomes something you want to do every day.” His words revealed a passion and commitment to Berkshire’s mission.
Wisdom Across Cycles: Investment and Life Maxims
Throughout the shareholders’ meeting, Buffett shared many time-tested investment principles and life wisdom:
Investment: The Art of Patience and Decisiveness:
Buffett reiterated that the key to investment success is the combination of immense patience and the ability to act decisively at critical moments. Waiting for “sweet spot” opportunities requires patience, but once opportunities arise, swift reaction is necessary. He also cautioned investors not to be troubled by short-term market fluctuations. “If a 15% drop in your stock affects you, you need a slightly different investment philosophy because the world won’t adapt to you. You will have to adapt to the world.” He predicted that the market would continue to see drastic fluctuations, making the right temperament essential.
Work: Seek Passion, Not Just Pay:
“What you are really looking for in life is a job you would hold even if you didn’t need the money.” Buffett encouraged young people to seek careers they genuinely love and can invest in long-term, even if it takes time. “Find that song, find that voice.” He illustrated the importance of finding one’s passion through the story of Glenn Miller discovering his unique band sound.
Choose Good Partners:
“Who you associate with is extremely important… you will develop in the direction of those with whom you work, whom you admire, and who become your friends.” Buffett emphasized the importance of surrounding oneself with those who are better and can inspire one to improve, while avoiding those who might have a negative influence. “Be very careful whom you work for, as you will pick up the habits of those around you.”
Setbacks: A Part of Life, Stay Positive:
When asked how to deal with setbacks, Buffett admitted that setbacks are a part of life and cannot be avoided. “Everyone will encounter setbacks.” The key is to maintain a positive mindset and focus on the good in life. “Look for the bright side, do your best.” He believes that living in the present era is itself a tremendous fortune that should be cherished and fully utilized.
Trust: The Most Valuable Asset:
Buffett frequently mentioned that one of Berkshire’s core competitive advantages is the trust people have in it. This trust is the result of decades of consistent integrity and rational management. “The biggest pleasure in this industry is to make people trust you.” This is also the source of his motivation to continue working at over ninety years old.
Legacy and Future
This year’s Berkshire shareholders’ meeting was not only a financial reporting session but also akin to a lively class on value investing and life philosophy. Especially as it may be Buffett’s last full participation, the future transition of leadership to Abel will determine whether Berkshire’s culture and values can be effectively passed on, which will be a focal point of market attention.
