Berkshire Hathaway shares have dropped nearly 15 per cent since peaking in May, just before Warren Buffett announced he’ll step down as chief executive at the end of 2025.
Is the supposed Buffett premium wearing off, or is something else dragging the stock down? (Disclosure: I own Berkshire shares.)
The decline contrasts sharply with the S&P 500’s double-digit gains over the same period, marking one of Berkshire’s worst three-month underperformances in decades.
As the FT put it, the sell-off came as investors “reckoned with the impending retirement of a man who has been a fixture in finance for more than half a century”.
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Maybe, but that feels a little dramatic. Buffett is 94; his retirement isn’t exactly a surprise.
More likely, two other factors are at play. First, UBS and Morningstar note Berkshire often outperforms in downturns but lags during risk-on, tech-driven rallies.
This summer, investors embraced high-growth stocks and shrugged off slowdown fears.
Second, Berkshire was pricey. In May, it traded at 1.8 times book value – well above its long-run average of 1.4–1.5. Even now, it’s above 1.5. Not especially cheap, and apparently not cheap enough for Buffett either: Berkshire didn’t repurchase any shares in the first half of 2025 or during the sell-off.
In the end, the dip may reflect less about Buffett’s exit, and more about the price.
