3 Value Stocks That Outperformed Berkshire Hathaway In 2014

There is no doubt that Berkshire Hathaway Inc. (BRK.B - Analyst Report) is a stock that most investors want in their portfolio, primarily because, as a shareholder, one is assured that the company is being managed by one of THE best investors of all times, its CEO chairman – Warren Buffett. Moreover, the company has diverse businesses comprising nearly 60 wholly owned subsidiaries engaged in everything from construction, furniture, and insurance to banking, soft drinks, and jewelry. This gives investor exposure to some of the strongest companies around and assures investors of strong returns from Berkshire Hathaway.

 

Warren Buffett, the doyen of value investing by virtue of his unique skills,has created tremendous value for shareholders over the last 49 years with book value growing from $19 to $134,973, a compounded rate of 19.7% annually. 

 

In 2014, the stock gained 29.4% year to date – more than double the gain of 13.6% in the S&P 500 (SPX). The stock price of the company boosted by a number of acquisitions both bolt-on and new to the company. These included the buyout of auto dealer Van Tuyl Group, electric transmission company AltaLink, batteries producer Duracell, investment in Burger King and the expansion of Berkshire Hathaway Specialty Insurance business.

 

Nevertheless, the stock felt the effect of some of Buffett’s big stock bets that tanked in 2014. These include the investment in British supermarket chain Tesco Corporation (TESO), shares of which collapsed after suffering accounting issues. Stocks of some of the big U.S. companies held by Buffett such as The Coca-Cola Company (KO) and Exxon Mobil Corporation (XOM) gave weak performances through the latter stages of the bull market. One of the most significant deals which failed to pay off was his investment in International Business Machines Corporation (IBM). It was the first investment of Buffett in technology and now the stock is reeling under pressure due to weak earnings . The stock lost 12% this year.  Moreover, the Chinese electric car maker BYD Company Ltd. (BYDDF)—in which Buffett has a significant stake—lost 16% of its value in 2014.