However, just like the mouse on the left would have more trouble gaining 10% of its weight than the mouse on the right, Berkshire is - as Mr. Buffett has repeatedly warned - going to have trouble continuing to outpace the S&P500 as the company becomes larger and larger.
In fact, more and more of Mr. Buffett's acquisitions take him farther and farther from his preferred investments - such as insurance companies and banks, and companies that commend "top of mind" presence with the element of repeated purchase present (i.e. think Coca-Cola, a major holding of Berkshire). Some recent acquisitions include home builders and RV makers. These obviously don't fit that profile and tend to be more in commodity-oriented type venues, where price becomes a larger factor than prestige or habit.
In fact, just as Mr. Buffett warned, his marked outperformance vs. the S&P500 is clearly waning. The following info is taken from the Berkshire web-site and shows his average annual outperformance of internal book value vs. the S&P500 by decade:
- 1970s - 15.8% better per annum
- 1980s - 11.4% better per annum
- 1990s - 6.3% better per annum
- last ten years - 5.6% better per annum
Nevertheless, Mr. Buffett has a remarkable record of outperformance, and that outperformance - albeit by a diminishing margin - may very well stay intact for many years into the future.
You can buy one share of Berkshire Hathaway "A" series (BRK-A) for a cool $87,400, or one of the "B" series (1/30 economic value) for $2,911 (BRK-B).
The Confused Capitalist