2009 was not a great year to be a Berkshire Hathaway shareholder. While the S&P 500 returned 23.5%, BRK.A stock had a gain of only 2.7%, lower than a ten year treasury note. The year was not without major criticism of CEO Warren Buffett for the price he paid for the purchase of Burlington North. While this purchase did not greatly affect 2009 returns, it concerned many investors that it will reduce returns in years to come.
2008 was not a very good year either for a Berkshire shareholder. While the stock outperformed the S&P be several points, the stock had a -31.8% return. Buffett was criticized for his purchase of preferred shares in Goldman Sachs and General Electric near the end of 2008, due to many investors belief the companies were insolvent. However this criticism quickly went away, when Bloomberg reported several months ago that Buffett has a several billion dollar paper gain on the Goldman deal, in addition to a hefty 10% a year dividend.
The past three years the S&P 500 outperformed Berkshire stock. This is the first three year winning margin over Buffett since the tech bubble years. However, the important statistic is Buffett’s 10 year record. Buffett beat the S&P 500 in 6 out of 10 years. As many other value investors note, Buffett would rather underperform in bull markets, if he can outperform in bear markets. I think he largely accomplished this in 2008, even if 2008 was his worst year ever. Berkshire had a 76% total return for the past ten years in contrast to the S&P 500’s 24.1% negative return. For the record BRK has produced annual gains of 27.7% since 1977 versus 8.8% for the S&P 500.
images courtesy of Cnbc.com
disclosure: long GS and GE
2008 was not a very good year either for a Berkshire shareholder. While the stock outperformed the S&P be several points, the stock had a -31.8% return. Buffett was criticized for his purchase of preferred shares in Goldman Sachs and General Electric near the end of 2008, due to many investors belief the companies were insolvent. However this criticism quickly went away, when Bloomberg reported several months ago that Buffett has a several billion dollar paper gain on the Goldman deal, in addition to a hefty 10% a year dividend.
The past three years the S&P 500 outperformed Berkshire stock. This is the first three year winning margin over Buffett since the tech bubble years. However, the important statistic is Buffett’s 10 year record. Buffett beat the S&P 500 in 6 out of 10 years. As many other value investors note, Buffett would rather underperform in bull markets, if he can outperform in bear markets. I think he largely accomplished this in 2008, even if 2008 was his worst year ever. Berkshire had a 76% total return for the past ten years in contrast to the S&P 500’s 24.1% negative return. For the record BRK has produced annual gains of 27.7% since 1977 versus 8.8% for the S&P 500.
| BERKSHIRE HATHAWAY STOCK VS. S&P 500 INDEX ANNUAL GAINS |
| Year | BRK.A Close | BRK Pct. Change | S&P Close | S&P Pct. Change |
| 2009 | 99,200 | +2.7% | 1115.10 | +23.5% |
| 2008 | 96,600 | -31.8% | 903.25 | -38.5% |
| 2007 | 141,600 | +28.7% | 1468.36 | +3.5% |
| 2006 | 109,990 | +24.1% | 1418.30 | +13.6% |
| 2005 | 88,620 | +0.8% | 1248.29 | +3.0% |
| 2004 | 87,900 | +4.3% | 1211.92 | +9.0% |
| 2003 | 84,250 | +15.8% | 1111.92 | +26.4% |
| 2002 | 72,750 | -3.8% | 879.82 | -23.4% |
| 2001 | 75,600 | +6.5% | 1148.08 | -13.0% |
| 2000 | 71,000 | +26.6% | 1320.28 | -10.1% |
images courtesy of Cnbc.com
disclosure: long GS and GE
