HIGH-profile investor Warren Buffett said his performance at Berkshire Hathaway should be measured over the course of stock market cycles after missing a five-year target for the first time.
Berkshire’s net worth failed to keep pace with rises in the Standard & Poor’s 500 Index over the period from the end of 2008 to the end of last year. It’s the first time that has happened since Mr Buffett (pictured) took control of Berkshire Hathawayin 1965.
Despite the underperformance, Mr Buffett, who is chairman and CEO, said he can beat the index over equity market cycles, as he did in the six-year period ended on December 31 last.
“Through full cycles in future years, we expect to do that again,” Mr Buffett wrote in a report. “If we fail to do so, we will not have earned our pay.”
In the past, Mr Buffett (83) has criticised other companies for altering how they evaluate performance. Last year he said Berkshire Hathaway wouldn’t “change yardsticks” when forecasting it would fall short of its five-year goal.
Book value, the measure of assets minus liabilities that Mr Buffett highlights, rose to $134,973 (€97,800) a share at the end of December, 91pc higher than five years earlier. The S&P 500 returned about 128pc during that period, including dividends, as stocks rallied. The Berkshire number is an after-tax figure, while the index results are before taxes.
“He moved the goalpost a little bit,” said David Rolfe, chief investment officer at Wedgewood Partners, which manages about $7bn. “For those that focus in on that, it may be disconcerting. Quite frankly, we never gave it much thought.” (Bloomberg)