Warren Buffett – chair and CEO of Berkshire Hathaway Inc (NYSE: BRK.A)(NYSE: BRK.B) – is one of the most successful and famous investors of all time.
He has become famous for steering Berkshire to success after success over the past near-seven decades. Over that time, Class A Berkshire shares have appreciated from roughly US$12.50 in 1964 to US$335,779 today.
Part of Berkshire’s success has no doubt been its rather unique structure. Unlike most companies in the top echelons of the US share market, Berkshire is a conglomerate. It owns massive stakes in a wide range of businesses, including Coca-Cola Co (NYSE: KO), American Express Company (NYSE: AXP) and (more recently) Apple Inc (NASDAQ: AAPL). It also owns a massive portfolio of businesses outright. These include Duracell, Dairy Queen and Geico.
Many companies have attempted to emulate Buffett’s strategy, none with quite the level of success though. But there have been recent signs that 2 Aussie fund managers are having a go as well.
Normally, a fund manager’s modus operandi is to buy small portions of shares of successful businesses, much like we ordinary retail investors do. Just like an ASX retail investor might spread their money across a range of blue chip shares, a fund manager might have 10, 20 or even 100 different positions. These positions would be larger in scale than those of a retail investor, but the same principle applies.
2 candidates for the ‘ASX’s Warren Buffett’
But 2 ASX fund managers have recently shown through their actions that they might be trying a different, more Buffett-esque approach.
Last week, we found out that ASX fund manager Geoff Wilson had put in a bid to acquire in full the shares of ASX telecom company Amaysim Australia Ltd (ASX: AYS) through his Listed Investment Company (LIC) WAM Capital Limited (ASX: WAM).
Not shares of Amaysim, but Amaysim period. WAM Capital does not usually do business this way. This LIC holds a wide portfolio of at least 20 different ASX shares, most recently of which included Elders Ltd (ASX: ELD) and Flight Centre Travel Group Ltd (ASX: FLT). For WAM, this looks set to be the first acquisition of an entire listed ASX company outside the fellow fund manager space.
Just a few days later, we were treated to the news that another ASX fund manager, Magellan Financial Group Ltd (ASX: MFG), is making a similar move. Magellan has reportedly entered into an agreement to acquire a full 10% of the private fast-food chain Guzman y Gomez (GYG). GYG is not currently a public company, but there have been recent stirrings of an upcoming IPO. The deal will set Magellan back $86.8 million in cash.
These moves are somewhat unusual for ASX fund managers, and yet here we are. They are also reminiscent of Warren Buffett’s methods of bringing businesses into his fold.
Will these moves work out for Magellan or WAM? That remains to be seen. But it’s not hard to see where they are getting their inspiration. Who knows, perhaps in a decade we will be calling Mr Wilson and Magellan’s Hamish Douglass the ‘ASX’s Warren Buffett’.
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Sebastian Bowen has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of and recommends Berkshire Hathaway (B shares) and recommends the following options: short January 2021 $200 puts on Berkshire Hathaway (B shares) and long January 2021 $200 calls on Berkshire Hathaway (B shares). The Motley Fool Australia has recommended Berkshire Hathaway (B shares), Elders Limited, and Flight Centre Travel Group Limited. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.