GuruFocus Premium Membership

Serving Intelligent Investors since 2004. Only 96 cents a day.

Free Trial

Free 7-day Trial
All Articles and Columns »

Warren Buffett and Berkshire Hathaway Have a Great Decade

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.

BERKSHIRE HATHAWAY STOCK VS. S&P 500 INDEX

ANNUAL GAINS
YearBRK.A CloseBRK Pct. ChangeS&P CloseS&P Pct. Change
200999,200+2.7%1115.10+23.5%
200896,600-31.8%903.25-38.5%
2007141,600+28.7%1468.36+3.5%
2006109,990+24.1%1418.30+13.6%
200588,620+0.8%1248.29+3.0%
200487,900+4.3%1211.92+9.0%
200384,250+15.8%1111.92+26.4%
200272,750-3.8%879.82-23.4%
200175,600+6.5%1148.08-13.0%
200071,000+26.6%1320.28-10.1%


091231A_ChartBRK_SP.gif





091231_WBW_scoreboard_200s.jpg

images courtesy of Cnbc.com

disclosure: long GS and GE

About the author:

Jacob Wolinsky
My investment ideas have been inspired by many of value investors including Benjamin Graham, Charles Royce, John Neff, Joel Greenblatt, Peter Lynch, Seth Klarman,Martin Whitman and Bruce Greenwald. .I live with my wife and daughter in Monsey, NY. I can be contacted jacobwolinsky(AT)gmail.com and my blog is www.valuewalk.com

Visit Jacob Wolinsky's Website


Rating: 3.8/5 (34 votes)

Comments

yswolinsky
Yswolinsky - 4 years ago
c

Please leave your comment:


Get WordPress Plugins for easy affiliate links on Stock Tickers and Guru Names | Earn affiliate commissions by embedding GuruFocus Charts
GuruFocus Affiliate Program: Earn up to $400 per referral. ( Learn More)
Free 7-day Trial
FEEDBACK
Email Hide