The $1.5 Billion Idea

Weschler's journey with DaVita began long before he joined Berkshire Hathaway. In the early 2000s, while running his own hedge fund, Peninsula Capital Advisors, Weschler started to take notice of the dialysis provider. It wasn't a glamorous business by any means – DaVita operates dialysis centers for patients with kidney failure – but Weschler saw something that many others missed.

Think of Weschler as a skilled fisherman. While others were casting their nets wide, hoping to catch anything that swam by, Weschler was content to sit quietly, studying the waters, waiting for the perfect catch. DaVita was that catch, but it took years of patience and observation before he was ready to reel it in.

What Weschler saw in DaVita was a business with strong fundamentals operating in a sector with steady, predictable demand. Kidney disease isn't going away, and dialysis is a life-saving treatment that patients need regularly. It's like owning a grocery store in a world where people need to eat every day – not exciting, but essential.

But Weschler didn't just jump in based on this surface-level understanding. He spent years studying the company, its management, and the broader healthcare landscape. He attended shareholder meetings, pored over financial statements, and built a comprehensive understanding of DaVita's business model and growth prospects.

This deep dive allowed Weschler to see value where others didn't. He recognized that DaVita's business model was more resilient than the market gave it credit for. The company had pricing power, economies of scale, and a management team focused on operational efficiency. It was like finding a diamond in the rough – not flashy at first glance, but incredibly valuable upon closer inspection.

Weschler's patience paid off in 2007 when he started building a significant position in DaVita for his hedge fund. By the time he joined Berkshire Hathaway in 2012, DaVita had become his largest holding, and he convinced Buffett that it was worth adding to Berkshire's portfolio as well.

Over the next decade, Berkshire Hathaway accumulated a substantial stake in DaVita, eventually owning about 38% of the company. The investment has been a resounding success, with Berkshire's stake now worth over $3 billion – roughly double its initial investment.

This success didn't come from frantically trading in and out of positions or chasing the latest hot stock. It came from one well-researched, patiently executed idea. Weschler's approach to DaVita is like planting an oak tree. It takes time to grow, but once it's established, it provides shade and stability for decades.

The DaVita case illustrates the profound wisdom in Weschler's quote about finding one good idea a year. In a world where many investors feel pressured to constantly be making moves, Weschler's approach is a reminder that quality trumps quantity. It's not about how many ideas you have; it's about how good those ideas are and how well you execute them.

This philosophy aligns perfectly with Warren Buffett's famous advice to invest as if you have a punch card with only 20 punches in your entire lifetime. Each investment should be made with careful consideration and strong conviction.

For the average investor, there's a valuable lesson here. You don't need to be a stock-picking genius or have inside information to be successful in the market. What you need is patience, diligence, and the willingness to dig deep into a company or industry. It's about finding those rare opportunities where your research gives you an edge – where you understand something about a business that the broader market hasn't yet recognized.

Weschler's approach also highlights the importance of thinking long-term. He didn't buy DaVita hoping for a quick profit; he invested because he believed in the company's long-term prospects. This long-term thinking allows investors to weather short-term market volatility and focus on the fundamental value of a business.

Moreover, the DaVita investment showcases the power of compounding. By holding onto a good investment for years, Weschler and Berkshire Hathaway have allowed the power of compounding to work its magic. It's like rolling a snowball down a hill – the longer it rolls, the bigger it gets.

In the end, Ted Weschler's success with DaVita is a masterclass in patient, thoughtful investing. It reminds us that in a world of constant noise and action, sometimes the best move is to slow down, do your homework, and wait for that one great idea. Because as Weschler has shown, one great idea, properly researched and patiently executed, can be worth more than a hundred mediocre ones.

Ask yourself: Is this truly a great idea worth committing to for the long haul? Because in investing, as in life, it's not about how often you swing – it's about how well you connect when you do.