One Amazing Stat That Captures Warren Buffett’s Investing Career

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Illustration by Elias Stein

Warren Buffett, at 91, presided last week over Berkshire Hathaway ’s annual meeting, a gathering popularly known as “Woodstock for Capitalists.” If you’re undecided about whether Buffett deserves his reputation as one of history’s greatest investors, consider this amazing statistic: Given the gains in Berkshire Hathaway Class A shares since he took over in 1965, the stock could drop 99% and still beat the S&P 500 index.

Barron’s calculates that Berkshire Class A shares would have had to return 10.3% annually since 1965 for a price of $4,968—1% of the stock’s recent close at $496,800. That return compares with a 10.2% annualized return for the S&P 500 over the same period. The 1965 starting price for Berkshire shares was $20. Class A is the original stock; Class B was issued in 1996.

Our calculation was inspired by Chris Bloomstran, chief investment officer of Semper Augustus Investments Group, who noted that Berkshire could drop 99.3% and still beat the S&P 500. “I mentioned that to Mr. Buffett several years ago,” Bloomstran tweeted. “His reply: ‘Ben Graham would be proud. But let’s not test the math.’ ” Graham, one of the 20th century’s top value investors, wrote The Intelligent Investor and was Buffett’s mentor.

From 1965 through 2021, Berkshire shares generated a compound annual return of 20.1% against 10.5% for the S&P 500. Most of Berkshire’s outperformance came earlier in Buffett’s tenure, when he racked up huge gains. Over the past 20 years, Berkshire is just a percentage point ahead of the S&P 500, with a 10.3% annualized return against 9.2% for the index.

Write to Andrew Bary at andrew.bary@barrons.com

Last Week

A Very Short Relief Rally

The week began with a flash crash in Sweden that spread to European stocks; Citigroup admitted a trading error. U.S. stocks ticked up. On Wednesday, the Federal Reserve opted, as expected, for a half-point rise in the federal-funds rate, but Chairman Jerome Powell seemed to take a future 0.75% hike off the table. Stocks took off, then, a day later, screeched in reverse, led by tech. April payrolls rose 438,000, leaving unemployment unchanged. On the week, the Dow Jones Industrial Average fell 0.24%, to 32,899.37; the S&P 500 edged down 0.21%, to 4123.34; and the Nasdaq Composite lost 1.54%, to 12,144.66.

The Earnings Beat

Expedia beat as travel revived, and Clorox pulled back its guidance, blaming supply inflation. KKR beat. Starbucks missed and suspended guidance. Both Pfizer and Moderna beat. Etsy , Shopify , and EBay all missed.

Targeting Russian Oil

A European Commission proposal to ban Russian oil by year end stalled, after Hungary pushed back. Western officials believe that Russia could declare war on Ukraine by May 9, Victory Day, commemorating its defeat of Germany in World War II. A declaration would allow mobilization of reserves. Russia also appears to be preparing to annex areas in the southeastern part of Ukraine, though its advances in the Donbas have been minimal. Officials said the U.S. provided intelligence to Ukraine that contributed to the deaths of Russian generals.

Roe Leak

A rare leaked draft of a majority opinion indicated the Supreme Court would strike down a half-century of Roe v. Wade, the constitutional right to an abortion. Chief Justice John Roberts ordered a probe of the leak, and fencing went up around the court as protesters gathered. A decision is expected by July.

Buffett Is Back

“It’s good to be back,” said Berkshire Hathaway CEO Warren Buffet as the company’s annual meeting began in Omaha, Neb., after two years online. Berkshire has been busy taking advantage of volatility to buy larger stakes in Chevron , Activision Blizzard , and HP Inc. Buffett also renewed his criticism of crypto, citing Peter Thiel’s recent comments that he was crypto’s “enemy No. 1.”

Annals of Deal Making

Elon Musk said he had $7 billion in commitments from friends (Larry Ellison), allies (Binance), and a Saudi prince (Alwaleed) to finance his $44 billion Twitter buyout. Musk also said he’d take Twitter public again after a few years…The Wall Street Journal reported that a second activist, Ancora Holdings, has joined Alta Fox Capital Management pressuring for change at toy maker HasbroSpirit Airlines rejected an offer from JetBlue and said it would merge with Frontier …Chinese insurer Ping An called for a breakup of HSBC into its Asian and European operations. Ping An is the bank’s largest shareholder.

Write to Robert Teitelman at bob.teitelman@dowjones.com