Permanent capital is an investment for an indefinite period of time in an underlying vehicle. The vehicle can be any form – a corporation, trust or partnership. The investment entity could be publicly traded or privately held.
The most recognized, and perhaps most successful, example of permanent capital may be Berkshire Hathaway. In simple terms, Warren Buffett created a pool of investments where new capital could be added, capital could be withdrawn, management is incentivized and the investments within the pool could change. Family offices have been doing this for years. This is why REICG quotes Warren Buffett in our video, “My favorite holding period is forever.” For 50 years, Warren Buffett has been able to reinvest profits from his businesses and the premiums from his insurance operations without investors pressuring him to return cash to them. The result is that Berkshire Hathaway is one of the largest companies on the U.S. stock market.