Reflections on Berkshire

As a finance professional, I’ve always begrudgingly respected Berkshire Hathaway and the driving forces of its success in Warren and Charlie (RIP). It’s hard to argue against the company’s results and the financial prowess and innovation that its leaders drove. The firm is the evangelist of value investing, evolving and popularizing the philosophy beyond Ben Graham’s reach and methodology. Amongst many other strategies copied by others later on, Berkshire entered the insurance business and utilized float for investment capital – something large PE firms started pursuing many decades after Berkshire. Overall, Berkshire is a remarkable business built by intelligent people ahead of their time.

Having said many praises, what’s irked me about Berkshire over the years are Warren’s negative and often contradictory statements regarding other investment strategies and Wall Street in general. For example, Warren has rallied against private equity but then partnered with 3G to do the Kraft Heinz merger. Moreover, Berkshire’s own success in large part has been driven by using leverage, which he critiques the PE industry on, via insurance balance sheets.  Secondly, he doesn’t like investment bankers either but uses their services and even has invested in large banks. Thirdly, he stated that gold is a bad investment but then did a gold trade. There are many other examples of contradictions.

Warren can take the aforementioned stances because of who he is, and beyond a great investor and company steward, he is a master marketer. He says things that speak to his following, which strengthen his brand as the simplest but shrewdest value investor of all time. He is the anti-Wall Street, sage like investment grandpa that lives in Nebraska. The brand building that he’s accomplished and resulting premium is remarkable.

Congrats to Warren, Charlie, and Berkshire on the success, but I and many other “Wall Street” professionals see you for who you are. Beyond an enviable track record, one could only aspire to be as simultaneously opportunistic and saavy while unconcerned of industry and peer opinions. As much as you lot have actively rallied against this idea, you are one of us but just much smarter.