"I love how he criticizes hedge funds yet he really had the first hedge fund. He criticizes activists but he was the first activist," Loeb, who runs $17.5 billion hedge fund Third Point, said about Buffett who has been running conglomerate Berkshire Hathaway for 50 years.
Read MoreCelebrityinvestments gone sour
Loeb, known in investment circles for his sharp tongue and top returns, made the comments at the SkyBridge Alternatives Conference, known as SALT, less than one week after Buffett hosted his company's shareholder meeting in Omaha.
Buffett, whose own strong record earned him his nickname, has in the past said that hedge funds could pose a threat to global markets and has a running bet with a New York-based hedge fund firm that hedge funds will underperform a low-cost index tracker over ten years. So far Buffett is winning the bet, he said at the weekend meeting in Omaha.
In Las Vegas, where Loeb was speaking to hundreds of hedge fund managers, investors, and lawyers in the Bellagio ballroom, the crowd was clearly on the fund manager's side, judging by the hearty applause his comments got.
"He has a lot of wisdom but there is a disconnect," Loeb said referring to the things Buffett says and what he actually does.
He quickly tried to walk back his comments by saying he took a "potshot" at the 84-year old investor and philanthropist who is widely seen as a hero by many other prominent hedge fund managers.