Warren Buffett’s recent shareholder letter not only reflected on Berkshire Hathaway’s future but also raised questions about who will carry forward his legacy as one of the most successful investors of all time.
While Buffett has named Greg Abel as his official successor at Berkshire, some in the financial world wonder whether Bill Ackman, the billionaire hedge fund manager behind Pershing Square, could emerge as Buffett’s true investment heir.
At 94 years old, Buffett acknowledged in his letter that his time leading Berkshire Hathaway is nearing its end, and he reaffirmed that Greg Abel will take over as CEO. Abel, a longtime executive at the company, has played a key role in managing Berkshire’s massive portfolio of businesses. However, while Abel is a highly capable operator, he lacks Buffett’s reputation as a visionary investor.
Berkshire’s annual report recognizes the challenge of replacing Buffett, stating that his absence could have a “material adverse effect” on operations. Investors have confidence in Abel’s leadership skills, but whether he can maintain Buffett’s legendary investment track record remains an open question.
Outside of Berkshire Hathaway, Bill Ackman has spent years trying to build an investment empire modeled after Buffett’s success. The founder of Pershing Square Capital Management, Ackman has long admired Buffett, regularly attending Berkshire Hathaway’s annual meetings and even asking questions directly to the legendary investor.
Ackman’s approach shares similarities with Buffett’s in several ways. His hedge fund has delivered impressive long-term returns, compounding at an annual rate of 19.8% after management fees—almost identical to Buffett’s 19.9% over six decades. He also maintains significant personal investment in his own fund, much like Buffett’s historical stake in Berkshire.
Recently, Ackman has taken concrete steps to create his own version of Berkshire Hathaway. His bid to acquire nearly half of Howard Hughes Holdings aims to establish a foundation for a diversified investment company, mirroring how Buffett used Berkshire’s early cash flow to build his empire. However, there are key differences between their strategies that may shape whether Ackman can truly follow in Buffett’s footsteps.
Despite his strong track record, Ackman faces significant obstacles in replicating Buffett’s success. One major difference is scale—Pershing Square manages $16.2 billion in assets, a fraction of Berkshire Hathaway’s $1.03 trillion market capitalization. Additionally, while Buffett streamlined his investment structure early on, Ackman continues to manage multiple funds, each with different investor interests.
Another challenge is cash flow. Buffett’s Berkshire Hathaway benefited from a steady stream of income from its insurance businesses, allowing him to reinvest profits without external constraints. In contrast, Ackman’s Howard Hughes investment will take years before it generates free cash flow, limiting his ability to expand quickly.
There are also differences in leadership style. Buffett is known for his humble, understated persona, while Ackman has a more high-profile, outspoken presence on social media. This distinction may impact how investors perceive Ackman’s ability to create the kind of long-term stability that defines Berkshire Hathaway.
The Economic Times and Fortune contributed to this report.
