Such investment vehicles can still run into trouble, of course. With Guo’s Fosun it seems to have come from ignoring Buffett’s warning to never borrow money to buy stocks. With Lampert, who drew the comparison to Buffett in 2004 because he seemed to be using retailer Kmart as the core of a new Berkshire-like investment entity, it was the decision to double down on struggling retailers and spend the next decade and half trying and failing to revive Sears. I think the jury is still out on hedge fund manager William Ackman, who was described as a “Baby Buffett” on the cover of Forbes in 2015 as he made the shift to a publicly traded entity, Pershing Square Holdings, that underperformed the market for its first few years but has actually done quite well lately.
The cases where you can be almost sure the “next Buffett” curse will hold are ones where the resemblance is obviously only superficial. I haven’t been able to find the 1995 Fortune article that reportedly labeled 30-year-old California money manager Christopher Bagdasarian the “next Warren Buffett,” but from the news reports that followed when he was charged with securities fraud in 1996 I gather that this was based only on the 29% average annual returns he reported, which turned out to be made up. CMGi (the CMG stood for College Marketing Group, and it had started out as a seller of mailing lists to educational and professional publishers) assembled a portfolio of money-losing internet companies that zoomed in market value during the dot-com boom of the late 1990s but was clearly very high risk. I was not the only one to compare it and its chief executive officer, David Wetherell, to Berkshire and Buffett, and I used the phrase “Berkshire Hathaway of Net investing” as easy-to-understand shorthand, not endorsement, but I remember cringing a little when I wrote the words and certainly wish I hadn’t. I’m sure Ackman wishes he hadn’t referred to pharmaceuticals maker Valeant as a “very early-stage Berkshire” in 2015 simply because it was so good at making acquisitions. Blowback over accounting practices and drug pricing soon sent the company’s stock price plummeting, dragging down the performance of both Ackman’s Pershing Square and the aforementioned Sequoia Fund.
A longtime crypto insider told me you’re going to come out of this looking like Warren Buffett—owning a lot, and everyone owing you a lot of favors. Do you think that’s overstating it?
I hope it’s not overstating it, though it might be.
It was overstating it! And it was thin evidence on which to compare SBF to WEB (Buffett’s middle name is Edward) to begin with. Which is why I don’t think Bankman-Fried’s fate is reason to fear that, say, Greg Abel—who according to the current Berkshire Hathaway succession plan truly is the next Warren Buffett—is cursed.
Justin Fox is a Bloomberg Opinion columnist covering business. A former editorial director of Harvard Business Review, he has written for Time, Fortune and American Banker. He is author of “The Myth of the Rational Market.”