Warren Buffett’s great-nephew completed the acquisition of a private-hangar specialist this week. Alex Buffett Rozek praised Sky Harbour’s competitive advantages and management team. Buffett and Rozek look for similar qualities in the businesses they buy. Sign up here for our daily newsletter, 10 Things Before the Opening Bell. Warren Buffett’s great-nephew appears to share the billionaire investor’s taste in businesses, appetite for acquisitions, and passion for private jets.
Buffett’s Berkshire Hathaway owns NetJets, which sells fractional ownership of private planes. Alex Buffett Rozek’s Yellowstone Acquisition Company completed its merger with Sky Harbour, which develops and leases private hangars for business and personal jets, earlier this week.
Rozek is the grandson of Buffett’s late sister, Doris. He runs a Berkshire-esque holding company named Boston Omaha, which has interests in advertising, insurance, and broadband internet.
Rozek and his partner, Adam Peterson, took Yellowstone public as a special-purpose acquisition company ( SPAC ) in October 2020. Their goal was to find a high-quality business and merge with it, giving it a stock-market listing without the need for an initial public offering (IPO).
The pair were partly drawn to Sky Harbour because they like infrastructure businesses, they said in a press release announcing the deal last August. They were also impressed by its cost advantages, scalability, executive team, and its sector’s high barriers to entry.
Several of Berkshire’s businesses are involved in infrastructure, including the Burlington Northern railway and Berkshire Hathaway Energy. Moreover, Buffett has repeatedly trumpeted the power of brands such as See’s Candies as “moats” to stave off competition, underlined Geico’s lower costs relative to its peers, and emphasized the critical importance of management.
It’s clear that Buffett and Rozek share more than a bloodline. They’re both drawn to businesses with physical operations instead of digital ones, and evaluate similar attributes when judging companies.
However, Rozek may be having more luck on the dealmaking front than Buffett because he’s shopping for much smaller businesses, and seems less concerned about their profitability.
Sky Harbour grew its revenue by 87% year-on-year to $784,000 in the first half of 2021, but a surge in its overheads and operating costs meant its net loss more than quadrupled to $4.8 million, Securities and Exchange Commission filings show.
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