Warren Buffett’s Protégé Is Building A Mini Berkshire

Warren Buffett’s Protégé Is Building a Mini Berkshire

Warren Buffett’s protégé, Tracy Britt Cool, is actively constructing a personal investment approach reminiscent of her mentor's long-term, value-focused philosophy. Having spent a decade working closely with Buffett, Cool has shifted her focus toward acquiring founder-led companies with durable competitive advantages—what Buffett calls "moats." These are businesses that have a proven track record of performance, are typically family or founder-owned, and are positioned to generate consistent above-average returns on capital.

Cool established Kanbrick in 2020, an investment firm that targets smaller companies with earnings between $10 million and $50 million. Unlike Berkshire Hathaway’s reliance on multibillion-dollar acquisitions, Kanbrick's strategy emphasizes buying a few carefully selected companies annually and holding them for the long term. The goal is to create a portfolio of high-quality, durable businesses, avoiding the typical private equity approach of short-term gains and quick exits. This long-term perspective allows for deeper collaboration and value creation, fostering growth and stability within the companies acquired.

Core to Cool’s methodology is a comprehensive understanding of each target’s fundamental performance, leadership, and strategic positioning. Her team conducts in-depth discussions with business founders to understand not only operational metrics but also the company’s culture, strategy, and growth opportunities. Additionally, Kanbrick offers a three-month program providing coaching and support to mid-sized firms, aiming to strengthen leadership, develop personnel, and address operational challenges. This approach underscores her belief that thriving businesses require more than just financial capital; they need strategic guidance and a collaborative partner committed to sustainable growth.

Cool’s background reflects her commitment to operational expertise. After studying at Harvard Business School and initially working as Buffett’s financial assistant, she took on executive roles within Berkshire Hathaway, including CEO of Pampered Chef and chairperson of companies like Benjamin Moore. Her experience in managing and reviving businesses informs her investment philosophy, emphasizing the importance of operational excellence alongside financial discipline. Buffett has openly praised her ability to revive struggling companies, referring to her as "the fireman."

In her interviews, Cool emphasizes the importance of patience and focus. Unlike private equity firms that typically hold investments for three to four years, Kanbrick’s long-term view enables them to prioritize value creation over immediate financial returns. Her operational experience, combined with Buffett’s long-term investment ethos, informs her approach. She recognizes that many founder-led businesses are resistant to traditional private equity exits because their owners want to preserve the company's legacy and culture. Consequently, she aims to be a partner that provides stability and growth, rather than disruption or rapid divestment.

Cool’s focus on smaller businesses addresses a significant market gap. Many founder-owned companies in the $10 million to $50 million earnings range are too small for Berkshire Hathaway’s size but often too large or complex for traditional private equity. These businesses often feature strong local or niche dominance and have resilient moats like customer loyalty, brand recognition, or operational efficiencies. By concentrating on these sectors—particularly consumer, industrial, and business services—Kanbrick seeks to build a diversified portfolio of resilient companies that can endure technological disruptions and market changes.

Operatively, Cool’s firm differentiates itself from Berkshire by its hands-on approach. While Buffett’s conglomerate maintains a largely passive investment style, Kanbrick involves itself closely in strategic decisions, management support, and operational improvements. This active involvement aligns with Cool’s belief that understanding and improving business operations is crucial for long-term value creation. She advocates for a partnership model that combines strategic oversight with operational assistance, ensuring businesses are well-positioned for future growth.

The firm’s long-term horizon and focus on founder-led companies also influence its valuation and risk management. Long-term ownership reduces pressures to meet quarterly benchmarks, allowing management to invest in growth initiatives without undue pressure. Furthermore, Kanbrick’s due diligence process involves assessing not just financials but also the quality of leadership, operational risks, customer base, and market positioning. This comprehensive approach seeks to minimize overpaying and to identify truly sustainable businesses.

Looking ahead, Cool’s long-term plan for Kanbrick centers on building a reputation for excellence in small-business investment and operational partnership. There is no explicit plan to go public; instead, the focus remains on creating value for investors, founders, and employees through sustainable growth. Her experience underscores the importance of patience, high-quality investments, and strong partnerships—principles she learned from Buffett and now applies in her own firm.

In conclusion, Tracy Britt Cool’s approach of building a "mini Berkshire" through long-term, founder-focused investments exemplifies a strategic shift in private investing. Her focus on smaller, durable businesses with competitive moats, combined with active operational involvement, positions her to create lasting value in a market segment often overlooked by larger conglomerates. Her continued success will depend on her ability to identify, acquire, and nurture these companies, applying Buffett’s iconic principles of patience, discipline, and partnership.

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