Berkshire Hathaway US stock portfolio ten-year performance - Best Guess

We got a request to come up with a guesstimate for the actual returns of Berkshire Hathaway’s US stock portfolio returns for the last ten years. So, here is our attempt: as some background, Berkshire Hathaway does not provide this information in any of the regulatory filings and chooses not to do so in his annual letter to shareholders. Instead, Warren Buffett keeps a tally of the book value of the company as a whole. The book value has grown at an outstanding rate, but doesn’t really answer the question as to how well he has done in the US stock portfolio which he manages. We approached the problem by making a few assumptions that simplifies the problem and then extrapolating the results:

1. Select the set of stocks that are common in the portfolio from ten years ago and the current portfolio (06/2011 13F). Almost 70% of the valuation of the portfolio from 2001 was left untouched throughout the ten years and so the assumption is a good approximation.
2. Normalize the share counts and adjust the market values accordingly.
3. Come up with a Compounded Annual Growth Rate (CAGR) based on these normalized values.

Below is a spreadsheet that shows the normalized share counts and market values of the stocks that were common to both the portfolios:



Below is a comparative look at the CAGR over the last ten years of the portfolio vs the S&P 500:




The estimate shows the portfolio outperformed the S&P 500 by 2.17% over the last ten years – these are good numbers but not comparable to the top hedge funds returns over the period – they have returned well into the high-teens and low-twenties over the same period. The actual performance including dividends should be around 2% higher annualized.