Surprise… Buffett & Berkshire Hathaway Underperforming Again in 2012 (BRK-A, BRK-B, DIA, SPY)

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Everyone loves Warren Buffett’s sage advice.  Almost everyone at any rate.  But what about Berkshire Hathaway Inc. (NYSE: BRK-A) (NYSE: BRK-B) as an investment.  We have argued that perhaps the Berkshire Hathaway empire needs to be evaluated and compared against a mix of stocks and bonds rather than just as a stock.  That argument is only more prominent when you consider that Berkshire Hathaway is underperforming the broad stock market all over again in 2012.

If you take a look at the ETF performances of the DJIA and the S&P 500 Index, the SPDR Dow Jones Industrial Average (NYSE: DIA) is now up 9.1% and the SPDR S&P 500 (NYSE: SPY) is up 12.1% so far in 2012.  Berkshire Hathaway Inc. (NYSE: BRK-A) is up only by 6.3% on the A-shares and it s up 6.6% on the B-shares which trade at the lower price.

If you peruse through Warren Buffett’s vast investment holdings for the Berkshire empire, it only accounts for the public stocks.  There is also the BNSF rail operation, then countless manufacturing and retail operations, and finally the multiple insurance and reinsurance outfits.  Buffett recently said he invested in several top European companies, although he did not disclose which ones.  He also has two new portfolio managers who are making smart investing decisions so far.

One year is not a lifetime.  One recent report on Covestor.com shows how over the last two decades that the return from Buffett has been about twice that of the broad market.

Is something wrong when thinking a return of 6.3% or 6.6% is bad?  Perhaps.  Still, maybe Mr. Buffett should be working more at his returns and cutting the less profitable areas which might come back rather than trying to preach to his shareholders that they need to be taxed at higher rates.  Just a thought.

JON C. OGG