The Berkshire Beat: March 21, 2025
All of the latest Warren Buffett and Berkshire Hathaway news!
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Warren Buffett lavished praise on Berkshire Hathaway’s Japanese investments in his latest annual letter to shareholders. “[In 2019], we simply looked at their financial records and were amazed at the low prices of their stocks,” he wrote. “As the years have passed, our admiration for these companies has consistently grown.”
“Both [Greg Abel and I] like their capital deployment, their managements, and their attitude in respect to their investors. Each of the five companies increase dividends when appropriate, they repurchase their shares when it is sensible to do so, and their top managers are far less aggressive in their compensation programs than their U.S. counterparts.”
As such, Buffett told shareholders that he anticipated adding more to these positions “over time” — even going so far as to obtain permission from the sogo shosha to exceed 9.9% ownership in each.
Well, new filings out of Japan on March 17 reveal that Berkshire has indeed purchased more shares in all five of the trading houses.
This brings Berkshire’s ownership percentages to…
Mitsui: 9.82%
Mitsubishi: 9.67%
Marubeni: 9.3%
Sumitomo: 9.29%
Itochu: 8.53%
Bloomberg reached out to the trading houses for comment. “Mitsubishi’s representative said Berkshire likely increased its stake on mid- to long-term growth expectations — and that it continues to engage in discussions on ways to collaborate. Itochu’s spokesperson said it expects Buffett’s stake to increase further, while Marubeni said it welcomes the investment.”
And, now, the latest news and notes out of Omaha…
A recent paid subscriber sent me a message that I would like to share below because it perfectly gets at what I’m trying to do with this newsletter. Kingswell is something of an outsider among financial newsletters — with most others offering stock tips or deep dives into a company’s financials. Here, though, I focus more on the mental side of the money game with timeless lessons from the greats. Or, as George Goodman once put it, “Enjoy the stories — they always teach more than the rules.”
March Madness tipped off this week — and so did Warren Buffett’s famous million-dollar bracket contest. But, after years of Berkshire Hathaway employees fruitlessly chasing the top prize, he is making things a little easier this time around. Why? “I’m getting older,” he told the Wall Street Journal. “I want to give away a million dollars to somebody while I’m still around as chairman.” In the 2025 edition of the contest, all it will take is correctly predicting 30 out of the 32 first-round games to be eligible for the $1 million grand prize. Tough, but not impossible. “I hope it’s this year,” said Buffett. “We made it easier this year than ever.”
When asked if he planned to fill out a bracket himself, Buffett admitted that he doesn’t have much time for sports these days. “I try and pay attention to stocks.”
There is also a “lollapalooza” prize — $1 million every year for life — if some prescient picker nails all 48 games through the tournament’s first two rounds.
Chris Bloomstran joined the Value: After Hours podcast on Tuesday to discuss his latest letter to clients, lofty valuations on Wall Street, and — of course — Berkshire. He pointed out that, with Berkshire hitting new all-time highs throughout the week, “Yesterday (Monday) was the first time since we’ve owned the stock — over 25 years — that the stock traded at a percent-and-a-half above my appraisal of intrinsic value. Today, Berkshire is fully valued.”
Last fall, vice chairman Ajit Jain sold more than half of his Berkshire shares — and Bloomstran offered a guess as to why that happened. “I think Ajit’s sale didn’t have anything to do with thinking that Berkshire was going to tank overnight,” he said, “but you had a legitimate campaign proposal that was going to tax individuals with over $100 million of net worth on their unrealized gains. Well, Ajit had — I don’t know — $350 million worth of Berkshire that he paid for out of pocket. Berkshire has never given away a single share of stock to an employee. Warren bought all of his, Charlie bought all of his, Greg has bought a bunch of it recently, [and] Ajit bought all of his. Nobody was ever given [anything]. Ajit was staring at, I would guess, a $75 million tax hit if the election had gone differently and a crazy proposal like that made its way into the tax code. So, when he sold it close to its high for the year, why not? It got reported that that was a sign that Berkshire was about ready to tank. No, it wasn’t — but Ajit’s a risk manager. He runs an insurance operation. If there’s a potential risk that, next year, I’m going to pay [tax] on a $300+ million gain and you don’t have a lot of cash laying around — so he trimmed the position.”
Bob Denham, one of the unsung heroes in Buffett’s rescue operation at Salomon, passed away on March 15. Berkshire director (for the moment) Ron Olson called Denham a “generational talent” whose “legacy will continue to inspire us all”. Buffett personally recruited Denham to steer Salomon through numerous legal and regulatory hurdles during the bond-trading scandal. He remained at Salomon as chairman until Travelers acquired the investment firm in 1998. According to his Munger, Tolles & Olson obituary, Denham also represented Berkshire on many major deals like the $37.2 billion acquisition of Precision Castparts, the $28 billion acquisition of H.J. Heinz (with 3G), the $9.7 billion acquisition of Lubrizol, the $44 billion acquisition of BNSF, and its investment in Bank of America.
A little Berkshire synergy? Over on X, Paul Dutz spotted a certain Berkshire subsidiary (GEICO) front and center in the trailer for Apple’s upcoming film, F1. Apple, of course, remains the largest holding in Berkshire’s massive stock portfolio.
And a few odds and ends to finish off the week…
Berkshire’s proxy statement revealed that Buffett did not repurchase any shares between February 10 (as shown in the annual report) and March 5. No surprise there. He hasn’t bought in any shares since Q2 2024. And, with Berkshire’s stock price at record highs, that probably won’t change any time soon.
International Dairy Queen hired Art D’Elia (formerly of Domino’s Pizza) as its new chief operating officer. He oversaw international business for Domino’s (Berkshire owns 6.9% of the pizza maker) — which was likely a big selling point since DQ hopes to expand overseas and in China. “[D’Elia] will elevate our franchise business to the next level and deliver on our vision to become the world’s favorite quick-service restaurant,” said CEO Troy Bader.
The Minnesota Star Tribune article on D’Elia’s move also provided some interesting facts from Dairy Queen’s franchise disclosure documents. The company earned a $94 million profit on $238 million of revenue in 2023. Individual DQ restaurants that opened in the past decade averaged $1.4 million in sales in 2023 — with a pre-tax margin of ~31%.
Lubrizol unveiled its “brand evolution” this week with a new logo and tagline — “Imagined for Life. Enabled by Science.” The Berkshire sub has come a long way since its start in a Cleveland garage 97 years ago developing lubricants for early automobiles. “From the cars you drive to the shampoo you wash your hair with to the running shoes you lace up for your daily walk, most of the world’s population uses Lubrizol-enabled products dozens of times a day,” said CEO Rebecca Liebert. “The average person may not fully realize the impacts our science has on daily life, but it is undeniable. The world needs Lubrizol and our teams.”
Chevron has purchased 4.99% of Hess common stock so far this year — which will allow the oil major to save a little money if the $53 billion merger ever gets the green light from arbitrators.
Coca-Cola CEO James Quincey called himself “the chief zombie killer” because of his penchant for axing underperforming business lines. He told the crowd at Adobe Summit 2025 that, five years ago, Coke had 400 different brands. Today, that number has been slashed to just 200.