For the first time in over four decades, billionaire Warren Buffet is probably going to miss his mark, Bloomberg reported. Citing analyst estimates, the report said his $292 billion firm, Berkshire Hathaway Inc, is set to report that it was not able to successfully increase net worth more quickly than the benchmark Standard & Poor's 500 Index in the past five years. This would be the first time that Buffet would miss his target since taking over the company in 1965, the report stated.
The 83-year old billionaire underscored the comparison to provide shareholders with a way to review his performance versus a low-cost fund tracking the index, the report said. Since the end of 2008, the S&P 500 was able to return 128%, dividends included. In comparison, Berkshire's book value per Class A share increased only 80% to $126,766 in the same time period which ended on September 30, the month when the latest data is provided.
Estimates by analysts indicated that Buffet most likely did not close in on the gap in the final months of this year. Berkshire's book value increased $131,005 a share. This was 86% more than it was five years before. Another estimate from Keefe, Bruyette & Woods puts the gain at 83% only.
Bloomberg reported that book value, which is a measure of a company's assets minus its liabilities, is shown on a per-share basis to allow investors to compare a firm's net worth to its trading price. Buffet has said that he can add value faster than the benchmark, the shares of Bershire Hathaway should be able to beat the S&P 500 in time.
The report quoted Tom Russo, who said that by keeping his goal the same, Buffet had actually been very honest. He added, "He didn't pick it because it was an easy benchmark." Russo is a Partner at Gardner Russo & Gardner, an investor at Berkshire, the report said.
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