Warren Buffett‘s Berkshire Hathaway (BRK.A·BRK.B) is enduring its worst relative underperformance since 2008. The BRK.A/SPY (Berkshire vs S&P 500) ratio has plunged from its 2024~2025 peak, evaluated as the “most severe relative slump since immediately before the 2008 financial crisis” per Benzinga. The S&P 500’s rally is led by AI mega-caps like Nvidia and Microsoft, while Berkshire — anchored in insurance, rail, energy, and consumer staples — has lagged.

This article synthesizes Benzinga, Berkshire IR, Bloomberg, and Seeking Alpha to cover Warren Buffett value-investing limits: BRK.A/SPY relative performance, 5 reasons for the lag, Berkshire portfolio breakdown, record cash hoard of $360B, successor Greg Abel’s takeover schedule, value vs growth comparison, cyclical vs structural-change hypotheses, and 5 balanced investment strategies. Berkshire official materials at Berkshire Hathaway.

The ratio of Berkshire Hathaway Class A (BRK.A) to S&P 500 SPDR ETF (SPY) is the leading proxy for value investing vs broad market performance. With 2008 financial crisis as baseline 100, the ratio rose to ~135 by 2024 — favoring value — but has tumbled to ~105 in 2025~2026, the most severe relative slump since 2008.

The ~105 level in May 2026 is nearly identical to immediately before the 2008 crisis. Per Benzinga, “value investing strategy is failing to keep pace with the growth-stock rally”, and whether this relative weakness is cyclical or structural remains the core unanswered question.

Berkshire’s relative weakness stems from 5 compounding factors, not a single cause. AI mega-cap leadership + traditional business mix + rate-cut cycle + ETF/passive concentration + Buffett’s selling signals.

The biggest factor is AI mega-cap leadership. NVDA·MSFT·META·GOOGL drove the S&P 500 higher while Berkshire has effectively no direct AI exposure — a decisive differentiator. Auto-concentration of ETF and passive flows into mega-caps also structurally sidelines value names.

Berkshire Hathaway is broadly composed of 5 segments. Insurance ~30%, Rail (BNSF) ~15%, Energy (BHE) ~12%, Consumer·Manufacturing ~10%, Stock Portfolio ~33%. Within stocks, Apple represents ~40% — the largest single position.

The portfolio profile emphasizes “predictable cash flows + strong moats + stable dividends“. Insurance·rail·energy are heavily regulated with low volatility but limited rapid growth. Beyond Apple, Coca-Cola·American Express·Bank of America anchor the stock portfolio, with very limited direct AI exposure.

As of May 2026, Berkshire holds about $360B in cash and Treasuries — a record high. Rising from $140B in 2020 to $325B in 2024 and now $360B, the market reads this as “Buffett sees the market as expensive“.

Buffett has repeatedly noted “a shortage of attractive buying opportunities” in shareholder letters. Recent quarters saw Berkshire partially trimming Apple and BAC, accumulating cash. This defensive stance has two faces: a short-term headwind for value, but also enormous dry powder for buying drawdowns — a potential catalyst for long-term re-rating.

In May 2025, Berkshire Hathaway formally announced Greg Abel as next CEO. Born in Canada in 1962, Abel chairs and vice-chairs BHE (Berkshire Hathaway Energy), known for strong operational management and data-driven decision making in energy. Takeover is scheduled for end-2025, with Buffett stepping back from chair to honorary chair.

The key question for the Abel era: how will Berkshire’s portfolio evolve. He is expected to retain value-investing essentials while gradually expanding AI·tech exposure. In investments, Todd Combs and Ted Weschler are CIO candidates, already managing portions of the stock portfolio.

Neither value nor growth is absolutely superior — leadership rotates by market cycle. Five core comparisons: PER, growth rate, stability, dividend, innovation exposure.

The market is currently in a growth-favored phase as AI cycles run strong, but a return to value cycles is plausible depending on rates·earnings·geopolitics. Long-term investors should hold a balanced value-growth portfolio rather than betting 100% on either side.

Benzinga frames it as “an open question whether this is cyclical or structural“. Both hypotheses have merit.

Cyclical hypothesis: if AI cycles peak and correct, value rotation kicks in. Berkshire’s $360B cash becomes drawdown ammunition, and successor Greg Abel can engineer fresh momentum. Structural-change hypothesis: AI permanently transforms the tech-economy paradigm, ETF/passive flows lock into mega-caps, and traditional businesses lose share permanently. Value-investing strategy’s efficacy weakens and the gap may not close even with rate normalization.

Five investment strategies drawn from the Buffett case: BRK.B phased buying + S&P 500 ETF + dividend ETF + AI mega-cap core + 20% cash. Avoid betting 100% on either side — balance value-growth-cash with three pillars to handle cycle volatility.

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