Fractional Ownership

A concept that runs through the Berkshire Hathaway Annual Letters in two distinct senses Kyle connects. The first is Buffett’s investing posture: he and Charlie Munger view their stock holdings not as ticker symbols to trade on chart patterns but as “fractional ownerships in businesses” — the cornerstone of Buffett’s approach since reading Ben Graham’s The Intelligent Investor at nineteen. Buying fractional positions in the open market lets the value-oriented buyer select from nearly the entire array of major American corporations at prices set by an “army of manic-depressive lemmings,” often acquiring far superior businesses than could be bought outright in a negotiated deal.

The second sense is literal product fractional ownership: Berkshire’s EJA (Executive Jet / NetJets) business, where customers “buy a fraction, get a fleet.” On the EJA letters Kyle noted that “the Subscription Economy is older than I realized,” reading fractional-jet ownership as an early form of the recurring-access business model — Buffett describing the fractional-ownership industry as still “in its infancy” and worth global scale-up.

Quick Capture links — October 22nd, 2020

• Robinhoods of the Art World Lure Scores of Investors in Pandemic (Bloomberg) — https://www.bloomberg.com/news/articles/2020-09-05/robinhoods-of-the-art-world-lure-scores-of-investors-in-pandemic

Where this appears

• Berkshire Hathaway Annual Letters — appears both as Buffett’s investing philosophy (holdings as fractional ownerships in businesses) and as EJA/NetJets’ literal “buy a fraction, get a fleet” model, which Kyle ties to the Subscription Economy.