Warren Buffett and Greg Abel Quietly Hold a Bigger Percentage of This Company Than Any Other in Berkshire's Portfolio (Hint: It's Not Apple or American Express)

DaVita (DVA) is highlighted as a Berkshire Hathaway (BRK) portfolio standout with Berkshire owning ~28.7M shares (~45% of DaVita’s equity) as of July 31. Despite a post-earnings slide, the stock is up 56% YTD after DaVita beat-and-raise Q1 results: adjusted profitability rose 21% to $198M and revenue increased 6% to $3.4B, leading management to raise adjusted EPS guidance to $14.10–$15.20 (vs. prior $13.60–$15.00). The article also attributes part of the momentum to DaVita’s aggressive buybacks shrinking shares outstanding from 240M+ to ~64M, reinforcing an upbeat outlook.

Analysis

DaVita’s equity story is less about end-demand growth than about how effectively management can turn a regulated, low-growth cash stream into per-share expansion. In this kind of model, buybacks matter disproportionately: shrinking the float can offset modest operational growth and keep EPS compounding even when clinic-level revenue growth is mid-single-digit. That makes the stock look cheap on forward earnings, but it also means the multiple is more fragile than it appears because there is little organic growth cushion if reimbursement or labor costs turn.

The competitive read-through is subtle. Public rivals like FMS and smaller private operators do not need to lose material share for DVA to outperform; they just need to have less efficient capital return or weaker domestic focus. If DVA continues to retire stock while competitors fund capex and debt service, DVA can outgrow them per share without taking much price risk, which can widen valuation gaps inside dialysis and broader healthcare services. The flip side is that a tighter float also raises volatility: incremental insider/holder selling can hit the tape harder, and the market may overreact to any hint that repurchases are slowing.

Consensus is probably over-reading Berkshire’s remaining stake as a conviction signal. The more important question is whether DVA can sustain buybacks from true free cash flow rather than financial engineering; if that answer weakens, the multiple can compress quickly. Falsifiers are a guide-down in adjusted EPS, a CMS reimbursement change that hits clinic economics, or evidence that capital returns are being funded with higher leverage instead of operating cash.

Key Decisions for Investors

• Long DVA / short FMS for 3-6 months as a relative-value expression of better U.S. capital-return compounding versus a weaker capital-allocation setup. Best entry is on any pullback after the current enthusiasm fades; exit if DVA guidance is cut or CMS rulemaking points to reimbursement pressure.
• Do not chase DVA after a strong YTD move; wait for a 5-7% retracement or the next post-earnings consolidation before adding. The risk/reward is materially worse after the headline-driven re-rating.
• If already long healthcare beta, rotate toward DVA from broader ETFs like XLV only on weakness. DVA is a stock-specific cash-return story, not a reason to add generic healthcare exposure at current levels.
• Set an alert on buyback cadence and net share count in the next 10-Q/10-K. If repurchases slow while the stock stays expensive, the thesis degrades quickly and the name should be trimmed.
• No standalone trade in BRK.B on this news. Berkshire’s residual DVA stake is too small relative to NAV to move the parent; treat the sales as liquidity management, not a broad Berkshire signal.