David Kass, a Berkshire shareholder, researcher and business professor at the University of Maryland, says that from 1965 through 1998, Berkshire's book value compounded at an average annual rate of 25 percent, versus 13 percent for the S&P 500, dividends included.
The growth rate, however, dimmed to 9 percent from 1999 through 2015, versus 7 percent for the S&P 500, with dividends included. Worse, between 2009 and 2015, Berkshire has underperformed the S&P 500, with an average annual compounded return of 12 percent versus 15 percent for the index.
Has Buffett lost his touch? Is there some toxic flaw deep in the inner workings at Berkshire?
Not really. If anything, Berkshire supporters say, the company is simply a victim of its own size, and expectations should naturally change.
“The greatest limiting factor to Berkshire's rate of growth in per-share book value is its increasing size,” Kass said. “With total assets of $552 billion at year-end 2015, and ranked fifth in market capitalization in the S&P 500, it is becoming increasingly difficult to move the needle.”
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University of Maryland business professor and Berkshire shareholder David Kass has attended the past 10 meetings and has kept detailed notes on each, including reviews of the Berkshire-produced short film, which has been a draw in recent years.
“The attendance has grown each year from 24,000 in 2006 to over 40,000 in 2015,” Kass said. I have always enjoyed the humorous film starring Warren and Charlie at the beginning of the annual meeting.”
As the attendance has grown over the years, so have the lines to get into the CenturyLink Center, Kass said, with shareholders recently beginning to arrive in line at 4 a.m. for a 7 a.m. entrance.
“In the earlier days I was able to recognize people I knew at the meeting a lot more easily than recently with the larger crowds,” Kass said. “But the main reason I am there has not changed — to be in the same room with Warren and Charlie as they answer shareholder questions.”
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