Warren Buffett’s 2025 annual letter to Berkshire Hathaway shareholders was more than a financial update—it was a masterclass in long-term investing, humility, and strategic patience. As Buffett nears retirement, this letter may be one of his last, and it’s packed with insights that every investor—retail or institutional—should absorb.
Mistakes and Wisdom: Buffett’s Candid Reflection
Buffett opened the letter with a rare level of vulnerability, admitting to several missteps in acquisitions and management decisions. Echoing Charlie Munger’s timeless advice, he wrote, “Problems cannot be wished away. They require action.” This honesty reinforces one of Buffett’s core principles: acknowledge mistakes early and correct them decisively. For retail investors, this is a reminder that even legends stumble—and that course correction is more important than perfection.
The Power of One Great Investment
Buffett emphasized that a few extraordinary decisions can outweigh dozens of mediocre ones. He cited GEICO, Berkshire’s crown jewel in auto insurance, as a prime example. Under Todd Combs’ leadership, GEICO has undergone a transformation, improving underwriting standards and operational efficiency. Despite industry headwinds, GEICO’s performance in 2024 was stellar, proving that long-term value creation often comes from refining what you already own.
Long-Term Thinking and Capital Allocation
Buffett reiterated his belief that owning shares in outstanding companies is often more effective than acquiring entire businesses. He stressed that truly great businesses are rarely available for full purchase—but investors can still benefit by holding their stock. This aligns with his broader philosophy: buy quality, hold patiently, and let compounding do the heavy lifting.
He also praised Greg Abel, Berkshire’s incoming CEO, for his disciplined approach to capital allocation. Abel’s leadership mirrors Buffett’s own—measured, thoughtful, and focused on long-term value rather than short-term gains.
Berkshire’s Record Tax Contribution
In a striking statistic, Buffett revealed that Berkshire Hathaway paid $26.8 billion in corporate taxes in 2024—more than any other company in U.S. history. This underscores the company’s commitment to reinvesting earnings rather than distributing dividends. For investors, it’s a lesson in the power of retained earnings and the compounding effect of reinvestment.
Equities Over Cash and Bonds
Despite Berkshire’s massive cash hoard—over $344 billion in cash, cash equivalents, and short-term Treasury bills—Buffett reaffirmed his preference for equities. He warned that poor fiscal policy can erode the value of cash and bonds, while high-quality businesses can adapt and thrive. His message was clear: stocks remain the best vehicle for long-term wealth creation.
Companies Buffett Is Betting On in 2025
Buffett’s letter and recent filings revealed several strategic moves in Berkshire’s portfolio. Here are some of the companies he’s backing:
- Constellation Brands (STZ): Buffett increased Berkshire’s stake in this alcohol importer, which owns brands like Corona and Modelo. Despite tariff-related headwinds, Constellation is expanding into non-alcoholic beverages, positioning itself for future growth.
- Pool Corporation (POOL): The world’s leading distributor of pool supplies saw renewed interest from Berkshire. Post-pandemic demand for maintenance products makes POOL a long-term value play.
- Domino’s Pizza (DPZ): Buffett began accumulating shares in 2024 and continued into 2025. Despite labor cost pressures and missed earnings forecasts, Domino’s global footprint and brand strength make it a compelling value investment.
- Sirius XM (SIRI): Buffett now owns nearly 35% of this satellite radio provider. With a dividend yield over 5%, Sirius XM fits Buffett’s preference for income-generating assets.
- Occidental Petroleum (OXY) and Chevron (CVX): Berkshire’s energy sector exposure remains strong, with Occidental now representing over 28% of its outstanding shares. Buffett sees long-term value in energy, especially amid global supply shifts.
- Apple (AAPL), Bank of America (BAC), American Express (AXP), Coca-Cola (KO): These remain Berkshire’s top holdings, accounting for over 70% of its publicly traded portfolio. While Apple’s stake has been trimmed, it still dominates the tech allocation.
- Allegion PLC (ALLE) and Heico-A (HEI/A): New additions in the industrial sector, with Allegion offering security products and Heico specializing in aerospace components.
- Lamar Advertising (LAMR): A rare real estate play for Berkshire, Lamar owns and operates outdoor advertising infrastructure—a strategic bet on physical media in a digital age.
Buffett’s 2025 letter wasn’t just a financial update—it was a philosophical reflection on a legendary career. He praised Greg Abel’s judgment and compared it favorably to Charlie Munger’s, signaling confidence in Berkshire’s future leadership. As Buffett prepares to step down, his legacy remains anchored in timeless principles: value investing, patience, humility, and integrity.
For retail investors, the 2025 letter is a roadmap. It’s a reminder that success in the stock market isn’t about chasing trends—it’s about understanding businesses, staying disciplined, and thinking long-term.
