The performance of Warren Buffett’s Berkshire Hathaway beat the performance of the S&P 500 in a year when Buffett made no major acquisitions.
The success was attributed to Buffett’s investment in Bank of America and a generous buyback program.
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Class A shares gained 17% last year compared to the S&P’s gain of 13%. Buffett’s stock picks and acquisitions have bolstered the company’s book value more than 5000 times its value in 1960 when Buffett took over.
Book value for Berkshire shares is estimated to have reached $113,579 on December 31. That means the company has established a growth rate of 7.8% for the five years ended 2012.
The company has also benefited from stock picks by two hedge fund managers, Todd Combs and Ted Wechsler, who were hired in 2010 to help oversee the portfolio.
Last month, Berkshire got a shot in the arm from a decision to boost the threshold at which stock would be bought back from 20% to 10%.
At the same time, the company announced it had bought back $1.2 billion of Class A shares from the estate of a long-time investor. The stock rose
2.4% on that announcement.