By Luciana Lopez
As they gather this week at the sprawling conglomerate's annual meeting in Omaha, Nebraska, and rub shoulders with its iconic chairman, Warren Buffett, the fact that its shares are once again beating the broader market should help dim the sour memory of its recent run of underperformance.
Last year, for the first time in nearly half a century, the gain in Berkshire's book value over five years - Buffett's preferred measure of performance - lagged the total return of the S&P 500 (.SPX).
Buffett himself concedes his company is just not built to run neck and neck with the kind of raging bull market that produced a 128 percent total return for the S&P from the end of 2008 through 2013. Berkshire, which saw its net worth grow just 91 percent by comparison in that run, does best in a weak market - the weaker the better, perhaps.
"For impressive outperformance you need a crisis," said Meyer Shields, an analyst with Keefe, Bruyette & Woods Inc.
"He's a headline investor," said Michael Yoshikami, chief executive of Destination Wealth Management, who owns about $18 million of Berkshire's class B stock. "If bad news comes, he's looking."
So with the S&P delivering a return, including reinvested dividends, of just 2.5 percent through the first four months of 2014 - and less than 2 percent on price alone - the 8.7 percent gain in Berkshire shares should provide shareholders some comfort.
More importantly for Buffett, it could also offer him some cover as he hosts the company's annual meeting in Omaha on Saturday, even though he will still face questions about how well the company can do going forward and why, at 83, he still hasn't named a successor.
Often called the called the Woodstock of capitalism, tens of thousands of people make the trek annually to hear Buffett and his partner, Charlie Munger, 90, answer hours of questions about the future of Berkshire, which has operations ranging from insurance to house paint.
THE ELEPHANT GUN
One topic of discussion is certain to be what he might buy next and how me might structure his next big deal.
Analysts at Barclay's estimate that Berkshire now has about $25 billion available for purchases, but as with last year's $23 billion Heinz deal, he may opt not to go it alone as he hunts for his "elephants." In that deal, Buffett broke new ground for Berkshire, partnering with private equity firm 3G Capital for the deal.
He could use that template again, Buffett said in an interview with Reuters last week. But he acknowledged that such deals aren't exactly thick on the ground.
"If I live long enough we'll do another one," he joked.
Buffett is transparent about his purchase criteria.
"Our long-held acquisition strategy is to acquire businesses at sensible prices that have consistent earning power, good returns on equity and able and honest management," Berkshire noted in a regulatory filing this year.
Finding a company that fits his requirements and can soak up that much cash could be a challenge, as could replicating the hands-down success of his largest-ever deal: the $26 billion purchase of Burlington Northern Santa Fe in 2009.
In hindsight, he looks prescient for buying the railroad on the eve of a U.S. oil production renaissance that sparked a boom in an oil-by-rail business now dominated by BNSF.
He called it an "all-in wager on the economic future of the United States." Five years later, BNSF now accounts for nearly 20 percent of Berkshire's pretax income.
No less an investor than Bill Gross, in fact, pointed out how hard it will be for investing titans such as himself and Buffett to keep replicating their past success.
Last year Gross, the chief investment officer of the bond firm Pacific Investment Management Co, said that he, Buffett and others had seen their returns boosted over the past few decades "during perhaps a most advantageous period of time, the most attractive epoch, that an investor could experience."
In one of his monthly investment outlook missives, Gross mulled whether that time could be drawing to a close: "Perhaps ... it was the epoch that made the man as opposed to the man that made the epoch."
(Additional reporting by Jonathan Stempel and Jennifer Ablan; Editing by Dan Burns, Bernard Orr)