Guru Gems Portfolio Update May 2026 - The Bounce Back
A short portfolio update and revisiting Berkshire's 1999 letter
Welcome back!
After several longer deep-dives in recent weeks, I wanted to keep this week’s issue short and focused.
Here is what’s on the menu for today:
1️⃣ A quick update on the Guru Gems portfolio
2️⃣ A look at the current watchlist
3️⃣ One interesting thing I read this week
Start here if you are new to Guru Gems.
💎 Guru Gems Portfolio update
The Guru Gems portfolio currently includes 13 stocks and a 26% cash position.
👉 Full Guru Gems portfolio and all transactions are available in the Guru Master Google Doc
At the end of March, the portfolio was down nearly 6%, after a perfect storm of SaaSpocalypse and Luxury sell-off had hit the portfolio.
Since then there has been a nice rebound as can be seen from the chart below.
The portfolio is up 4% since I started Guru Gems a bit more than a year ago. Not exactly a spectacular result, but also not terrible…
The bounce back was driven by Constellation Software (+15% from end March), Amazon (+30% from end March) and who else than the ultimate Guru Gem Alphabet (+32% since the start of Q2).
Over the past month, there were only 2 ‘activities’ in the portfolio:
I trimmed Alphabet a little, keeping the position capped to 15% of the portfolio
The only new position this past month was Zoetis. Read more below on why I added this global leader in animal health:
👀 Watchlist update
Following the latest 13F releases a few weeks ago, I updated the Guru Gems watchlist, which now includes more than 35 companies that are in Gurus’ portfolios and that may be interesting to study in more depth.
A few names which I’m watching very closely:
Interactive Brokers (IBKR)
Netflix (NFLX)
MercadoLibre (MELI)
Molina Healthcare (MOH) (part of my Magic Formula portfolio)
👉 Access the full watchlist here: Guru Master Google Doc
Interactive Brokers (IBKR) is a company I reviewed in more detail in last week’s update. At the right price, this is a company I would definitely like to add to the Guru Gems portfolio.
Check out last week’s post if you haven’t yet, where I cover Marc Werres, a lesser-known Guru who has compounded at ~20% per year over the past decade.
📖 One Interesting Thing I Read This Week
I re-read Warren Buffett’s 1999 Berkshire Hathaway shareholder letter, published in March 2000, near the peak of the dot-com bubble.
At the time, Buffett was underperforming badly and many people believed he had “lost it” because he didn’t participate in the internet mania.
History doesn’t repeat itself, but it often rhymes
Back to 2026. Berkshire is again significantly underperforming the S&P 500, by more than 30% over the past year, having ‘missed out’ on the rally driven by mega-cap AI and semiconductor winners.
Has Berkshire lost it?
Or could it be that we are in a phase of the cycle that rhymes a lot with what happened in 1999 and early 2000?
Here are some numbers that should at least make investors think about whether this time is really different:
Semiconductor index (SOX) up 175% over the past year and 81% year-to-date
Intel, Micron (chart shown below), AMD, Dell, ASML are within 5-10% of their all-time high
NASDAQ 100 up by more than 8% in May
Korea Composite Stock Price Index (KOSPI), in which Samsung and SK Hyninx make up more than 40% of the index, is up 214% over the past year
With the current context in mind, now read the extracts below from Buffett’s 1999 letter (and I highly recommend to read the full letter).
To me, this sure rhymes with the current environment.
(Bold emphasis is mine)
The numbers on the facing page show just how poor our 1999 record was. We had the worst absolute performance of my tenure and, compared to the S&P, the worst relative performance as well.
[…]
We made few portfolio changes in 1999. As I mentioned earlier, several of the companies in which we have large investments had disappointing business results last year. Nevertheless, we believe these companies have important competitive advantages that will endure over time. This attribute, which makes for good long-term investment results, is one Charlie and I occasionally believe we can identify. More often, however, we can’t — not at least with a high degree of conviction. This explains, by the way, why we don’t own stocks of tech companies, even though we share the general view that our society will be transformed by their products and services. Our problem — which we can’t solve by studying up — is that we have no insights into which participants in the tech field possess a truly durable competitive advantage.
[…]
Our reservations about the prices of securities we own apply also to the general level of equity prices. We have never attempted to forecast what the stock market is going to do in the next month or the next year, and we are not trying to do that now. But, as I point out in the enclosed article, equity investors currently seem wildly optimistic in their expectations about future returns.
[…]
Meanwhile, if anyone starts explaining to you what is going on in the truly-manic portions of this “enchanted” market, you might remember still another line of song: “Fools give you reasons, wise men never try.”
As a reminder, Berkshire significantly outperformed the S&P 500 during the market’s ‘lost decade’ of 2000 - 2010…
That’s it for this week! Thank you for reading.