Carlos Dubois

The acquisition of equity stakes in 2025 involves an approval process that must comply with current regulations, and this is not just a minor sub-event. Regulatory mandates impose specific conditions for each type of acquisition, especially regarding competition and protection of minority shareholders. For example, an acquisition exceeding a certain threshold may be prohibited without approval from competition authorities, even if liquidity is available.

The question of sustained alpha is essential because it pushes us to examine our assumptions from a new perspective, as if we hadn't already invested so much attention in the received idea. If we were to reassess the situation with fresh eyes, would we still be inclined to see size as an absolute barrier, or rather as a condition for applying different strategies, notably investing in private markets where liquidity is lower but disinvestment opportunities could be more lucrative in the long term?

How do the past performances of Berkshire Hathaway logically refute the idea that increasing assets under management makes sustained alpha more difficult?
This case demonstrates the importance of investment structure and mandate flexibility, not a universal invalidation of the size constraint.
A traditional fund cannot acquire an entire company like Burlington Northern Santa Fe to generate performance, which is an option for Berkshire Hathaway.
The ability to control market noise and execute unique acquisition strategies is a differentiating factor.
The impact of size is a matter of discipline and investment posture, not an absolute fate for entities with adequate leverage.

How can the performance of a single entity like Berkshire Hathaway invalidate a general structural constraint related to the scale of assets under management? Specific factors unique to this conglomerate, such as the ability to acquire entire companies, are controllable and do not apply to the majority of fund managers. For most, increasing assets under management effectively reduces the number of significant investment opportunities, making it more complex to achieve a sustained alpha. It is essential to exercise discipline and not confuse an exceptional case with a universally applicable norm, especially for our capital preservation mandates.

The idea that the size of capital absolutely limits sustained alpha lacks nuance; it is not a binary concept but a matter of discipline and management.
Berkshire Hathaway, with its consistent performance over six decades, illustrates that a large-scale entity can maintain significant growth despite its size.
The ability to generate high returns depends more on the quality of capital allocation decisions than on absolute volume.
For a Family Office, the important thing is to focus on controllable factors, such as a solid investment strategy and rigorous diversification, rather than on the market noise.
For example, well-executed strategic acquisitions or significant participations can generate value even with substantial capital.

Your addition reinforces the demonstration that insurance float as competitive advantage is not an absolute truth but rather conditional. Indeed, by emphasizing the costs of maintaining the float, you confirm that market conditions can turn an asset into a mere element to manage, a real balancing act. We will need to refine our analysis of competitors by incorporating these maintenance costs to evaluate their true advantage.

The idea that the size of managed capital intrinsically limits sustained alpha is a persistent noise in markets. Berkshire Hathaway, with its 19.7% compound annual growth over six decades, demonstrates that disciplined management and strategic capital allocation can transcend this supposed limitation. Opportunities change in nature with size, shifting from small caps to strategic acquisitions and significant holdings, which does not eliminate value. The ability to identify quality assets remains the controllable factor, as illustrated by the acquisition of Burlington Northern Santa Fe. It is crucial to distinguish external constraints from internal management skills.