I think by "actually not a great investor in the way people think", what you're saying is that he isn't a particularly outstanding stock picker. To the extent that that's the way in which people think he's a great investor, it's because lots of (most?) people think investing is just stock picking. But what makes him a great investor is exactly what you outlined. He found a great strategy - insurance float for leverage - and has executed it well for decades.
It seems weird to me to say, "he's not a great investor, he just found a great investment strategy and executed it really well!" What makes someone a great investor if not that?
He's also a good marketer. I have a mostly unsubstantiated theory that Buffet's celebrity 1) allows him to negotiate better deals than other investors and 2) moves the market after he's invested. Re: 2) if Warren buys something, other people will pile on and drive up the price, which helps drive his returns.
He's mentioned the effect that Berkshire's brand reputation has on investment returns in his annual reports. It's substantial, but not in the way you theorize.
Basically, Berkshire's reputation for 1.) being financially stable through good times and bad 2.) keeping existing management and place and 3.) being able to allocate capital from cash-rich but growth-poor businesses to growth-rich but cash-poor businesses makes them a "preferred buyer" for many strong private companies that are seeking to get liquidity for themselves or family members but don't want to kiss their baby goodbye forever. That a.) opens up dealflow to Berkshire that would never think of selling to other private equity firms and b.) gives them a good price on the deal, since the owners are not seeking to generate a competitive marketplace of bidders that might drive up the price.
Although Berkshire does invest in regular public companies on the open market, that hasn't driven the majority of their returns in decades. Instead, their modus operandi is usually to buy 80% (there was some tax reason why it was 80%) of highly profitable private businesses, and then use the cash generated by those profits to buy more highly profitable private businesses. They only invest in the public markets when there are no attractive private opportunities available, and in some cases they take formerly public companies (eg. BNSF) private. The subsequent share price matters little with this strategy, because the investments are illiquid and just spin off lots of cash from profits.
> 2) if Warren buys something, other people will pile on and drive up the price, which helps drive his returns.
While this is technically true, in the long-run the price of a firm will reflect reality as it exists, not as its perceived. And since Warren doesn't buy, then instantly sell when the price goes up, but rather holds for a long time. I don't believe we can attribute his returns to this phenomena.
As a side note, the reason the price goes up is because he built a reputation of being able to pick undervalued stocks, therefore his purchase is a signal.
Probably to some degree but you have to remember that to get to that point where that's even the case you have to do something right for a long time before that and during that period those particular benefits are non existent because the brand and celebrity hasn't been established yet.
That would be weird, but "he's not a great investor" is taken out of context from "he's not a great investor in the way people think". The way it would be said is "he's not a great investor in the way people think [stock picking], he's a great investor because he found this other strategy that works well."
What about he's "not a great investor in the way people think" leads you to believe "he's not a great investor"?
It seems weird to me to say, "he's not a great investor, he just found a great investment strategy and executed it really well!" What makes someone a great investor if not that?