Warren Buffett’s famous annual shareholder letter is out, and starts on a sombre note.
For the ninth time in 48 years, Berkshire’s percentage increase in book value was less than the S&P’s percentage gain, even though the company posted a $24.1 billion gain in 2012.
What’s more, the venerable company’s streak of overperformance is in danger.
“To date, we’ve never had a five-year period of underperformance, having managed 43 times to surpass the S&P over such a stretch,” Buffett wrote.
“But the S&P has now had gains in each of the last four years, outpacing us over that period. If the market continues to advance in 2013, our streak of five-year wins will end.”
But the Oracle of Omaha isn’t about to change his ways.
“Charlie [Munger] and I believe the gain in Berkshire’s intrinsic value will over time likely surpass the S&P returns by a small margin. We’re confident of that because we have some outstanding businesses, a cadre of terrific operating mangers and a shareholder-oriented culture,” he says.
While Buffett bemoaned the fact that he didn’t acquire any significant businesses in 2012, Berkshire’s pleased about its February announcement to acquire half of H. J. Heinz.
But he warns investors that Heinz’s $12 billion price tag “soaks up much of what Berkshire earned last year.”
We’ll further parse Buffett’s letter on Monday — stay tuned. In the meantime, you can read the whole thing here.