Warren Buffett’s annual letter to Berkshire Hathaway shareholders, released in February 2025, provides insight into how he is navigating an expensive stock market. The message is clear. While many investors chase record highs, Buffett remains patient. Berkshire’s cash reserves have grown to an unprecedented $334.2 billion, reflecting his disciplined approach. Even with significant capital at his disposal, he has resisted making large moves, waiting for opportunities that align with his strict value-based philosophy.

Despite his caution, Buffett has not remained on the sidelines. He has selectively placed new bets in industries where he sees long-term value. One of his biggest moves was increasing Berkshire’s stake in Occidental Petroleum to approximately 28 percent. While energy stocks have been volatile, Buffett remains confident in companies with strong cash flow and consistent earnings. He also invested over $1 billion in Constellation Brands, the parent company of Corona and Modelo, reinforcing his trust in businesses with strong consumer brands.

Beyond the United States, Buffett has expanded Berkshire’s holdings in Japan’s five largest trading houses: Itochu, Marubeni, Mitsubishi, Mitsui, and Sumitomo. By the end of 2024, his investment in these firms totaled $23.5 billion, with the possibility of increasing ownership beyond the previous ten percent limit. These companies operate in industries from commodities to logistics and fit Buffett’s preference for diversified businesses with stable returns. His growing investment in Japan reflects confidence in the country’s economy and a willingness to seek value beyond traditional U.S. markets.

While adding to certain positions, Buffett has also trimmed stocks when necessary. Apple remains Berkshire’s largest stock holding, but he reduced the position by selling approximately 10 million shares in late 2023. This move was not a sign of doubt in the company but a decision to maintain portfolio balance, as Apple had grown to nearly 45 percent of Berkshire’s stock portfolio.

Some investor’s view Berkshire’s massive cash reserves as excessive, but Buffett sees them as a strategic advantage. Instead of chasing expensive stocks, he has allocated capital to U.S. Treasury bills, earning returns while waiting for stock prices to reach more reasonable levels. This is not market timing but a disciplined refusal to overpay. His letter makes it clear that Berkshire prefers to own businesses but only at the right price. In a market where valuations remain high, Buffett is willing to wait, even if it means sitting on cash for an extended period. His approach reflects a rational mindset, avoiding emotional decisions, maintaining flexibility, and ensuring that every investment aligns with long-term objectives.

Buffett’s latest actions offer key lessons for investors. His patience reinforces the importance of waiting for the right opportunity rather than reacting to market excitement. Holding cash in an overheated market is not hesitation but preparation for future investments. His preference for quality businesses with strong fundamentals, from Apple to Japanese trading houses, highlights the importance of selecting companies with reliable earnings and competitive advantages. Just as important is knowing when to step back. Trimming Apple and exiting Paramount show that even the most experienced investors regularly reassess their holdings and sell when needed.

At 94 years old, Buffett remains the ultimate example of a rational investor. Selective, disciplined, and always focused on the long game, his ability to resist market hype and focus on real value has made Berkshire Hathaway one of the most successful investment firms in history. His latest letter serves as a reflection of his strategy and a reminder that lasting success is built on patience, prudence, and sound decision-making. While speculation may dominate headlines, Buffett’s approach continues to prove that rational investing wins in the end.

Sources: Berkshire Hathaway, Factset

About Beese Fulmer Private Wealth Management

Beese Fulmer Private Wealth Management was founded in 1980 and is one of Stark County’s oldest and largest investment management firms.  The company serves high-net-worth individuals, families, and non-profits, and has been ranked as one of the largest money managers in Northeast Ohio.