Shares of Berkshire Hathaway have remained under pressure since Warren Buffett unveiled his succession plans, falling more than 12% and underperforming the broader U.S.
market.
The stock is now heading toward its longest losing streak in three years, as investors grow increasingly uneasy about the conglomerates post-Buffett trajectory.Since May 3, when Buffett revealed his intention to hand over the reins of the Omaha-based investment group, Berkshires Class B shares have shed more than a tenth of their value.
The decline has pared year-to-date gains to just 4.5%, falling short of the S&P 500s 7% advance over the same period.The slump has extended into the summer months, with the stock logging losses in six of the past seven weeks.
Should it finish July in negative territory, it would mark Berkshires third consecutive monthly decline, its longest such stretch since June 2022.Market rethinks post-Buffett futureThe sell-off highlights market unease over the companys future in the absence of its long-standing leader.
Buffett, who transformed Berkshire from a struggling textile firm into a sprawling conglomerate over six decades, has been a singular presence in global investing.
His departure raises questions about whether the groups next generation of leaders can maintain the same performance edge.Still, Buffett has long sought to temper expectations about Berkshires future returns.Live EventsWith our present mix of businesses, Berkshire should do a bit better than the average American corporation and, more important, should also operate with materially less risk of permanent loss of capital, he wrote in his 2023 annual letter.
Anything beyond slightly better, though, is wishful thinking.He also acknowledged the difficulties of deploying Berkshires vast cash pile, noting that the scale of the company makes it harder to find investments capable of moving the needle.Legacy remains intactDespite recent weakness, Buffetts long-term record at Berkshire remains unmatched.
Since taking control in the 1960s, he has delivered a cumulative return of 5,502,284%, more than twice the average annual gain of the S&P 500 over that period.Even so, as the conglomerate adjusts to a future without Buffett at the helm, the stocks underperformance suggests that markets are beginning to recalibrate their expectations, not just for earnings, but for the intangible value of the Buffett brand itself.
| Warren Buffetts rare misstep: Will Kraft Heinzs breakup rewrite the ending or can it still pay off?(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own.
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