Berkshire Hathaway may fall short of five-year S&P test for first time
Warren Buffett, the billionaire investor known as the Oracle of Omaha, may miss his investing goal for the first time in more than four decades.
The chairman and chief executive of investment firm Berkshire Hathaway might soon disclose his Omaha company failed over the last five years to boost its net worth more quickly than the Standard & Poor’s 500 Index, Bloomberg reported. That five-year comparison has been used by Buffett to demonstrate his company’s performance over time.
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When considered on an annual basis, the company has already failed nine times to show a percentage increase in book value that was greater than the S&P percentage gain.
The S&P 500 returned 97.6% over the last five years; with dividends thrown in, that rate jumped to 128%. In comparison, the value of Berkshire per Class A share climbed 80% for a similar stretch that ended Sept. 30, the latest period with available data.
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Bloomberg reported analysts predict the company will miss the mark when taking into account the full 2009-13 period. Barclay said Berkshire’s book value will jump 86% over that time. Investment banking firm Keefe, Bruyette & Woods estimated an increase of 83%, the report said.
In his annual letter to shareholders last March, Warren Buffett himself predicted Berkshire might miss its target for the first time given the rapid gains of the S&P.
“The S&P has now had gains in each of the last four years, outpacing us over that period,” he wrote. “If the market continues to advance in 2013, our streak of five year wins will end.”
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