Buffett letter could show Berkshire winning streak over

Fri Feb 28, 2014 6:08pm EST
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By Luciana Lopez

NEW YORK (Reuters) - A five-year bull market may have finally outdueled one of the U.S. stock market's biggest bulls, and Warren Buffett will probably tell investors on Saturday that his 43-year run of beating the Street has come to an end.

By his own benchmark for performance, Buffett's Berkshire Hathaway Inc almost certainly lagged a red-hot stock market in 2013 and probably also fell short over the previous five years, his favored timeframe for measuring the firm's return for its investors.

Using the gain in Berkshire's book value per share after taxes, which Buffett traditionally contrasts with the pre-tax total return, including dividends, on the Standard & Poor's 500 Index, Berkshire will be hard pressed to match the S&P's 128.2 percent gain in the five years ended December 31, 2013.

Investors will learn for sure when the world's fourth-richest man releases his annual letter to investors on Saturday around 8 a.m. Eastern time.

Buffett, 83, had already warned last year that he might miss his target, noting that his conglomerate of more than 80 companies and investments might fare relatively better in weaker markets than stronger ones.

The S&P's sharp rally since 2008 has made Buffett's benchmark particularly difficult to maintain over the past five years due to a flood of money from the Federal Reserve boosting equity markets. The whopping 32 percent total return on the S&P last year only makes it more likely that Berkshire's book value did not match the index's five-year performance.

In fact, he would have required a one-year gain of more than 40 percent in book value per share from 2012's $114,214 to keep his prized streak alive.

Ironically, Buffett took on the role of cheerleader for the American stock market during the depths of the recession, writing an Op-Ed piece in the New York Times on October 17, 2008 imploring readers to "buy America."   Continued...

Warren Buffett, Chairman of the Board and CEO of Berkshire Hathaway, poses for a portrait in New York October 22, 2013. REUTERS/Carlo Allegri