The Berkshire Beat: May 30, 2025
All of the latest Warren Buffett and Berkshire Hathaway news!
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If past years are any indication, I will be slowly catching up on all of the interviews and media coverage surrounding Berkshire Hathaway’s annual shareholders meeting for months to come. And, with this week being relatively quiet on the Berkshire front, I finally had a chance to dive in to Mohnish Pabrai’s recent appearance on The Investor’s Podcast — which was recorded before the AGM but released afterwards.
Of particular interest to me — an inveterate coffee-canner who prefers to never sell anything — were Pabrai’s comments about holding on to exceptional businesses.
This approach is not one of arrogance, assuming that our selections are flawless and destined to soar indefinitely. But, rather, the humility to admit that no one can ever fully predict how high a truly great business can climb.
Selling a stock because it seems “fully valued” presumes a level of certainty about its future potential that cannot be known. (At least by knuckleheads like me.) By contrast, holding on to an exceptional business reflects an awareness of our own limitations.
Pabrai put it bluntly: “It only dawned on me in the last few years that the way I’m doing things is quite stupid. My model, when I was forty and even when I was in my early fifties, was that you try to buy a business for half or less than it’s worth. And when it gets valued at 90% or more of intrinsic value, it’s time to move on. That sounds rational, but it’s the dumbest thing.”
“The reason it’s the dumbest thing,” he continued, “is we don’t know what intrinsic value is. We may have a guess at it, but the great businesses surprise to the upside and they really kind of blow your mind in terms of what they’re actually able to do.”
A classic example of this, as Pabrai highlighted, is Warren Buffett and Charlie Munger’s acquisition of See’s Candies. One that almost didn’t happen because — at first — they failed to understand the true value of the candy maker’s brand.
Back in 2020, Charlie laughed about how they nearly walked away from the deal with the two sides just $100,000 apart on the price. “We almost didn’t buy it,” he said. “We just squeaked through. We made a wonderful decision because we were just barely smart enough to make a no-brainer.”
Even Buffett and Munger, two of history’s greatest investors, underestimated the potential of an exceptional business. And I know I’m no match for them.
“Warren Buffett was having difficulty paying $25 million for See’s Candies,” said Pabrai, “[and], basically, the dividends that they have received in the last few decades [from See’s] is approaching $3 billion. More than 100x what they invested. They would have never guessed that, in their wildest dreams, it was going to give $2.5-3 billion in dividends — and counting.”
“So, basically, the advice to my 40-year-old [self] would be, ‘Listen, idiot, you’re going to get some companies in the portfolio that are truly exceptional. You will know that they are exceptional. You will know. When you own an exceptional business, do not sell it at 90% of intrinsic value. Do not sell it when it’s fully valued. Do not sell it when it’s overpriced. You can possibly think about selling it when it’s egregiously overpriced. And when you figure out the difference between overpriced and egregiously overpriced, call me collect.’”
And, now, on to the latest news and notes out of Omaha…
Berkshire Hathaway sold 200,000 more shares of Davita — for $27.8 million — between May 22-27. Following these transactions, Berkshire now owns 44.76% of the dialysis provider. And, notably, the SEC filing for these sales did not reference the Share Repurchase Agreement between the two companies like the one on May 8 did. Still, this was likely done to open up a little breathing room under the 45% limit.
A similar pattern occurred in the previous quarter, too. Berkshire sold Davita shares on February 11 (pursuant to the Share Repurchase Agreement) and then followed up with more sales (not mentioning said agreement) a few days later.
HomeServices of America CEO Chris Kelly spoke at the T3 Leadership Summit last week — and expressed excitement for Berkshire’s upcoming leadership transition. According to Real Estate News, he is “thrilled with Buffett’s replacement pick, noting that [Greg] Abel has developed a deep understanding of the business through his time at the company”. But, most of all, he believes that Buffett deserves to ride off into the sunset on his own terms. “Certainly, with Warren Buffett, the name recognition is really amazing — but I think after 94 years he’s earned the right to go to McDonald’s and get his [Coca-Cola] twice a day instead of once per day.”
At the summit, Kelly once again shot down rumors that the Berkshire-owned real estate brokerage was ever up for sale or close to a deal with Compass, as the Wall Street Journal reported back in March. “We can definitively say that we are not for sale and we’re very excited to be partnering with all the other great brokerages out there.” Still, Kelly sees room for improvement. “The way that we were originally constructed as an enterprise was we bought companies and we left them alone,” he said. “That worked well for a really, really long period of time. [But] there’s more that we need to be doing together on the backside, preserving what are the great local cultures of our brands.” That includes a renewed focus on the financing, title, and insurance services that HomeServices provides in-house.
The high-stakes dispute between Chevron/Hess and Exxon Mobil over a lucrative project in Guyana’s Stabroek Basin went before an arbitration panel in London this week. It all boils down to Exxon’s right of first refusal on Hess’s 30% stake in the basin — and whether or not it was violated by Chevron’s proposed $53 billion acquisition of the latter company. This legal battle has already delayed the blockbuster merger by more than eighteen months — with a final decision not expected until the fall.
“We remain confident that the arbitration will confirm the Stabroek right of first refusal does not apply to the merger," a Hess spokesperson said.
Bloomberg reports that Apple will soon overhaul the naming convention for its operating systems — and will now designate them by the year of their release. Or, in this case, the upcoming year. So the current iOS 18 will be followed by iOS 26 (for 2026) in September. This change will apply uniformly across the entire Apple ecosystem — e.g., macOS 26, iPadOS 26, watchOS 26, tvOS 26, and visionOS 26 — and should hopefully reduce confusion among users. Right now, the current versions of these operating systems are iOS 18, watchOS 11, macOS 15, tvOS 18, and visionOS 2. Making it all a little difficult to keep track of. Simplicity and consistency for the win.
And a couple of odds and ends to finish off the week…
This week, Berkshire collected $32.3 million in quarterly dividends from Sirius XM and $173,423 from Jefferies Financial Group.
The American Express app and website both ranked #1 in a recent J.D. Power survey measuring customer satisfaction.
Perhaps the best current example of Pabrai’s point is Berkshire itself. It’s no longer ridiculously cheap, as it was at many times after the financial crisis, but it seems silly to try to sell with the hopes of buying back in more cheaply in the future, since that opportunity may never come. We simply do not know.
Legend has it that a friend named Ira Marshall, together with Charlie Munger, pushed Warren to make the See's purchase despite the premium. Charlie says that sometimes you have to "pay up."