Warren Buffett's Berkshire Hathaway heading for worst year relative to rest of the US stock market since 2009

 
James Nickerson
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Shares in Berkshire Hathaway are down 11 per cent this year (Source: Getty)

The Oracle of Omaha is set for his worst investment year since 2009.

Shares in revered investment guru Warren Buffett's Berkshire Hathaway are down 11 per cent, in the same year Buffett celebrates his golden anniversary running the company.

Berkshire Hathaway has suffered as a number of investments were hit by falling oil and gas prices.

While the company doesn't own oil and gas subsidiaries, its manufacturing arm sells to the oil industry, and its railway business transports oil and coal.

Meanwhile, lower oil prices are also thought to be responsible for poor results from Berkshire Hathaway's insurance divisions, as lower petrol prices mean drivers are on the road for longer and having more accidents.

Read more: Buffett's Berkshire Hathaway risks downgrading by S&P

Berkshire Hathaway has also been hit by declines in two of its largest investments, American Express and IBM. American Express shares became 24 per cent lighter this year, while IBM's stock fell 13 per cent.

But as Buffett has readily said, "I've made lots of dumb decisions. That's part of the game".

But we'd imagine he's sanguine. As he might add: "Time is the friend of the wonderful company, the enemy of the mediocre."

Berkshire Hathaway's 2015 Investments

  • Kraft Heinz

Kraft Heinz, the merged food giant joined under the direction of Warren Buffett and investment firm 3G Capital, began trading in July after the merger was announced in March.

  • Precision Castparts

Warren Buffett confirmed Berkshire Hathaway would buy Precision Castparts for $37.2bn in August - the investor's biggest deal ever.


 

This is only the 11th year where Berkshire Hathaway shares have fallen since Buffett took the reins in 1965, and comes against a three per cent return from the S&P 500.

The last time Berkshire Hathaway shares fell over a year and underperformed the S&P 500 was back in 1999.

Read more: The world's richest got $19bn poorer in 2015

Tech stocks soared this year, helping the wider stock market. That's one of the reasons Buffet's company is down relative to the S&P 500 this year, as he has no investments in Netflix, Amazon, Alphabet (Google) or Facebook, which have all made strong gains in 2015.

The downbeat news comes the day after it was revealed that Buffett - currently at number three on the ranking of the world's wealthiest - lost $11.3bn this year after Berkshire made a loss for the first time since 2011.

Still, it isn't all bad, given Berkshire posted net earnings up 18 per cent for first nine months of the year, boosted by a $4.4bn gain from the merger of Kraft and Heinz.

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