Even the Oracle of Omaha, widely considered one of the most successful investors, has not been able to outperform the booming S&P 500 in recent years.
The stock of Warren Buffett’s holding company Berkshire Hathaway has nearly equaled the return of the S&P 500 for the past two decades, according to MarketWatch.
“As Buffett has acknowledged in prior annual shareholder letters, Berkshire Hathaway’s sheer size now makes it much more difficult to find companies that are both significantly undervalued and large enough to make a difference to Berkshire’s bottom line,” writes MarketWatch contributor Mark Hulbert.
Another reason could involve the influence of the portfolio’s co-managers Todd Combs and Ted Weschler, who were hired in 2010 and 2011, respectively. Before that, Buffett managed Berkshire’s portfolio by himself.
Buffet has previously acknowledged the efficiency of the S&P 500. In an annual letter to shareholders in 2013 he said 90% of his wife’s inheritance would be invested in an S&P 500 index fund.
“One bequest provides that cash will be delivered to a trustee for my wife’s benefit,” Buffett wrote in the letter. “My advice to the trustee could not be more simple: Put 10% of the cash in short-term government bonds and 90% in a very low-cost S&P 500 index fund.”
Buffett’s latest moves
Buffett’s latest letter to shareholders, along with Berkshire Hathaway’s earnings report, is set to come out next Friday (Feb. 23).
In the meantime, recent US Securities and Exchange Commission filings have provided insight into Buffett’s recent stock moves—for example, Berkshire Hathaway sold off about 1% of its stake in Apple in the last quarter of 2023.
The company now has a 5.9% stake in the tech giant, worth about $176 billion, according to the Wall Street Journal. That is still over half of the company’s more than $300 billion stock portfolio.
During the same period, Berkshire Hathaway has increased its stake in Chevron by 18% to more than $18 billion, according to Forbes, and also grew its stake in Occidental Petroleum by almost 9% to about $14.5 million.
Its stake in the satellite radio company SiriusXM increased to about $220 million, MarketWatch reported.