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Career Resources
Yes, the entire methodology is different. It's like the difference between a regular mutual fund and someone who rigorously applies Graham's framework.
simply speaking
Berkshire is a holding company and they look for under valued company for long term growth potential.
private equity issues heavy debts (LBO) then buy companies then recap the companies then sell the companies for huge profit.
The difference between PE and Berkshire is kind of like the difference between people who "flip" houses and those who buy property for long-term value. PE essentially flips public companies- they take over using mostly debt and then improve the corp structure so that they become more profitable, then sell them off for a healthy gain. When Berkshire buys a company, they intend to keep it for a very long time.
good analogy.
you just rephrased what i said
GOD DAMNIT DON'T YOU KNOW PROPER MLA RULES FOR CITATIONS!!!1!!1!11!!1!eleven!!1!!
are you in kindergarten?
The only similarities that I see is that both the PE guys and Buffet do not actively manage their "portfolio" companies. They both rely on good and knowledgeable management teams to drive value. In the PE case, however, they incentivize value creation through large equity stakes for top management and debt induced fiscal conservatism. As said before, Buffet looks for undervalued companies, and does not lever them or, as far as I know, heap large amounts of equity on top management. In that respect, he is more like a GE. The only conglomerates that really survived the conglomerate bust up of the 1980s (without a significant decline in value) were those like GE (and Buffet for that matter) that did not actively micromanage their division heads.
If you really want to get into specifics, Berkshire Hathaway is primarily in the insurance (e.g., Geico) and reinsurance (e.g., General Re) businesses.
The holding company owns an amalgamation of investments (something like 75 companies), most of which were purchased via cash thrown off from the core insurance business. Additionally, a large portion of Berkshire's investments have been made as minority investments in public equity (i.e., purchases of common stock).
Buffet is a very intelligent investor; however, it should be noted that his returns for the past several years have been driven primarily by conditions in the insurance markets, and not by the company's ancillary investments.
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