This is how Berkshire Hathaway has outperformed S&P 500 since Warren Buffet took over

Warren Buffett remains a coveted figure in the financial world, thanks to the continuous growth of Berkshire Hathaway (NYSE: BRKA, BRKB), which has exhibited remarkable expansion over the years.

The stellar performance of the conglomerate under Buffett is evident when comparing it to the broader market, specifically the S&P 500. In 1962, Buffett initiated acquiring Berkshire Hathaway shares, ultimately securing a controlling ownership stake by 1965. 

Notably, Berkshire’s shares have demonstrated a remarkable compounding rate under his leadership, outpacing the S&P 500. Particularly, according to data provided by StockMKTNewz in an X (formerly Twitter) post on February 24, Berkshire Hathaway has outperformed the index at least 140 times since Buffett took over. 

According to the data, Berkshire Hathaway has experienced an astronomical surge of 4,384,748% since Buffett assumed control. In contrast, the S&P 500, a widely used benchmark for the overall U.S. stock market, has seen a comparatively modest return of 31,223% during the same period. 

The annual percentage change in per-share market value highlights Berkshire Hathaway’s market value journey. In 1965, the company witnessed an annual change of 49.5%. Fast forward to 2023, and despite the inevitable challenges faced by any long-standing entity, Berkshire Hathaway recorded an annual percentage change of 15.8%. 

Elsewhere, the S&P 500 had an annual percentage change of 10% in 1965, including dividends. Over the years, the index has seen a notable increase in annual percentage change, reaching 26.3% by 2023.

Buffet’s investment approach 

Buffett’s investment philosophy, characterized by a long-term value-oriented approach, has undoubtedly played a pivotal role in Berkshire Hathaway’s success. The conglomerate’s diversified portfolio, spanning various industries, has allowed it to weather economic storms and capitalize on opportunities. 

Buffett’s investment strategy involves acquiring businesses with durable economic moats at discounted prices. He emphasizes understanding a business thoroughly before investing, avoiding speculative moves akin to gambling. His advice includes adopting a buy-and-hold mentality holding onto good stocks for extended periods. 

While the S&P 500 reflects broader market trends, Berkshire Hathaway’s ability to outpace it significantly underscores Buffett’s unique strategies and decision-making over the decades, characterized by regularly updating his portfolio.

For instance, as reported by Finbold, it emerged that Buffett recently made significant adjustments to his portfolio. Notable changes included a reduction of 10 million shares in Apple (NASDAQ: AAPL), marking a 1.09% decrease in his holdings. Paramount Global (NASDAQ: PARA) saw a substantial reduction of -32.44%, while  HP (NYSE: HPQ) was removed at -77.71%. 

Additionally, Buffett eliminated positions in D.R. Horton (NYSE: DHI), Markel Group (NYSE: MKL), StoneCo (NASDAQ: STNE), and GlobeLife  (NYSE: GL). 

However, the media sector gained Buffett’s confidence, with Sirius XM Holdings (NASDAQ: SIRI) experiencing a remarkable 315.60% increase in position, with 30,559,834 shares acquired.

Wall Street outlook 

In the meantime, a Wall Street analyst over at TipRanks projects a possible upside in the Berkshire Hathaway stock for the next 12 months. Based on the stock’s last three months’ performance, the analyst projects an average price target of $435, indicating a 4.26% change from the previous recorded price of $417.22. 

The high forecast matches the average at $435, while the low forecast aligns with the same figure.

This stability in price targets may indicate prevailing confidence in the current valuation of Berkshire Hathaway.