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 some of the sectors Berkshire is involved in and a selection of its leading rivals.
Key Takeaways:
- Due to Berkshire Hathaway’s diverse holdings, competitors are found in a variety of fields.
- In the diversified holding sector, Berkshire competes against firms such as Jefferies Financial Group.
- Berkshire Hathaway is also a rival of large insurance firms such as Allstate Corporation.
- Berkshire is sometimes considered a management investment company and therefore competes with players like BlackRock.
- It’s also seen by some as a private equity firm, contending with the likes of KKR & Co.
Berkshire Hathaway Competition: an Overview
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, Berkshire’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). As 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.
Investment Banking
Jefferies Financial Group (formerly Leucadia National Corporation) is a competitor of 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 with Berkshire Hathaway in a real estate lending joint venture called Berkadia.
Insurance
Berkshire Hathaway relies heavily on its investments in the insurance business. The company competes through its Geico holding with some of the same personal insurance lines as Allstate, such as auto and property coverage. Berkshire also owns reinsurance giant Gen Re.
Allstate’s insurance assets include Square Trade, an extended warranty provider, and National General, a specialist in insuring commercial drivers such as truck and taxi drivers.
Investment Management
Although Berkshire Hathaway is not officially a management investment company, it effectively plays in this space by managing a portfolio of securities for its investors.
BlackRock is a Berkshire competitor in this sector. It’s the world’s largest public investment firm with more than $9 trillion in assets as of 2022. Unlike Berkshire Hathaway, 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.
Private Equity
Some might not view Berkshire Hathaway as a private equity firm. However, reports indicate 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.
Why Is Allstate Considered a Berkshire Hathaway Competitor?
The Allstate Corporation is a major American insurance company that owns a variety of insurance company brands. Berkshire Hathaway’s biggest generator of profit is its insurance component, which includes GEICO. They both operate in the property/casualty insurance market. They vie for business from much of the same customer base. That’s why Allstate is seen as a Berkshire Hathaway competitor.
What Is BlackRock?
BlackRock, Inc. is the world’s largest asset management, with about $9.6 trillion under management as of Q1 2022. Based on Berkshire Hathaway’s similar portfolio management role, Berkshire Hathaway and BlackRock can be considered competitors.
What Is Berkshire Hathaway’s Standing in the Insurance Sector?
Berkshire Hathaway is the second largest insurance company in the U.S. with total assets of over $873 billion. Only Prudential Financial is larger, with more than $940 billion in total assets.