Berkshire: Ready, Willing, And Abel

Whenever the S&P 500 has a period of torrid performance consistently hitting new highs, it’s not uncommon to see Berkshire Hathaway (BRK-B) underperform given its exposure to stable but relatively slow-growing companies. Along with the underperformance, questions start to arise over whether Warren Buffett and company have “lost their touch.” A recent example came just over a month ago in an article that questioned whether new CEO Greg Abel was “up to the job” and whether Ajit Jain “should have gotten the job.”

It was easy to raise that question in early October. After all, the S&P 500 was up 13% for the year and right at all-time highs, while Berkshire was flat on the year.

The underperformance this year was simply a continuation of a trend that had been in place since the Liberation Day lows in April 2025 when Berkshire’s relative strength versus the S&P 500 hit a record high. Back then, Berkshire was repeatedly highlighted as a port in the storm. In April 2025 just as the market was near its lows from the tariff tantrum, Bloomberg noted that “Buffett's Berkshire Weathers Tariff-Fueled Stock Market Selloff.” Whenever sentiment gets extreme in either direction, a lesson investors should be quick to learn is that the best days, at least in the short run, could be moving into the rearview mirror.

With Berkshire stock near its peak level of underperformance, Warren Buffett was probably cracking open a Coke wishing it was something a little stronger. Just as sentiment toward the stock hit its most pessimistic level in at least a year, the S&P 500 hit some speed bumps, and like clockwork, Berkshire started to rally. After breaking below its 50-day moving average to close out Q3, Berkshire has rallied close to 20% in what has been an overall down tape. Bottoms up!

With their stock rallying and the S&P 500 falling over the last month, Buffett and company have seen the one-month performance gap with the S&P 500 expand to its widest spread in favor of Berkshire in more than 15 years. The chart below shows the rolling 21-day performance spread between Berkshire and the S&P 500, and the recent rally in the stock has taken its short-term level of outperformance to a level even exceeding those from the tariff-tantrum lows. For now, at least, the new leadership looks like it’s up to the job.