Core Viewpoint - Berkshire Hathaway, led by Warren Buffett, has experienced its largest underperformance against the S&P 500 in decades, attributed to Buffett's impending retirement and investor sell-offs [2][3]. Group 1: Stock Performance - Since May 2, when Buffett announced the transfer of control to Greg Abel, Berkshire's Class A shares have dropped by 14%, contrasting sharply with the S&P 500's 11% increase [2]. - The gap in performance is one of the largest since 1990, with only the early pandemic period showing worse quarterly results for Berkshire [3]. - Berkshire's Class A shares reached a record price of $812,855 in May, but there is uncertainty about who is selling these high-vote shares [3]. Group 2: Business Operations - Despite the stock sell-off, Berkshire's subsidiaries, including BNSF Railway and several utility companies, reported profit growth in Q2, with overall operating profit increasing by 8% year-over-year when excluding currency fluctuations [3]. - Berkshire's market valuation has risen to a price-to-book ratio of nearly 1.8, the highest since October 2008 [4]. Group 3: Investment Strategy - Buffett has ceased stock buybacks since May 2024, only repurchasing shares when he believes the price is below intrinsic value [5]. - Recent comments from shareholders suggest that the stock may be overvalued, with expectations that a market correction could prompt Buffett to resume buybacks [6]. - Berkshire has been a net seller of stocks for 11 consecutive quarters, with cash levels reaching 30% of total assets by the end of June [6].

Core Viewpoint - Terry Smith, known as the "UK Buffett," criticized Novo Nordisk in his latest semi-annual shareholder letter, labeling it the biggest drag on the fund's performance in the first half of the year [1][3]. Fund Performance - The Fundsmith Equity Fund reported a -1.9% return for the first half of 2025, with a cumulative return of +593.6% since inception, resulting in an annualized return of +14.1% [2]. - The fund's size reached £20.1 billion as of June 30, 2025 [2]. Key Holdings and Challenges - Novo Nordisk, the fund's eighth-largest holding valued at approximately $1 billion, saw its European stock price decline nearly 30% year-to-date [3]. - Despite the global popularity of its diabetes and obesity drug semaglutide, the company struggles to convince investors that its product pipeline can withstand competitive pressures [3]. - Smith also criticized the Danish medical device manufacturer Coloplast, which has also experienced a nearly 30% decline in stock price year-to-date, following operational failures after two significant acquisitions [3]. Management Changes and Market Conditions - Both Novo Nordisk and Coloplast's former CEOs resigned in May, which Smith viewed as a disadvantage given the slow pace of transformation within the companies [3]. - The appreciation of the British pound against the US dollar by 9% from the beginning of the year to June 30 impacted the fund's net asset value, with Smith expressing skepticism about the sustainability of this trend [3].