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Berkshire vs. S&P 500: Which Won In 2012?

ByDavid Kass
Published 01/02/2013, 12:18 PM
Updated 07/09/2023, 06:31 AM

Warren Buffett’s Berkshire Hathaway outperformed the S&P 500 in 2012. Berkshire’s shares rose 17% last year, exceeding the 13% gain in the S&P 500 (The S&P 500 advanced 15% with dividends included). The primary drivers of Berkshire’s outperformance included its announced plans to repurchase its shares at prices below 120% of book value versus its previous target of 110%. This effectively set a new floor under the price of its shares that is 10% higher than previously. The new “floor” translates into about $135,000 per A share and $90 per B share. In addition, Berkshire’s 700 million Bank of America warrants increased in value by $3 billion, as the underlying common shares doubled in 2012. Finally, investments by Buffett’s recently hired portfolio managers, Todd Combs and Ted Weschler, performed extremely well. These included large positions in DaVita HealthCare Partners, Phillips 66, and Liberty Media which gained over 45% in 2012.

I am quoted in a Bloomberg article on this topic:

Weschler and Combs are probably “on average outperforming the S&P 500,” said David Kass, a professor at the University of Maryland’s Robert H. Smith School of Business who has taken groups of students to meet the billionaire in Omaha. “That’s a wonderful indication” that they were good hires, he said.

The entire article is available here.

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