Isn't Buffett's case a bit different? He typically buys businesses outright, rather than making investments on the open market, so no passive investor (besides one in Berkshire Hathaway) could get those returns.

Also, as I understand it, Berkshire gets to implement management changes (if it deems them necessary) as it wishes, since it owns whole companies, and so the improvements they see could also come from better management of a business rather than picking better businesses. So arguments about average or above average stock picking ability seem less relevant here. (It could well be that Buffett has average management-picking ability, but is one of a relatively small number of market participants who both can and do exercise it, thereby getting an outsize result.)