‘Be like Buffett’ mantra takes on new meaning

American idols. It’s not just masses flocking to Berkshire Hathaway’s annual investor confab in Omaha, Nebraska who look to boss Warren Buffett for vice. Financial masterminds like Blackstone’s Steve Schwarzman and KKR’s Henry Kravis have followed Sage’s example, accruing huge pools of permanent capital that enable m to invest without raising new funds. irony is, since New York-based crew plunged into se initiatives, ir stocks have bested Berkshire’s. As guard changes in Omaha, those firms may now overshow master.

Blackstone, KKR and ir fellow private equity giants once looked very different from Berkshire Hathaway. Schwarzman’s and Kravis’s firms are deal machines, tritionally using privately-raised funds and los of leverage to take control of companies and flip m, hopefully, for a profit. Conversely, Buffett takes cash from public investors and its insurance businesses, makes both public and private investments in companies, and often holds m for long periods as a passive investor.

But New York-based asset managers feeling pinch of fundraising have looked, in recent years, to something like Berkshire’s model to build a more stable war chest. KKR bought into insurance company Global Atlantic Financial in June 2020, while Apollo Global Management merged with insurer Ane in 2022. Blackstone raised a real-estate fund from small-dollar investors with no set expiration date to return capital.

That’s not to say Buffett hasn’t used his own pre-eminent reputation to score plum deals, much like Schwarzman crowd. For instance, in 2019, he bailed out Occidental Petroleum boss Vicki Hollub’s ambitious deal for Anarko Petroleum in exchange for preferred shares that have ultimately become very lucrative.

Still, wher it’s Berkshire, Blackstone, or any or asset manager, share price is a reflection of how good y are at making money off of ors’ money. In that sense, those chasing Buffett have actually done better than him of late. Stock returns for Blackstone, KKR, and Apollo have outpaced Berkshire over past five years.

Last month, KKR’s co-CEOs compared direction y’re moving ir business to Berkshire in an interview with Bloomberg. In particular, y highlighted a plan to use ir balance sheet to buy and hold companies that throw off dividends, which could n be used to grow. Buffett, meanwhile, on Saturday sat at his company’s annual meeting for first time without trusty sidekick Charlie Munger, who passed away late last year. As ors find success in his model, Berkshire’s future depends on Buffett handing his expertise – and reputation – down to a new guard. Buffett is confident y are well prepared to take over. When y do, though, y may find y’ve alrey been eclipsed.