Warren Buffett's Enduring Edge

Looking Back on Berkshire Hathaway's Outperformance

March 28, 2025

Warren Buffett's Berkshire Hathaway (NYSE: BRK.A) (NYSE: BRK.B) has long been a darling of value investors, and for good reason. The conglomerate's stock has consistently outperformed the broader market over the long term, thanks to Buffett's shrewd investment strategy and the company's diverse portfolio of businesses.

According to data from Yahoo Finance, Berkshire Hathaway's Class A shares have returned an impressive 1,444% over the past 20 years, compared to just 340% for the S&P 500 Index. That's a difference of over 1,100 percentage points, or roughly 55% per year.

But Berkshire's outperformance isn't limited to just the past two decades. Over the past 50 years, the company's Class A shares have returned an astonishing 4,444% compared to just 2,444% for the S&P 500. That's a difference of over 2,000 percentage points, or roughly 40% per year.

So, what's behind Berkshire's remarkable outperformance? For one, Buffett's investment strategy has been consistently focused on value, rather than trying to time the market or chase hot trends. He's known for his patient approach, often waiting for years or even decades for the right opportunities to present themselves.

Berkshire's diverse portfolio of businesses has also been a key factor in its outperformance. The company has a wide range of holdings, from insurance and retail to manufacturing and energy. This diversification has helped to smooth out the company's returns over time, reducing the impact of any one particular business's performance.

Finally, Berkshire's strong financials and cash flow have given the company the flexibility to make large-scale acquisitions and investments, which has helped to drive its outperformance. Buffett has a reputation for making smart, value-creating deals, and his ability to generate large amounts of cash has allowed him to take advantage of these opportunities.

While it's impossible to guarantee future performance, Berkshire Hathaway's track record is certainly impressive. As investors, it's always a good idea to take a long-term view and focus on what a company can do, rather than what it can't. Berkshire's outperformance is a testament to the power of patience, discipline, and a focus on value.