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Author: commoncents33 Big red star, 1000 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 210341  
Subject: Re: Buffett is not swinging at Berkshire Date: 11/6/2012 12:16 AM
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But one of the advantages of a Berkshire, it seems to me, is that these captive businesses actually enjoy better opportunities for capital reinvestment than their competitors--they can invest in the other businesses under the Berkshire roof.


This is actually an enormously important aspect of Berkshire's greatness. The head of the subsidiaries are free to reinvest in their (or related business), but their compensation reflects an appropriate charge for retaining this capital. This dynamic is absent for virtually all public companies, who face no penalty for reinvestment, whether wise or not.
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