I'm trying to figure out why it made sense to for Warren Buffet / Charlie Munger to have Berkshire Hathaway as their investment vehicle.
Buying Berkshire instead of a high quality insurance operation was itself a mistake according to Buffett, but that's beside the point.
When Buffett closed his partnership and decided to make Berkshire his vehicle of choice, he had a lot investors in the company who have gotten a free ride of sorts up to this day, as top management is not extracting any kind of fee, other than a nominal salary. Tod Combs and Ted Weschler receive substantial bonuses, when Buffet and Munger do not. I'd be interested to understand the rationale behind that.
If it's harder to make a 20% return on $4b than it is on $1b, then it even comes at a personal cost to have a 25% stake in a $4b "investment corporation" vs a 100% stake in a $1b "investment corporation".
On the other end of the spectrum you have the practices by management of Biglari Holdings, extracting massive fees for management. Somewhere in between are Greenlight Capital/Greenlight Re, setting itself up to profit from investment of insurance float, but taking a cut for management, and Fairfax India, which also extracts management fees.
So back to the original point...
1) Why no fees? Why does it make sense for Fairfax India to charge fees, but not for Berkshire (if this is even the case!).
2) Berkshire and some other companies were merged. Technically speaking, what was the reason it didn't make more sense to have an investment vehicle owned 100% by Buffett, Munger & Co.
Interested to hear your thoughts!