Tonight, the highlights of Berkshire Hathaway's earnings report and shareholder letter are here!

At 9:00 tonight Beijing time, Berkshire Hathaway, owned by Warren Buffett, will release the fourth quarter and full-year 2023 earnings report, along with Buffett's letter to shareholders, eagerly anticipated by global investors.

The annual Buffett shareholder letter has become a 58-year tradition in the global investment community. What will the Oracle of Omaha say this year?

The market is closely watching five key issues: Berkshire Hathaway's cash reserves, Buffett's secret new investments, the company's positioning in the oil sector, the reduction of Apple stock holdings, and the company's future succession plan.

On Friday, Berkshire Hathaway's stock price rose slightly, with a year-to-date increase of about 16%. Since 1965, Berkshire Hathaway has achieved a compound annual growth rate of 19.8%, nearly double that of any fund tracking the S&P 500 index.

Berkshire Hathaway's major investments are concentrated in five stocks, including Apple, Chevron, Bank of America, American Express, and Coca-Cola, which account for approximately 75% of its total investment portfolio value.

No.1 Cash is Still King?

As of the end of the third quarter, Berkshire Hathaway held around $157.2 billion in cash and cash equivalents, reaching a historical high. This massive cash reserve is mainly held in short-term Treasury bills.

However, U.S. short-term interest rates have declined since the end of the third quarter, which may reduce Buffett's motivation to further increase his cash reserves.

At the end of last year, the interest rate on U.S. 6-month Treasury bills was around 5.26%, down from about 5.55% at the end of September. Analysts expect Berkshire Hathaway to continue using acquisitions or stock buybacks as part of its capital allocation strategy.

No.2 What is the Mystery New Investment?

Buffett may reveal his secret new investment in the annual report.

Berkshire Hathaway has twice applied to the U.S. Securities and Exchange Commission to temporarily keep secret the new investment he started building since the second quarter of last year.

Buffett stated that his investment plans are often imitated by retail and institutional investors, and keeping his buying plans private will give him more control over future stock purchases. SEC rules allow for a confidentiality period of up to one year.

There is speculation that Buffett or his colleagues may be accumulating shares of a U.S. financial services company.

No.3 Behind the Significant Increase in Oil Stock Holdings, What is Buffett Thinking?

Berkshire Hathaway's latest 13-F filing shows that it has increased its holdings in the second-largest U.S. oil company, Chevron, to 126.1 million shares, accounting for about 5% of its $371 billion investment portfolio, making it the fifth-largest holding in Buffett's $371 billion investment portfolio. Warren Buffett still holds a 27% stake in Occidental Petroleum, and may increase his ownership to 33% through preferred shares and warrants.

These holdings directly link Berkshire Hathaway's overall financial commitments to the health of the U.S. economy. Buffett's comments on the health of the U.S. economy and its ability to avoid a recession this year will be crucial to Berkshire Hathaway's performance.

Will No.4 continue to reduce its holdings in Apple?

Buffett has long advocated the value of holding shares in Apple, believing that the iPhone is "extremely undervalued" compared to the value it provides to consumers.

However, Berkshire Hathaway's SEC 13-F filing for the fourth quarter showed a reduction of about 10 million shares of Apple. Apple remains Buffett's largest single holding, with approximately 905 million shares valued at around $174 billion.

With doubts about Apple's growth prospects and its lagging position in the AI field, Apple's stock performance has been lackluster. Investors will be watching for Buffett's comments on Apple or the broader tech industry.

Any indication that Berkshire Hathaway is seeking to diversify its tech investments beyond Apple would be significant news for investors.

About Munger and Successors

Buffett is likely to dedicate a significant portion of this year's annual letter to commemorate his good friend and long-time business partner, Charlie Munger.

Munger passed away on November 28 last year, just a month before his 100th birthday.

Munger's passing has once again brought the issue of succession to the forefront. Buffett has previously stated that he is "playing in overtime," and in this shareholder letter, he may once again address the issue of succession, outlining a future for the company without him.

Greg Abel, born in Canada and in charge of Berkshire Hathaway's non-insurance businesses, is seen as Buffett's clear successor. Buffett mentioned to the media in 2021, "If something happens to me tonight, Greg will take over tomorrow morning."