Berkshire Hathaway (NYSE: BRK.A) is now trailing the broader market by nearly 23 percentage points, as the so-called Buffett premium appears to be evaporating in the wake of the legendary investor’s retirement.
Since May 3, 2025, when Warren Buffett formally announced that he would step down as CEO of Berkshire at the end of the year, the firm’s Class A shares have declined 12.66%, while the S&P 500 has surged 9.93% over the same period, according to Barchart data.
The stark divergence highlights investor hesitation around Berkshire’s future under Greg Abel, the long-designated successor now preparing to assume control on January 1, 2026. While Buffett will retain the title of Chairman, the market is no longer treating Berkshire as the same fortress of stability and compound returns it has long been under his direct leadership.
A 60-year outperformance… Then a gap
Buffett has famously overseen Berkshire’s rise from a failing textile manufacturer to a $700,000-per-share conglomerate with sprawling interests across insurance, energy, railroads, and consumer goods. For decades, its stock reliably outperformed the broader market.
But that leadership halo now seems to be dimming. Since the retirement announcement, Berkshire has failed to participate in the broader rally. While the S&P 500 climbed nearly 10%, driven by AI-fueled tech optimism and bullish earnings momentum, Berkshire sank, posting one of its worst multi-week relative performances in recent memory.
This reversal marks a rare period of underperformance not due to company fundamentals or macro headwinds, but rather a perceived leadership void.
Why investors may be hesitating
Buffett’s name alone has long been a proxy for discipline, prudence, and long-term compound gains. But as succession shifts from narrative to reality, investors may be reassessing how much of Berkshire’s past performance can be replicated without the “Oracle of Omaha” actively steering capital allocation decisions.
Moreover, Berkshire’s famously conservative cash pile, reportedly still hovering near $150 billion has underperformed amid a raging bull market, further widening the gap.
Market participants are also pricing in the end of Buffett’s deal-making aura. With megadeals like BNSF, Heinz, and Apple behind him, there’s growing concern that future capital deployment may lack the same prescience and outsized returns.
Is the Buffett Premium Gone?
To be clear, Berkshire hasn’t “tanked,” its decline is relatively modest in absolute terms. But the psychological gap is growing. As of July 16, the S&P 500 is nearly 23 percentage points ahead of BRK.A since Buffett’s announcement, a symbolic turning point that may redefine Berkshire’s place in modern portfolios.
The big question: Is this just a short-term post-Buffett adjustment? Or a structural re-rating?
With Abel set to take over in 2026 and market sentiment shifting to favour high-growth tech and AI-centric plays, Berkshire could be at risk of becoming a value trap unless its post-Buffett strategy proves equally visionary.
Until then, the chart tells a simple story: Berkshire is no longer keeping up.
