Warren Buffett No Admirer Of PE Pros? Now Wait Just A Gosh Darned Minute!

A story in yesterday’s Dealbook painted Warren Buffett as no friend of private equity. Buffett, 82, was reportedly asked during a lunch last week if there were any private equity investors that he admired, Dealbook says.

“No,” he flatly replied in the story.

But hold on. Debbie Bosanek, an assistant to Buffett, in an email to peHUB wrote that the Oracle of Omaha was asked what PE managers he “particularly admired,” and he responded that none came immediately to mind. “This is different from saying that he doesn’t admire private equity managers,” she writes.

Bosanek also pointed to Buffett’s friendship with David Rubenstein, a Carlyle Group co-founder. Buffett admires very much what Mr. Rubenstein does in the field of philanthropy, Bosanek writes. Byron Trott, BDT Capital’s chairman and CEO, might be classified as a PE investor, she adds. “Mr. Buffett has written and spoken many times of his admiration of Byron.”

A New York Times spokeswoman says the quote is accurate.

Reports of Buffett’s views on private equity are not new. He has called the private equity industry “The Two and Twenty Crowd” and has sworn never to buy a company from private equity, Forbes has reported.

Buffett, during the lunch, lamented the current state of Wall Street and how it promotes a trading culture over an investing culture, Dealbook reports. The reminiscing by Buffett coincides with the publication of “Tap Dancing to Work,” a book by Fortune’s Carol Loomis that chronicles his 61-year career, Dealbook says.

Buffett talked about the “good old days” and spoke of early friends who were successful hedge fund investors, like Julian Robertson, founder of Tiger Management, the story says. Buffett, however, is “less enamored” with the latest generation of alternative asset managers, the story says.

Photo courtesy of REUTERS/Kim Kyung Hoon

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4 Comments

  • Why would Mr. Buffett want to say anything good in public about private equity?

    It is to Berkshire Hathaway’s advantage to position itself publicly as a dramatically different sort of buyer than private equity firms. It can then use this positioning to try to eliminate PE firms as competing bidders, especially when buying family-owned private companies. It’s like asking Coca-Cola’s CEO what he thinks about other brands of cola. What would he say anything positive regardless of what he truly thinks?

  • More to stress their differences than their similarities.
    They’re from different camps: buy-to-hold vs buy-to-flip cultures?

    • Derek,
      Buy to flip is pretty relative term. Is it really flipping when someone buys a company, bolts on a handful of strategic acqusitions, and 5 – 7 years later sells it. Buffetts biggest issue in many other speeches has typically been the use of leverage. Warren’s massive cash stash and getting fed more from GEICO and others allows him to not have to use leverage to any signficant degree. Berkshire operates very much like a middle market PE firm, but with significantly more capital so he can do much larger deals. The only difference is the fee structure and time horizon. Don’t forget that BRK’s two most recent hires on the marketable security side were from the 2&20 crowd.

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