There will never be another Warren Buffett, but that won’t stop anyone from deeming people new Warrens now and then. Buffett is too much a creature of the times — in a sense, we made Buffett who he is because we needed someone like him, a grandfatherly patriach of equities.
Nevertheless, BusinessWeek is off hunting for Buffett this week, and it names Eddie Lampert and his ESL Investments as the Next Contender. With his 53% stake in K-mart and his penchant for unsexy investments he has delivered returns average 28% a year back to 1988, which has brought in investors like Michael Dell and David Geffen, among many others.
The key to his ambitions, though, is a 53% stake in Kmart Holding Corp. (KMRT ). If a fading textile maker in New Bedford, Mass., called Berkshire Hathaway Inc. (BRKB ) provided the launchpad for Buffett, then Kmart might do the same for Lampert. Much like the textile mill when Buffett got hold of it, the once-bankrupt Kmart is now throwing off far more cash — it has $3 billion on hand — than it can use in the business. It also has $3.8 billion in accumulated tax credits, which can offset taxes on future income, and a fast-rising stock that is valuable in deal-making. Those advantages make Kmart a perfect vehicle for bankrolling big acquisitions. They give Lampert “the ability to buy a lot of companies and shield a lot of income from taxes,” says John C. Phelan, a former ESL principal who is now managing partner of MSD Capital, which also manages Dell family money.