Core Viewpoint - Berkshire Hathaway's Class A shares have experienced a historic underperformance relative to the market, indicating that the "Buffett premium" may not be immediately passed on to successors [1][6]. Group 1: Stock Performance - Since the leadership transition in early May, Berkshire Hathaway's Class A shares have declined by 14%, marking one of the worst performances relative to the S&P 500 in decades, while the S&P 500 has risen by 11% during the same period [3][5]. - This underperformance is one of the worst three-month periods for Berkshire relative to the S&P 500 since 1990 [5]. Group 2: Market Sentiment and Fundamentals - Despite the poor stock performance, Berkshire's operational performance remains strong, with profit growth in its BNSF railroad, utilities, and manufacturing, service, and retail sectors in Q2 [8]. - Excluding currency fluctuations, Berkshire's operating profit grew by 8% year-over-year in Q2, but this positive data has not prevented investor sell-offs [8]. - Earlier this year, investors viewed Berkshire as a safe haven amid market turbulence, but as recession fears eased, funds have shifted back to rapidly growing tech stocks [8]. Group 3: Valuation and Buyback Opportunities - Berkshire's stock buyback plan was halted by Buffett in May 2024, with buybacks only occurring if the repurchase price is believed to be below the company's intrinsic value [9]. - The recent stock price correction may create an opportunity for Buffett to resume buying, as the stock was previously considered overvalued [9].

Core Viewpoint - Berkshire Hathaway's A shares have declined by 14% since the leadership transition in May, marking one of the worst performances relative to the S&P 500 in decades, as investors reassess the company's value post-Buffett [1][3]. Group 1: Performance Analysis - The recent decline is the worst relative performance against the S&P 500 for Berkshire since 1990, highlighting the potential challenges in leadership succession [3][4]. - Historically, Berkshire's stock has created a "Buffett premium," with a cumulative return of 55,000 times since 1965, significantly outperforming the S&P 500 by 140 times [4]. - The stock's valuation reached a rare high, with a price-to-book ratio of nearly 1.8, the highest since October 2008, before the recent downturn [5]. Group 2: Market Sentiment - Despite solid operational performance, with an 8% increase in operating profit year-over-year in Q2, market sentiment has led to significant sell-offs [5]. - Investors previously viewed Berkshire as a safe haven during market turbulence, but as recession fears eased, funds have shifted towards high-growth tech stocks [5]. Group 3: Future Outlook - The recent stock price correction may create a buying opportunity, as Berkshire's CEO Buffett has indicated he will only repurchase shares if the price is below the company's intrinsic value [6]. - There is speculation that Buffett may soon resume stock buybacks following the recent valuation adjustments [6].