No. of Recommendations: 2
"" Berkshire trails red-hot S&P by biggest margin so far this year
With hot tech stocks fueling its solid 5.1% gain in May, the S&P 500 closed today at a fresh record high.
In a sharp contrast, shares of Berkshire Hathaway were close to unchanged for the month.
As a result, Berkshire's widely held B shares are now running 16.3 percentage points behind the benchmark index year-to-date, the biggest gap so far in 2026.
Warren Buffett Watch Graph
At the end of March, Berkshire had a small winning margin of 1.8 percentage points over the S&P.
But then the S&P zoomed more than 35% higher in April and May while Berkshire fell almost 11%.
Warren Buffett Watch Graph
Great expectations for AI profits, and massive spending to build the infrastructure needed to generate all that future artificial intelligence, have been sending the tech stocks that dominate the market-capitalization-weighted S&P sharply higher.
Berkshire, on the other hand, is extremely conservative with minimal exposure to AI, nearly $400 billion in cash, and solidly profitable, but not spectacular, operating companies.
If enthusiastic AI investments turn out to be a bubble, (the concept has its own Wikipedia page), as some have been warning (for months), that caution may well pay off over time, as it did when Warren Buffett avoided the high-flying internet stocks of the late 1990s.
While its overall AI exposure remains relatively small, it does appear new CEO Greg Abel did, in a decidedly un-Buffett-like move, triple the company's Alphabet stake during the first quarter. At almost $22 billion, it is the fifth largest equity holding in the portfolio.
Warren Buffett Watch Graph
Berkshire shares are now down 12% since their all-time closing high in May of last year, just before Buffett revealed he planned to step down as CEO at the end of 2025.
According to a chart analysis by 22V Research, as reported by CNBC.com, Berkshire's relative performance ratio vs. the S&P has dropped to its lowest levels since 2007.
In a note to clients, the firm said, "Berkshire Hathaway was a good bellwether for the S&P, but that relationship appears to be changing."
Regulatory delay for railroad merger opposed by Berkshire's BNSF
The U.S. Surface Transportation Board is pausing its review of the proposed $85 billion merger between Union Pacific and Norfolk Southern.
The regulator, which has final say over whether the companies will be able to create the country's first transcontinental freight railroad, wants more information from them by late July on how the tie-up would affect competition.
UNP and NSC already had to file a revised application in April after their first proposal was rejected in January.
Now the STB says, "Several aspects of the revised application... are unclear or underdeveloped and require supplementation at this stage."
A final decision may be delayed until the fall of 2027.
Warren Buffett Watch Graph
Reuters file photos
Berkshire's BNSF, which has been critical of the merger from the start as anti-competitive, is part of the Stop the Rail Merger Coalition recently formed by rival railroads, customers, and labor unions.
Last August, BNSF announced a "collaboration" with CSX to provide "seamless, efficient, coast-to-coast solutions to ship between the western and eastern U.S."
A few days later, Buffett shot down speculation Berkshire would counter the UNP-NSC deal with a bid to acquire CSX, telling CNBC the company was not in the market to buy any railroad.""
https://link.cnbc.com/public/45940834 