As Warren Buffet—my other favorite Midwesterner, the world’s superstar investor and CEO of Berkshire Hathaway—is putting the final touches on an incredible run leading the conglomerate. He certainly leaves behind an extraordinary legacy. Greg Abel is poised to step in and eventually assume full leadership of Berkshire Hathaway. As he gets ready to step down, the company’s Class A shares have skyrocketed nearly 19% this year, reaching a record high less than a week before this Friday’s annual meeting.
Under Buffett’s stewardship, Berkshire has delivered an unbelievable compounded annual return of 19.9%. From 1965 to 2024 the company’s stock had increased an astonishing 5,502,284%! This extraordinary performance serves as a living testament to Buffett’s dedication to long-term investing and the principles of value investing.
Berkshire Hathaway’s board has officially approved Buffett’s decision to step down as CEO, a role he has held for decades. He will remain on as chairman. His deep knowledge of the industry and market will continue to make him an important resource for the company’s future. Greg Abel is set to take over as CEO at the year’s end, stepping into the role with significant expectations based on Berkshire’s impressive track record.
Over the past ten years, Berkshire Hathaway has beat the S&P 500 by almost 2%. This accomplishment is all the more impressive given the difficulties value-oriented investors experienced throughout this time frame. Importantly, under Buffett’s leadership the company had weathered some brutal market conditions. Most striking of all, in 1981, Berkshire’s value increases by 31.8% as the S&P 500 tumbles 5%. It was an incredible 129.3% year for Berkshire Hathaway vs a 23.6% gain for the S&P 500 index.
Even as late as 2011, Berkshire Hathaway would surprise skeptics by showing strength. In 2022, during which time the S&P 500 plunged 18.1%, Berkshire Hathaway finished the year ahead 4% in a bear market no less. The company’s performance in 1998 exemplifies its strength. Berkshire surged 52.2% against the S&P 500’s 28.6%.
Jeremy Siegel, the highly respected finance professor and market analyst, lauded Buffett’s remarkable long-term performance.
“For a value-oriented investor to be above the S&P 500 over the last 10 years — which have been one of, if not the, most difficult decade for value investors in the 100 years — is absolutely extraordinary,” – Jeremy Siegel
He further emphasized Buffett’s unparalleled dominance among value investors:
“I don’t think any value investor can touch him.” – Jeremy Siegel