On Saturday, Warren Buffett’s annual letter to shareholders of Berkshire Hathaway (BRK.B) was posted. Amidst commentary on stock buybacks and a brief discussion of the company’s performance in 2022, the letter did not have any explosive market-moving news or commentary. As a result, price action today has been relatively uneventful. That same sort of sleepy price action also applies to the past few months. Overall, the Oracle of Omaha’s company has been treading water since last fall with a flat 50-DMA and 200-DMA to boot.

Although BRK.B is trending sideways over the past few months, looking back since the start of last year, the stock has performed remarkably well.  As shown by the relative strength line below, strong performance in early 2022 (as the equities began to enter a bear market) led BRK.B to massively outperform the S&P 500 (SPY). Although still outperforming, the pattern at the start of this year has been the polar opposite of last year.  Given equities have broadly rallied and Berkshire has been rather stagnant, the stock’s relative strength has taken a sharp turn lower headed into this weekend’s letter and the annual conference coming up in a few months.

In the table below, we break down the performance of the company’s b-shares after the release of Buffett’s annual letters.  Again, the stock’s reaction today has been a bit muted, with the flat move lower than the historical average of a 0.54% gain. Going forward, performance has been mixed. While one week and one month out from the letter have averaged gains and positive moves more than half the time, three months later has seen BRK.B fall more than half the time.  From there, consistent with what has tended to be Mr. Buffett’s optimistic long-term view, performance has tended to be more consistently positive with a move higher nearly two-thirds of the time one year later for an average gain of 13.7%. Click here to learn more about Bespoke’s premium stock market research service.

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