Headed by renowned investor Warren Buffett, Berkshire Hathaway (BRK.A, BRK.B) is a holding company involved in multiple industries. As such, it faces a variety of competitors. Here are the sort of sectors it's involved in, and some of its leading rivals.
- Because it's a holding company involved in so many industries, Berkshire Hathaway's competitors are in a variety of fields.
- In the diversified holding sector, Berkshire competes against firms such as Jefferies Financial Group.
- Because many of its assets are insurance subsidiaries, Berkshire Hathaway is also a rival of large insurance firms such as Allstate Corporation.
- Berkshire is also sometimes considered a management investment company, competing with players like BlackRock and a private equity firm, contending with the likes of KKR & Co.
Competitors to Berkshire Hathaway
Warren Buffett is Berkshire Hathaway's main investor and serves as chair and CEO. The publicly-traded company's many other investors include billionaires such as Bill Gates, founder and former CEO of Microsoft Corporation, and Mexican business magnate Carlos Slim. Beyond insurance, the company's holdings range across the food, apparel, and utilities sectors. Other assets include jewelers and furniture retailers.
In the diversified holding sector, Berkshire competes against firms such as Jefferies Financial Group (JEF). Because many of its assets are insurance subsidiaries, Berkshire Hathaway is also a rival of large insurance firms such as Allstate Corporation (ALL). Berkshire is sometimes considered a management investment company, competing with players like BlackRock, Inc. (BLK), and a private equity firm, contending with the likes of KKR & Co., Inc. (KKR).
On May 1, 2021, the vice chair of Berkshire Hathaway, Charlie Munger, unofficially announced that Warren Buffett would be succeeded as CEO by Greg Abel when Buffett eventually steps down. Abel is CEO of Berkshire Hathaway Energy and vice chair in charge of noninsurance operations.
Jefferies Financial Group (formerly Leucadia National Corporation) is a competitor for Berkshire Hathaway where investments are concerned. With a similar business model, Jefferies is often called the "Baby Berkshire." While its stock is much lower-priced and it has nowhere near the holdings that Berkshire Hathaway possesses, Jefferies is successful at acquiring promising assets at less than fair value, and building their long-term growth.
Jefferies has holdings in a variety of industries, including the real estate, retail, energy, and telecommunications sectors. The company is also a 50% owner in a joint venture with Berkshire Hathaway for real estate lending, called Berkadia.
Berkshire Hathaway relies heavily on its investments in the insurance business. The company competes through its Geico holding in some of the same personal insurance lines as Allstate, such as auto and property coverage. It also owns reinsurance giant Gen Re.
Allstate's other insurance assets include Square Trade, an extended warranty provider, and National General, a specialist in insuring commercial drivers such as truck and taxi drivers.
Although Berkshire Hathaway is not 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 $6.84 trillion in assets. Unlike Berkshire Hathaway, however, BlackRock does not 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 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 acquisitions. Kravis is the co-founder of 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.