Berkshire Hathaway’s Class B shares have faced a challenging 2024, trailing the broader market significantly as of mid-year. While the S&P 500 has posted a total return of approximately 10.7% through July 2024, Berkshire Hathaway’s stock has declined by 1.8% during the same period. This divergence highlights a period of relative underperformance for the conglomerate compared to the technology-heavy gains driving the wider index.
Performance Gap in 2024
The disparity between Berkshire Hathaway (BRK.B) and the S&P 500 reflects broader trends in market leadership. According to data tracked by CNBC, the S&P 500’s year-to-date performance has been heavily influenced by a surge in large-cap technology and artificial intelligence-related stocks. Berkshire, which maintains a more diversified portfolio across insurance, energy, railroads, and manufacturing, has not captured the same momentum.
Berkshire’s cash position remains a focal point for investors. In its first-quarter 2024 earnings report, the company disclosed a record cash pile of $189 billion. CEO Warren Buffett has noted in previous shareholder meetings that finding "elephant-sized" acquisitions that move the needle for a company of Berkshire’s scale is increasingly difficult in the current valuation environment.
Strategic Asset Allocation
The company’s portfolio composition serves as a hedge against volatility, though it often lags during momentum-driven bull markets. Berkshire’s largest holding, Apple, has experienced fluctuations throughout the first half of the year. According to regulatory filings, Berkshire reduced its stake in Apple during the first quarter, a move that prompted speculation among analysts regarding the firm’s outlook on tech valuations.
Market Comparison: Berkshire vs. S&P 500
| Metric | S&P 500 | Berkshire Hathaway (B Shares) |
|---|---|---|
| Year-to-Date Return | +10.7% | -1.8% |
| Primary Drivers | Large-cap Tech/AI | Insurance, Energy, Utilities |
| Investment Strategy | Market Indexing | Value Investing/Capital Allocation |
Analyst Perspective on Capital Deployment
The persistent gap between Berkshire’s performance and the S&P 500 often centers on the "opportunity cost" of holding massive amounts of cash. While the company earns interest on its short-term U.S. Treasury holdings, investors frequently weigh this against the potential returns of a fully deployed portfolio.
Despite the current lag, Berkshire’s historical performance has frequently functioned in cycles. The company’s focus on intrinsic value means it often underperforms when market valuations reach historical premiums, as observed in several high-growth sectors throughout 2024. As of mid-year, the market remains focused on whether Berkshire will initiate significant buybacks or deploy its capital into new acquisitions before the end of the fiscal year.
Related reading