Don’t bash Buffett. His Berkshire Hathaway has ‘pummeled’ the S&P 500, says this fund manager

The August jobs number has hit a market that was again looking nervous. The S&P 500 SPX is down 2.6% over the three trading days this week as many of the big tech names that led the rally to a record in the summer falter amid overvaluation fears. Nvidia NVDA is down 24% from its intraday peak.

But there was one well known stock that hit a fresh record high this week: Berkshire Hathaway BRK.A BRK.B.

Most Read from MarketWatch

Warren Buffett’s insurance, utility, freight and investment conglomerate joined the $1 trillion market cap club recently. And such was its recent spurt to a new high that its 14-day relative strength index, a momentum gauge, rose at one point above 85 on Wednesday, according to MarketWatch data.

That overbought RSI has encouraged some profit taking, but Berkshire is still up 28.3% for the year to date.

Such a performance is ammunition for Christopher Bloomstran, the long-time Berkshire investor and co-owner of investment firm Semper Augustus Investments, who this week in an X missive took to task The Economist, whose Schumpeter column had a look at Berkshire’s recent stock market returns and asked “Has Warren Buffett lost his touch”.

Them’s fightin’ words to Bloomstran! And some all-cap emphasis duly followed.

He notes that Schumpeter says that Berkshire “roughly” earned what the S&P 500 did over the last ten years. “No,” says Bloomstran. “Berkshire outperformed. And that’s with Berkshire ALREADY paying taxes on the dividends it receives where taxable investors must pay tax on their fund/ETF dividend distributions, lowering after-tax returns.”

Bloomstran says that the Economist cherry-picked their data and in fact “Berkshire took the S&P behind the woodshed of late and pummeled it.”

He notes that over the last decade Berkshire returned 246.4% against 230.9% for the S&P 500, but the Economist decided to examine a 14-year comparison during which the latter did manage to outperform. “Seriously? Fourteen? That’s from just after the financial crisis. In FACT, in all but TWO of the annual intervals from recent to 59 years, BRK wins, and generally by A LOT,” Bloomstran writes.

Story continues

Another area of contention is the Economist’s comparison between Berkshire and Apple AAPL and Microsoft MSFT. The magazine says the two tech giants have more than three times the annual profit of Berkshire, Bloomstran notes.

“Really? BRK’s annual economic earnings are roughly $60 billion (earning more at the moment since they are earning nearly $15 billion alone on just their T-bills).”

Apple, he says, currently earns about $100 billion, (which is not three times Berkshires $60 he notes acidly), while the iPhone maker is capitalized at more than $3 trillion, or roughly 34 times earnings. Microsoft earns $88 billion and also sports a market cap of about $3 trillion, equating to roughly 35 times earnings.

“Berkshire, meanwhile sports a 16.7 times multiple, higher than in recent years but still a discount to my appraisal of intrinsic value,” says Bloomstran.

An unsuspecting reader of the Economist “might conclude that the index is a better investment than BRK,” says Bloomstran. “At what is likely a secular peak in the index, that’s a very dangerous suggestion.”

Markets

U.S. stock-index futures ES00 YM00 NQ00 have recovered losses after the jobs data as benchmark Treasury yields BX:TMUBMUSD10Y slip. The dollar index DXY is falling, while oil prices CL.1 rise and gold GC00 is trading around $2,528 an ounce.

For more market updates plus actionable trade ideas for stocks, options and crypto, .

The buzz

The August nonfarm payrolls report showed a net 142,000 jobs were added, higher than July’s downwardly revised 89,000, but lower than the 161,000 expected by economists.

The unemployment rate came in line with forecasts at 4.2% and the month-on-month hourly wages grew 0.4%. higher than the downwardly revised minus 0.1% in July and above forecasts for 0.3%.

New York Fed President John Williams speaks at a Council on Foreign Relations event at 8:45 a.m., and Fed Gov. Christopher Waller makes comments on the economic outlook at 11:00 a.m. — the last speaker before the Fed goes silent ahead of its next ratee decision.

Broadcom shares AVGO are down nearly 10% in premarket action after its earnings guidance could not match investor expectations.

Salesforce CRM late on Thursday announced a deal to acquire cloud startup Own Co. for about $1.9 billion in cash.

Best of the web

Nvidia’s AI chips are cheaper to rent in China than U.S.

AI and the labor market: Will firms hire, fire, or retrain.

Leaked reports and political heat are testing trust in economic data.

The chart

The iShares Silver Trust SLV was launched in 2006 and it kept up pretty well with its peer the SPDR Gold Shares fund GLD up until the early 2010’s notes Bespoke Investment. However, if you’d put $10,000 into the SLV at inception it would be worth a little more than $18,500 today, whereas the same investment for the GLD would have become about $35,400.

Top tickers

Here were the most active stock-market tickers on MarketWatch as of 6 a.m. Eastern.

Random reads

Common food dye found to make skin and muscle temporarily transparent.

Speaking of strange food: Cinnamon and salty bacon launched.

Disney-obsessed couple lose lawsuit to get back into exclusive Club 33.

Most Read from MarketWatch

EMEA Tribune is not involved in this news article, it is taken from our partners and or from the News Agencies. Copyright and Credit go to the News Agencies, email news@emeatribune.com Follow our WhatsApp verified Channel