Warren Buffett failed to beat the S&P 500 over a five-year period for the first time since he took control of Berkshire Hathaway in 1964.
The news was highlighted in his annual letter to shareholders, released on Saturday, which showed shares in Berkshire increased by 18% in 2013 versus a 32% rise in the S&P 500.
Buffett (pictured) was not too concerned by the underperformance following the strong run in markets.
'Charlie Munger, Berkshire’s vice chairman and my partner, and I believe both Berkshire’s book value and intrinsic value will outperform the S&P in years when the market is down or moderately up,' his letter read. 'We expect to fall short, though, in years when the market is strong – as we did in 2013.'
He added: ‘We have underperformed in ten of our 49 years, with all but one of our shortfalls occurring when the S&P gain exceeded 15%.’
Buffett remained confident that over the cycle Berkshire would outperform.
‘Over the stock market cycle between year-ends 2007 and 2013, we overperformed the S&P. Through full cycles in future years, we expect to do that again. If we fail to do so, we will not have earned our pay. After all, you could always own an index fund and be assured of S&P results.'
Other performance metrics were positive with Berkshire making record earnings of $19.5 billion in 2013 versus $14.8 billion in the previous year.
The Sage of Omaha also indicated Berkshire was on the lookout for more acquisitions following last year's deal to buy a big stake in Heinz and the NV Energy purchase, on which the firm spent a combined $18 billion.
‘With the Heinz purchase, moreover, we created a partnership template that may be used by Berkshire in future acquisitions of size,’ Buffett told shareholders.