Berkshire Hathaway underperforms S&P 500 by up to 41 points, raising financial crisis concerns

For the better part of six decades, betting against Berkshire Hathaway was roughly as smart as bringing a knife to a gunfight. From 1965 to 2024, the company compounded at approximately 19.9% annually, nearly doubling the S&P 500’s 10.4% over the same stretch.

As of mid-May 2026, Berkshire Hathaway shares have lagged the S&P 500 by roughly 30 to 41 percentage points since Buffett announced his retirement in May 2025. The S&P 500 has gained between 25% and 31% over that period. Berkshire, meanwhile, has been approximately flat or down single digits.

The Buffett vacuum and $397 billion sitting on the sidelines

Buffett’s departure announcement coincided almost perfectly with the start of Berkshire’s relative decline. Greg Abel, the company’s new CEO as of January 1, 2026, inherited not just the corner office but a widening performance gap that had already been expanding through the back half of 2025.

Abel also inherited what might be the most conservative balance sheet in corporate America. Berkshire’s cash and equivalents hit a record of approximately $397 billion by mid-2026. Buffett spent his final years at the helm pulling back from the market, selling down positions and letting the cash pile grow. Under Abel, that posture has continued.

Why some see crisis signals in the underperformance

The late 1990s dot-com bubble is a relevant precedent. Berkshire underperformed significantly as tech stocks soared, then its conservative positioning looked prescient when the bubble burst.

Berkshire’s underperformance could also simply reflect the market’s rational repricing of a company navigating a once-in-a-generation leadership transition. Buffett wasn’t just a CEO. He was the investment thesis.

What this means for investors

Berkshire has nearly $397 billion in dry powder, no operational crisis to speak of, and a new leadership team that worked directly under Buffett. The company’s operational businesses continue to generate substantial cash flow. Analysts suggest the current underperformance should not be interpreted as a systemic crisis, but rather as a potential opportunity for value-oriented investors.

The bearish case is also worth taking seriously. Buffett’s departure removes the single largest reason many investors owned Berkshire in the first place. Abel is a capable operator by all accounts, but he hasn’t yet proven he can deploy a $397 billion cash hoard into outsized returns. Leadership transitions at founder-driven companies are inherently risky, and the market is pricing in that uncertainty.

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