Led by renowned investor Warren Buffett, Berkshire Hathaway (BRK.A) is involved with multiple sectors of industry, facing different competitors in each one. In the diversified holding sector, Berkshire competes against challengers such as Leucadia National Corporation (LUK). Because many of its assets are insurance subsidiaries, Berkshire Hathaway is also a rival of large insurance firms such as The Allstate Corporation. Berkshire is sometimes seen, too, as a management investment company, competing with players such as Blackrock, Inc. (BLK), and as a private equity firm, contending with the likes of KKR & Co. LP.
Buffett is Berkshire Hathaway's main investor and serves as chairman and CEO. The publicly traded company's many other investors include billionaires such as Bill Gates, founder and former CEO of Microsoft Corporation, and Mexico's Carlos Slim. Beyond insurance, the company's holdings range across the food, apparel and utilities sectors. Other assets include jewelers and furniture retailers.
Leucadia National Corporation is often referred to as a "Baby Berkshire." While its stock trades for lower prices and its holdings aren't nearly as huge, Leucadia follows a similar business model. Like Berkshire Hathaway, it acquires highly promising assets at less than fair value and then builds them into valuable investments.
Just as Berkshire Hathaway relies heavily on its investments in the insurance business, Leucadia relies strongly on its major business, the Jefferies Group investment banking firm, acquired in 2012. Leucadia also owns National Beef, the fourth-largest beef processor in the United States, and Garcadia, the nation's 15th-largest auto dealer. Leucadia has other holdings in the restaurants and telecommunications sectors. The company is also a 50% owner in a joint venture with Hathaway Berkshire for real estate lending.
In the insurance sector, Berkshire Hathaway competes through its Geico Corporation holding in some of the same personal insurance lines, such as auto and property insurance, as Allstate. The holding company's other insurance assets include reinsurance giant General Re and National Indemnity, a specialist in insuring commercial drivers such as truck and taxi drivers.
Although Berkshire Hathaway isn't officially a management investment company, it effectively plays in this space by selling and managing a portfolio of securities for its investors. Blackrock is the world's largest public investment firm, with an impressive $4.55 trillion in assets. Unlike Berkshire Hathaway, however, Blackrock doesn't participate in proprietary trading.
Also, Blackrock's customer base is limited to institutional and retail investors such as pension plans, mutual funds, insurance companies and charities. Like other management investment firms, Blackrock provides formal mechanisms that allow investors to pool their capital with that of other investors so as to purchase professionally managed groups of diversified securities.
Some might not view Berkshire Hathaway as a private equity firm; however, reports say private equity titan Henry Kravis once referred to Berkshire as "the perfect private equity model," due to its massive amounts of cash and publicly traded shares for making acquisitions. Kravis co-founded KKR, a highly substantial player in the private equity sector.
In fact, much like KKR and other private equity companies, Berkshire Hathaway is indeed a source of investment capital from wealthy individuals and institutions for investing in and acquiring equity ownership in companies. However, private equity firms tend to be more direct about raising these funds and managing the money to ensure positive returns for shareholders.