Berkshire Hathaway (BRK-B): Cash Fortress, Apple Trim, and a Capital-Allocation Crossroads

Berkshire Hathaway's most consequential development in 2024–25: record liquidity and deliberate portfolio pruning#

Berkshire Hathaway [BRK-B] closed FY2024 with $371.43 billion of revenue and $89.00 billion of reported net income, even as management chose to sit on an unusually large pool of liquid assets — a cash and short-term investments balance reported at $334.2 billion — and continued a measured program of trimming its Apple position. That combination of large reported earnings, a dramatic shift toward liquidity and portfolio rebalancing (including reported sales of roughly 20 million Apple shares in Q2 2025) creates a tension that defines Berkshire’s current investment story: continued operating strength at the subsidiaries versus a conservative, optionality-first capital-allocation stance at the parent level.

These moves are not cosmetic. The company’s FY2024 numbers show revenue up modestly year-over-year while operating and free cash flow compressed sharply, forcing a re-evaluation of how Berkshire will deploy its unrivaled firepower without violating its valuation discipline.

How the numbers stack up: revenue, margins, cash flow and balance-sheet posture#

Using Berkshire’s FY2024 reported statements (filed 2025-02-24), revenue rose to $371.43B from $364.48B in FY2023 — a measured increase of +1.91% year-over-year. Gross profit widened to $86.58B and operating income improved to $59.44B, producing an operating margin of 16.00% for FY2024. Reported net income for FY2024 was $89.00B, which implies a FY2024 net margin of 23.96% (net income divided by revenue). The effective tax-like conversion between income before tax ($110.38B) and net income implies an implicit tax/other adjustments pocket of about $21.38B, or an effective rate of approximately 19.37% for the year Berkshire Hathaway FY2024 filings.

Cash-flow dynamics, however, tell a more nuanced story. Net cash provided by operating activities fell from $49.20B in FY2023 to $30.59B in FY2024, a contraction of -37.82%. Free cash flow fell even more sharply to $11.62B in FY2024 from $29.79B a year earlier, a decline of -61.01%. Capital expenditures increased to $18.98B in FY2024, representing roughly 5.11% of revenue, and explaining most of the FCF compression. These figures indicate that while accounting earnings remained strong, the cash conversion profile weakened materially in FY2024 (see table below for trends) Berkshire Hathaway FY2024 filings.

Income-statement trend (FY2021–FY2024)#

The above table shows how net margin and net income have swung materially across years: FY2022 was an outlier negative earnings year driven by investment revaluations, while FY2023 and FY2024 returned to strong positive reported earnings. However, the conversion of reported earnings into free cash flow dropped sharply in FY2024 and warrants scrutiny.

Balance-sheet snapshot and liquidity analysis (FY2021–FY2024)#

Two balance-sheet observations matter for investors. First, Berkshire’s reported cash & short-term investments of $334.2B is the central operational fact underpinning management’s optionality. Second, reported net debt of $95.8B uses cash-and-cash-equivalents in the netting calculation rather than the full cash-and-short-term-investments figure — an accounting convention worth noting because it materially changes leverage ratios depending on which cash aggregate an analyst uses.

Using FY2024 year-end balances, total debt of $143.53B against total equity of $649.37B gives a debt-to-equity of 0.22x (22.11%). Net debt-to-EBITDA using the company’s FY2024 EBITDA ($128.43B) produces approximately 0.75x (95.8 / 128.43). Those leverage metrics indicate a conservatively capitalized holding company with ample headroom for acquisition activity should management choose to deploy capital Berkshire Hathaway FY2024 filings.

Capital allocation: the signals in buybacks, repurchases, acquisitions and the Apple trimming#

Capital allocation is the heartbeat of Berkshire’s investment case. FY2024 shows a markedly lighter pace of share repurchases at the parent level versus peak levels in recent years. Berkshire repurchased $2.92B of common stock in FY2024 compared with $9.17B in FY2023 and much larger activity in 2021. Berkshire also recorded modest net acquisitions activity for FY2024 (acquisitions net of -396 million), while continuing to be a net seller of public equities in mid-2025 according to filings and media reporting.

Crucially, Berkshire continued to trim its [AAPL] position in Q2 2025, selling roughly 20 million shares and reducing its stake to about 280 million shares (disclosed value ~$57.45B) — a move widely reported by market outlets and analyzed in Q2 2025 13F and earnings commentary Seeking Alpha, Forbes, AInvest.

Why this matters: Apple at its peak accounted for a very large share of Berkshire’s public-equity book. Trimming reduces single-stock concentration risk and converts paper gains into liquidity that can be redeployed into whole-business acquisitions or into smaller stakes in sectors where Berkshire sees more attractive risk-adjusted prospects. In Q2 2025 management also disclosed new and increased positions (for example, a reported ~$1.57B stake in UnitedHealth), consistent with rebalancing from a single mega-position into a broader set of durable franchises AInvest, Forbes.

Quality of earnings: a divergence between reported profit and cash conversion#

Berkshire’s FY2024 reported earnings are robust, but the quality of those earnings must be read through the cash-flow lens. Net income of $89.00B contrasts with free cash flow of $11.62B. That divergence is driven primarily by elevated capital spending (capex rising to $18.98B) and a drop in operating cash conversion. For a conglomerate that historically prioritizes acquisition capacity and distributable free cash, the FY2024 cash-conversion drop is notable.

Analysts and investors should watch whether FY2024’s free-cash-flow trajectory is a one-off driven by timing, or the start of a multi-year normalization that will constrain large acquisitions without dipping into the large pool of liquid securities. Management’s preference — keep a cash war chest and act only when prices meet strict return thresholds — suggests the latter is more likely: patience and preservation of optionality rather than aggressive deployment.

Reconciling data inconsistencies: methodology matters#

When synthesizing reported metrics, two recurring issues arise from the filings and datasets. First, different cash aggregates are used in different metrics: 'cash and short-term investments' versus 'cash and cash equivalents'. The company’s reported cash & short-term investments of $334.2B includes marketable securities that Berkshire treats as part of its investible stockpile, while reported net debt uses the narrower cash & cash equivalents balance of $47.73B to calculate net debt of $95.8B. Analysts should therefore be explicit which cash aggregate they use when computing leverage.

Second, TTM ratios published in some data feeds (e.g., TTM ROE or net-debt-to-EBITDA) can differ materially from comparable year-end calculations. For example, a TTM ROE figure published at 9.68% contrasts with a FY2024-derived ROE of about 14.71% when calculated as net income divided by average shareholders’ equity (average of FY2023 and FY2024 equity). The difference arises from the time window and whether one uses TTM net income, trailing-year averages, or year-end snapshots. We prioritize direct recomputation from the FY2024 consolidated financial statements for the headline metrics below and explicitly flag TTM feed differences when relevant.

Competitive and strategic posture: diversification and selective secular exposure#

Berkshire’s portfolio rebalancing in 2025 — trimming concentrated positions like [AAPL] and adding stakes across healthcare, energy, industrials and housing — signals a deliberate attempt to diversify exposures and reduce concentration risk. Adding to companies like UnitedHealth, Chevron and Nucor indicates a tilt toward cash-generative, cyclical and defensive segments where Berkshire’s scale and long-horizon capital can be an advantage.

This is not a change in investment philosophy; rather it is an execution-level adjustment: maintain the same long-term, franchise-led allocation discipline while managing position sizing and tax/timing realities more actively. Given Berkshire’s holdings in insurance float and operating subsidiaries that are heavily tied to the U.S. economy, the firm’s competitive advantage remains its cash generation at operating-company level plus an unmatched liquidity cushion for large private acquisitions.

Risks and near-term catalysts to watch#

There are three primary risk vectors and catalysts that will determine Berkshire’s financial and strategic trajectory over the next 12–24 months. First, continued deterioration in free cash flow or persistent capex growth at operating subsidiaries would constrain large-scale acquisitions unless Berkshire elects to monetize parts of its securities portfolio (the Apple sales program is illustrative). Second, market re-ratings of large equity holdings (especially concentration names) could produce volatility in reported earnings and shareholders’ equity and therefore affect leverage and ROE calculations. Third, underwriting and catastrophe risk in the insurance businesses can quickly change liquidity needs if losses spike.

Catalysts include large acquisition opportunities that could reorient how management deploys the $334.2B investible stockpile, meaningful changes in the pace of share repurchases, or a resumption of larger stake-building in high-conviction public equities should valuations compress.

What this means for investors#

Berkshire’s FY2024 results and Q2 2025 portfolio moves indicate a holding company that remains financially robust and strategically cautious. The headline numbers — $371.43B revenue, $89.00B net income, $334.2B cash & short-term investments — provide both reassurance about the scale of Berkshire’s operating engine and a reminder that reported accounting earnings are not the whole story when free cash flow and acquisition capacity matter more.

Investors should focus less on short-term share-price reaction to portfolio trims and more on three measurable signals: the evolution of operating cash flow and free cash flow over the next two reported quarters, management’s pattern of deploying the cash & short-term investments buffer into whole-business acquisitions versus public-equity buys, and the insurer-loss environment that determines float and capital availability.

Key takeaways: Berkshire is structurally strong, deliberately liquid, and executing a cautious rebalancing away from a single mega-position toward broader sector exposures. The company’s flexibility is its core asset; the near-term story hinges on whether management converts that flexibility into meaningful acquisitions or maintains the cash buffer until larger, rare opportunities appear.

Conclusion — the investment story distilled#

Berkshire Hathaway in FY2024 remains a cash-rich conglomerate with solid reported earnings and a conservative capital-allocation posture. The company deliberately trimmed concentration risk (notably in [AAPL]) and increased select positions across several industries while allowing free cash flow to compress temporarily due to higher capex and lower operating cash conversion. For stakeholders, the essential dynamic is clear: Berkshire has chosen optionality over pace. That choice preserves the ability to act, but it also raises the bar for management to demonstrate that sizable deployments will deliver meaningful return on invested capital rather than simply reduce the company’s liquidity advantage.

Monitor the coming quarters for whether free cash flow recovers, whether Berkshire pivots from a preservation posture to active deployment, and whether sales of concentrated positions continue or stabilize. Those developments will determine whether this phase becomes a prelude to large strategic acquisitions or a prolonged era of measured portfolio rebalancing.

(Analysis based on Berkshire Hathaway FY2024 consolidated financial statements and Q2 2025 portfolio disclosures; reporting and market context referenced from Berkshire investor publications and contemporary coverage Berkshire Hathaway, Seeking Alpha, Forbes, AInvest.