A recent academic study shows what many people have long believed. That Warren Buffett’s stock picks for Berkshire Hathaway have beaten the market by a commanding margin. The study by Gerald S. Martin and John Puthenpuracakal entitled, “Imitation is the Sincerest Form of Flattery: Warren Buffett and Berkshire Hathaway” examines Buffett’s stock picking ability from 1980-2003. They find:

Ruling out the major alternate explanations to Berkshire’s investment performance leaves us with the potential explanation that Warren Buffett is an investor with superior stock-picking skills that allows him to identify undervalued securities and thus obtain risk-adjusted positive abnormal returns. Consistent with this explanation, we find a significant positive stock price reaction around the announcement that Berkshire has acquired a stock suggesting that Berkshire’s investments are viewed as positive information signals by the stock market.

With Buffett shying away from open-market stock market purchases, except for takeovers, there has been little for Buffett-followers to grab hold of recently. Buffett’s biggest investment at the moment seems to be a bearish bet against the U.S. dollar. Some commentators have noted that Buffett has been on the losing end of this trade during 2005. It should not be surprising that in light of this and scandals at Berkshire subsidiary Gen Re, the stock of Berkshire Hathaway has been weak with the stock down some 5.6% (as of Oct. 11) since the beginning of the year.

This content, which contains security-related opinions and/or information, is provided for informational purposes only and should not be relied upon in any manner as professional advice, or an endorsement of any practices, products or services. There can be no guarantees or assurances that the views expressed here will be applicable for any particular facts or circumstances, and should not be relied upon in any manner. You should consult your own advisers as to legal, business, tax, and other related matters concerning any investment.

The commentary in this “post” (including any related blog, podcasts, videos, and social media) reflects the personal opinions, viewpoints, and analyses of the Ritholtz Wealth Management employees providing such comments, and should not be regarded the views of Ritholtz Wealth Management LLC. or its respective affiliates or as a description of advisory services provided by Ritholtz Wealth Management or performance returns of any Ritholtz Wealth Management Investments client.

References to any securities or digital assets, or performance data, are for illustrative purposes only and do not constitute an investment recommendation or offer to provide investment advisory services. Charts and graphs provided within are for informational purposes solely and should not be relied upon when making any investment decision. Past performance is not indicative of future results. The content speaks only as of the date indicated. Any projections, estimates, forecasts, targets, prospects, and/or opinions expressed in these materials are subject to change without notice and may differ or be contrary to opinions expressed by others.

Please see disclosures here.

Please see the Terms & Conditions page for a full disclaimer.