By Martin Baccardax

Warren Buffett isn't used to lagging behind the market.

The billionaire's Berkshire Hathaway investment group has firmly outpaced the S&P 500 over the past five years, and has delivered staggering returns since he began converting it from a textile company into an acquisition machine in the mid-1960s.

But while the Oracle of Omaha's record is beyond reproach -- and a $100 investment in Berkshire in 1965 would now be worth around $3.9 million -- there's another historic icon with an even more impressive ledger.

Father Time, as it's often said, is undefeated. And after decades of chasing a man whose energy, enthusiasm, and kind demeanor seemed limitless, he may have finally caught his man. Buffett, who turns 95 later this month, announced his effective retirement last spring by naming Greg Abel, a longtime Berkshire colleague, as his successor.

Investors are already starting to make the adjustment.

Berkshire's Class A shares have fallen nearly 10% since Buffett's succession plan was unveiled in early May. (The S&P 500 has powered more than 12% higher since President Donald Trump's April 2 tariff announcement.)

But while Buffett's stamp of approval is still powerful enough to trigger a 14% rally in a $280 billion stock -- as it did last week when Securities and Exchange Commission filings revealed Berkshire's stake in UnitedHealth Group totals five million shares -- his broader investment legacy appears to be holding back Berkshire stock and weighing on Abel's ability to revive it.

Berkshire's overall cash pile edged lower for the first time in three years last quarter, SEC filings indicate, but it's still sitting on nearly $344 million in liquidity as of the end of June. That is a lot of money to have been left out of the S&P 500's 57% rally over the same period.

It has also left Buffett, who has famously avoided chasing higher stock prices, possibly reluctant to pull the trigger on a deal that could ensure the value of his holding in Burlington Northern Santa Fe as the railroad industry consolidates.

In fact, he told CNBC last month that reports of talks he was working on a takeover through Goldman Sachs were inaccurate.

Buffett also hasn't authorized a buyback of Berkshire stock in nearly a year -- not even in the second quarter of 2025, when shares slumped.

Some of his older bets, which were based on his immensely successful strategy of applying a long-term investment horizon, are also looking stale. Berkshire took a $3.8 billion write-down on its 27% stake in packaged food group Kraft Heinz last quarter. Its overall carrying value is around half of what it was in 2017.

Time isn't necessarily on Buffett's side, but it's important to consider that his investment ethos is likely to remain embedded within Berkshire, where he'll remain chairman after he retires.

And there's a lot to like about the group he's leaving behind. Its cash pile can command a lot of attention in a market where inflated stock prices make equity-based takeovers seem ephemeral.

Berkshire's broad holdings in bellwether companies like Apple, Coca-Cola, and American Express allow it to benefit from both a booming economy -- and one that is nearing recession. Its insurance business generates oodles of cash, and its shares aren't subject to the dilution of stock-based compensation, either.

Buffett's most recent "out of the box" investment, a bet on five Japanese trading houses in 2019, has generated more than $10 billion in value as of the end of last year, too.

Would you bet against Buffett making one final, winning roll of the dice before his December farewell?

"We would spend $100 billion if something is offered that makes sense to us, that we understand, offers good value, and where we don't worry about losing money," he told investors in May. "The problem with the investment business is that things don't come along in an orderly fashion, and they never will."

Write to Martin Baccardax at martin.baccardax@barrons.com

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August 20, 2025 14:26 ET (18:26 GMT)

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