Buffett's Berkshire Hathaway dives 32 percent in 2008

The shares of billionaire Warren Buffett's Berkshire Hathaway dropped 32 percent in 2008, the worst performance in more than three decades, as the U.S. recession forced down the value of the firm's equity holdings and derivative bets.

Most of the decline was in the last three months, when Berkshire posted its fourth-straight decline in quarterly profit amid sagging insurance results. The company still beat the 38 percent tumble of the Standard & Poor's 500 index, the 14th year in 20 that Buffett outperformed the benchmark.

Just six of 1,591 U.S. stock-mutual funds with at least $250 million in assets made money for investors in 2008, according to data compiled by Bloomberg.

"In 2008, there was nowhere to hide," said Guy Spier, chief investment officer at Aquamarine Capital Management, which holds shares in the Omaha, Neb.,-based company.

Berkshire closed at $96,600 on Dec. 31, compared with the $141,600 close in 2007, when the stock advanced 29 percent for the year. The slide for the year is the worst since at least 1976, according to Global Financial Data, which keeps records on historical prices.

Shares of Berkshire Class A stock gained $3,390 on Friday to close at $99,990. In the last 52 weeks, it has been as low as $74,000 a share and as high as $147,000.

Buffett, 78, poured money into stocks as prices fell. He increased Berkshire's pace of deals as the contraction in credit markets hobbled buyout firms.

Buffett spent about $3.9 billion on equities in the third quarter, making Berkshire the biggest shareholder in ConocoPhillips, the second-largest U.S. refiner. Berkshire announced 12 acquisitions in 2008, compared with eight in 2007, and agreed to buy $8 billion in preferred shares from Goldman Sachs and General Electric.

"Buffett has the opportunity to do what he does best, which is acquire new companies at prices that have him licking his lips," said Frank Betz, a partner at Carret Zane Capital Management, which holds Berkshire shares. "I don't think Mr. Buffett is bummed out at all."

Jackie Wilson, a spokesman for Berkshire, didn't return a call seeking comment.

Not all of his bets have worked according to plan. Berkshire agreed in July to a $3 billion preferred-stock investment in Dow Chemical to help finance its $15.4 billion takeover of Rohm & Haas. Dow shares plunged after Kuwait withdrew a deal to buy half its plastics unit for $9 billion, prompting Standard & Poor's and Moody's Investors Service to cut the firm's ratings.

Most of the top holdings in Berkshire's stock portfolio, valued at $76 billion as of Sept. 30, declined at least 15 percent in the last three months of 2008. ConocoPhillips plunged 29 percent in the fourth quarter. Coca-Cola, Berkshire's top holding, dropped 14 percent, and No. 2 Wells Fargo plummeted 21 percent.