S&P trounces Berkshire by biggest margin since 2009

Berkshire Hathaway Class A shares gained 11.0% in 2019 in their fourth straight annual advance.

The benchmark S&P 500 index, however, soared 31.5% (with dividends included) in its best year since 2013.

The 20.5 percentage point gap is the biggest win for the S&P since 2009 when it beat Berkshire by 23.8 percentage points.

Berkshire outperformed the S&P in the previous three years and in 12 of the last 19 years.

In Buffett's letter to shareholders released last February, he ended his decades-long practice of comparing Berkshire's per-share book value to the S&P. (See the letter for an explanation of his reasoning.)

Instead, Buffett will compare Berkshire's stock price to the S&P. While conceding the markets "can be extremely capricious," Buffett believes that over time, Berkshire's stock price "will provide the best measure of business performance."

"Our answer, invariably, is no"

A big factor holding back Berkshire's stock is its $128 billion in cash. With rates so low for years now, that cash just doesn't grow very much.

Some shareholders and analysts are urging Buffett to do some buying with that money, but he hasn't found anything he can buy at what he considers a decent price.

So a Financial Times story headlined "Warren Buffett spurned Tiffany as deal drought continued" (subscription required) got a fair amount of attention this week.

The FT reported that after LVMH approached Tiffany about a takeover, the U.S. jewelry retailer asked Buffett if he wanted to make his own bid.

Berkshire bought $250 million in Tiffany bonds during the financial crisis in 2008, but Buffett "politely rejected its advances this time" said the newspaper, quoting "people briefed on the matter."  The FT says Buffett "confirmed the conversation took place." (LVMH wound up with a deal to pay $16.2 billion for Tiffany.)

The story generated some discussions about how Tiffany would be a good fit with Berkshire's Borsheims jeweler and prompted some speculation about what Buffett might have liked or not liked about Tiffany's fundamentals.

All of that, however, may not have mattered much.

At the 1999 Berkshire annual meeting, Buffett told shareholders, "We get approached when somebody, occasionally, when somebody has a takeover bid. And they say, 'Would you like to top it or something?' To which our answer, invariably, is no."

Here's the brief clip from CNBC's Warren Buffett Archive:

BUFFETT AROUND THE INTERNET

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BERKSHIRE STOCK WATCH

BERKSHIRE'S TOP STOCK HOLDINGS 

Berkshire's top stock holdings by market value, based on today's closing prices. The number of shares held is as of September 30, 2019, as disclosed in the company's November 14 13F SEC filing.

The full list of holdings and current market values is available from CNBC.com's Berkshire Hathaway Portfolio Tracker.

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-- Alex Crippen, Editor, Warren Buffett Watch