(Bloomberg) — The newest trend in alternative investing is trying to look like Warren Buffett’s conglomerate, Berkshire Hathaway Inc.
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The chief executive officers of KKR & Co., Brookfield Asset Management and Pershing Square Capital Management have touted aspects of the Berkshire investment model, which centers on taking in money through insurance and using it to buy and hold companies for the long term. That strategy led to a multi-decade run of market-beating returns and turned Buffett into a household name.
KKR Co-Chief Executive Officer Joe Bae has repeatedly cited Berkshire as the inspiration behind the New York-based firm’s decision to create its Strategic Holdings unit to hold long-term bets, an idea he reiterated Wednesday at the Bloomberg Invest conference in New York.
“What we’re trying to build in Strategic Holdings is in some ways a mini Berkshire Hathaway,” Bae said.
Brookfield CEO Bruce Flatt said that its insurance business may ultimately own the rest of its operations, in a move that also would emulate Berkshire. Last year, hedge fund manager Bill Ackman last year invoked the Berkshire model when he was marketing the IPO of Pershing Square USA.
Several other themes loomed large at the two-day Bloomberg Invest event, with markets gyrating after President Donald Trump lobbed 25% duties on most Canadian and Mexican imports and raised the charge on China to 20%. Speakers offered sharply opposing views on the potential impact of tariffs and how protracted the trade war will be, and also also discussed the potential for artificial intelligence, the merits of private market versus public, and the best places to invest right now.
KKR’s Bae said that the firm intended to expand its Strategic Holdings unit beyond its current portfolio of 18 private equity investments into infrastructure and real assets. While it’s a small piece of KKR’s business now, Strategic Holdings is a key part of the firm’s plan to more than quadruple earnings per share over the next 10 years.
Alternative asset managers have started buying and building insurance companies that can generate a steady source of capital for managers to shovel into the private investments they structure. Apollo Global Management Inc., KKR and Brookfield all have life insurance businesses on their balance sheets, while firms like Blackstone Inc. have pursued investment management partnerships.
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