How does an investment company like Berkshire receives incentives from clients?

[hedgehog]

Portfolio managers or investment advisers(?):

The 2 main business models are:

- One who receives a fixed fee, regardless if he advised you on a winning or losing investment

- One who receives a performance fee, usually only when the investment is in the black

How about a 3rd business model like Berkshire, whose stock you simply buy on any exchange, how do they get their incentives from simple investors? Their customer service is not so good to bother to answer me.

[Libertarian666]

They aren't portfolio managers or investment advisors. They are a holding company that owns lots of stock in other companies (as well as some whole companies).

[hedgehog]

To further clarify my question: if I buy BRK-A or BRK-B which is a stock made up of other stocks, how does Mr. Buffett & co profits from me buying given portfolio packaged as BRK instead of me going out picking the stocks together one by one just like they do?

[hedgehog]

OK.

I understand why it is good for a 'real' company to buy a stock in them, such as Apple: they do research and development from my money, expand and sell more stuff. Easy.

But how about a holding company? What is their benefit of me buying their stock? Let's assume here they only own stocks of other companies, not companies out of the stock market. How does said holding company directly profits from my purchasing a share in them?

[hedgehog]

Unless you bought AAPL in an IPO (i.e. on a primary market), Apple doesn't see a dime of what you paid for their stock.  When most people buy stock, they are buying in the secondary market.  In the secondary market, I buy from you in hopes that the price will go up: I hope to reap some reward when I sell at a later date.  But Apple is not involved in the transaction at all.

Do not forget dividends either! But you are right, thanks for your help.