Three-quarters of the way through 2019, Warren Buffett’s conglomerate Berkshire Hathaway is trailing the renowned investor’s favorite benchmark, the S&P 500 — as it’s done over the past decade.

Besides having a large stock portfolio, Berkshire owns an odd mix of companies, some well-known such as the Geico insurance company and the Dairy Queen restaurants, and other far less familiar names such as MidAmerican Energy and Iscar Metalworking. The assortment produces steady profits but not significant growth, and occasionally needs some new blood in order to outperform the market.

Finding that next big acquisition has been hard to come by for Buffett, one reason he says Berkshire hasn’t kept up with the overall market. Buffett says low interest rates have made it easier for other investors to borrow money and bid up the prices of acquisition targets.

On the investment side, where Buffett earned his reputation, he’s gotten good returns investing in bellwethers such as Apple and Bank of America, but a big investment in Kraft Heinz has turned sour.

While many people view Buffett as the world’s pre-eminent investor, in the years since the financial crisis — when Buffett made a number of profitable deals — Berkshire Hathaway has delivered a 353% return while the S&P 500 index has delivered 468% in gains when dividends are included. This year alone, Berkshire’s stock is up just 8% compared to the total market’s 25% gain.

That performance has tested the patience of some longtime Buffett backers. Investor David Rolfe sold off his firm’s roughly $100 million stake in Berkshire during this year. Rolfe expressed frustration with Buffett’s investment choices and inability to find productive uses for Berkshire’s cash.

“Thumb-sucking has not cut the Heinz mustard during the Great Bull Market of 2009-2019,” Rolfe wrote to investors in his Wedgewood Partners fund.

Rolfe said Buffett should have bet heavily on a handful of stocks he knows well — such as Visa and Mastercard — when he couldn’t find major acquisitions during the past decade.

“Buffett is incredibly well-versed in the payments processing industry given his half-century knowledge in longtime holding American Express. These two stocks should have been layups for Buffett,” Rolfe said about Visa and Mastercard. Both shares are up more than 150% over the past five years.

To be sure, the growth in Berkshire’s stock price since 1965 has outpaced the Standard & Poor’s 500 index in all but 17 years to deliver a compounded annual return of 20.5% overall compared to the market’s 9.7% through 2018. But Buffett has repeatedly warned investors not to expect that type of return going forward because Berkshire’s size makes it nearly impossible to keep growing significantly faster than the overall market.

Buffett’s last major acquisition was Berkshire’s 2016 purchase of Precision Castparts. More than three years without a sizeable deal is a long stretch for Buffett although he has always been willing to wait for a deal at the right price. The fact that Berkshire is holding more than $128 billion in cash and short-term investments — earning little interest — shows Buffett has already been waiting some time to find the right deal.

Berkshire teamed up with the Brazilian firm 3G Capital to combine Heinz with Kraft back in 2015 in a $54 billion deal. Early this year, Berkshire took a $3 billion write down on its Kraft Heinz investment at roughly the same time the company slashed the value of its Oscar Meyer and Kraft brands by $15.4 billion. Kraft Heinz wrote down its own value by another more than $1 billion in August, and also restated financial results after an investigation by the U.S. Securities and Exchange Commission.

The Kraft Heinz investment also remains a relatively small part of Berkshire overall. Berkshire said Saturday that Kraft Heinz contributed $467 million to Berkshire’s earnings in the first nine months of the year. Berkshire estimated that its entire Kraft Heinz stake of 325 million shares was worth $9.1 billion at the end of September — significantly less than the $13.8 billion it estimated Kraft Heinz’s value at a year earlier in 2018.

The write down at Kraft Heinz took what had been a good investment for Berkshire and made it a OK one now, said Andy Kilpatrick, who wrote “Of Permanent Value: The Story of Warren Buffett.”

“It looked like a good investment at the time,” Kilpatrick said. “But it’s all been pretty bleak this year.”

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