There is a good reason many investors consider Berkshire Hathaway (NYSE:BRK.A) (NYSE:BRK.B) the paragon of investment success. For over 20 years, Berkshire's equity portfolio has outperformed the general market absolutely and on a risk-adjusted basis. But in the past two years Berkshire'salpha has turned negative. We identify the principal culprits and provide evidence of style drift at Berkshire - either by Warren Buffett or one of his possible successors. Followers of Berkshire's picks should pay attention to this drift. It is also a cautionary tale for fund investors and allocators.

Below is a chart showing Berkshire's long equity portfolio performance since 2006, during which time it gained 108%. Many investors and guru-followers will dig no further. But simplistic analysis produces dangerous conclusions. Much of Berkshire's performance-and that of most stocks-can be attributed tosystematic sources, or factors. Berkshire's nominal performance is influenced by the Market, bond rates, and FX rates. Since factor returns revert, andnominal returns are a contrarian indicator of future performance, it is important to separate Berkshire's factor performance from its stock-picking skill.

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