Investors in Berkshire Hathaway Inc (NYSE: BRK.A)(NYSE: BRK.B) are used to seeing their company deliver long-term outperformance of the US markets, particularly the S&P 500 Index (SP: .INX). After all, that's what legendary investor and long-time Berkshire Hathaway CEO Warren Buffett is best known for.

Over almost all of its history, at least with Buffett at the helm, Berkshire has delivered this outperformance. But recently? Not so much.

Last night (our time), Berkshire's Class A shares closed at US$692,600 each. At this price, the shares have risen 2.53% year to date in 2025 and 11.7% over the past 12 months.

In contrast, the S&P 500 Index, which is a proxy for the performance of the broader US markets, is up 7.86% year to date. That gain extends to 22.05% for the past 12 months.

So Berkshire has been the clear laggard, at least in recent history.

But how might the sprawling conglomerate finish the year? Can it regain its edge to at least match the S&P 500?

Berkshire stock suppressed amid Buffett's retirement

Well, there's no way to know for sure. But it's arguably more likely than not that Berkshire will continue to underperform the broader market, at least if the market optimism we have seen over the past 12 months continues. Why? Well, the elephant in the room here is Warren Buffett's impending retirement.

At 94 years of age (soon to be 95), investors have long known that his presence at the top of Berkshire cannot continue forever.

However, Buffett set a firm timeline for this transition back in early May. Back then, Buffett announced that he would be standing down as CEO of Berkshire and handing over the reins to long-time deputy Greg Abel at the end of this year.

Buffett is set to remain on as chairman of the board. But even so, investors responded with (understandable) dismay. They sent Berkshire stock down almost 5% at the time of the announcement. As of current prices, the stock remains down by a nasty 14.4% from when that news broke.

Now, Buffett has long warned that, thanks to Berkshire's sheer size, maintaining its record of outperformance compared to the S&P 500 is becoming increasingly difficult.

There is little doubt that the market will not extend the same level of deference to Abel as it has to Buffett. This might mean that Berkshire will face pressure to violate some of the long-standing conventions that Buffett has insisted on resisting. That includes selling off parts of its business or paying a dividend.

To put a long story short, Berkshire Hathaway is facing a level of uncertainty today that investors have not had to contemplate since the early 1960s when Buffett took the helm. As such, it's no wonder its shares have been lacklustre performers. I don't see that changing anytime soon.