The Best Ideas I Found in Q1 2025 Investor Letters (Part IV)
From the letters of Greenhaven Road Capital (Scott Miller), and Tom Russo (Semper Vic Partners).
I’m back with a fourth part of the letters that I like to read and write-down the commentaries on current holdings.
If you missed the Part I, Part II, and Part III of the Q1 2025 Letters, go and read it. Quite a few interesting ideas!
Companies mentioned in the letter
Kingsway Financial (KFS)
Nestlé
Philip Morris International (PM)
Berkshire Hathaway
Kingsway Financial (KFS) – Greenhaven Road
Though its name suggests an insurance company, KFS today is an entirely different story. A decade ago, it was a struggling, overleveraged conglomerate. Under new leadership since 2018, Kingsway has sold off non-core businesses, reduced debt, and repositioned itself as an asset-light compounder built around an innovative acquisition strategy.
At the core of the thesis is Kingsway’s Search Xcelerator platform—essentially a scaled version of the search fund model taught at Stanford and used by many successful entrepreneurs. In this model, young operators (often ex-military, Ivy League MBAs, or seasoned professionals) are hired as “Operators in Residence” (OIRs) and backed with capital and expert advisors. They go out to acquire small but highly attractive private businesses: typically B2B services, healthcare, software, or skilled trades, with $1M–$3M in EBITDA, recurring revenues, and high margins.
The acquisition criteria for Kingsway are asset-light, recurring revenue, and high margins – which happen to be the types of businesses that Greenhaven Road wants to invest in and the attributes that the successful search funds have historically invested in. The Search Xcelerator business owns seven operating businesses spread across B2B services, healthcare services, vertical market software, and skilled trades. If the model works, the OIRs should complete two or three acquisitions per year, making way for additional searchers to look for more businesses to buy.
These businesses are too small for most private equity buyers, and often lack natural successors—creating a buyer’s market for Kingsway’s team. Deals are typically done at around 5x EBITDA, and over time, the goal is to build a portfolio of cash-flowing companies that self-fund further acquisitions.
What sets Kingsway apart is the quality of its advisors and operators. Will Thorndike (The Outsiders author), Tom Joyce (former Danaher CEO), and Tyler Gordy (Kingsway’s most successful searcher to date) all coach the OIRs. The company screens heavily, hiring only about 1 in 100 candidates—often with backgrounds like ex-Navy pilot, HBS MBA, and proven operating experience.
The early signs are promising. Among its current seven businesses:
Ravix nearly doubled EBITDA in 3.5 years
DDI is on pace to double revenues after geographic expansion
SPI became a Rule of 40 company within two years
Kingsway’s current run-rate EBITDA is about $20M, and the stock trades around $8/share, with a market cap of ~$225M and ~$30M in net debt. Scott believes that even moderate growth assumptions (adding $6M of acquisitions/year and 15% organic growth) could more than triple the share price in 5y.
Importantly, this is not a classic PE roll-up chasing short-term gains—Kingsway is explicitly focused on buying, improving, and holding small businesses for long-term compounding. It is also one of the only ways for public market investors to gain diversified exposure to search fund strategies, which have historically delivered strong returns (Stanford studies show a median 35% IRR).
At the core, this is a business model/jockeys bet. For a $225M market cap company, the board and advisors are the A-team, Delta Force. The searchers are 100% backable. The model has worked in the past. This is currently the only way for investors to get exposure to search funds at scale and with liquidity. I think the upside/downside is skewed dramatically in our favor.
Ideas from Tom Russo’s Latest Letter*
Nestlé
Nestlé embodies the very type of global consumer company that Russo seeks: one with both the capacity to reinvest and the capacity to suffer — meaning a willingness to make long-term investments that depress near-term profits in service of compounding intrinsic value. He likens Nestlé’s culture to a Japanese pagoda — an enduring structure rebuilt and maintained over centuries while keeping its essence intact. Nestlé operates in 175 countries and boasts 27 brands generating over $1 billion each annually.
Its success lies in price inelastic demand — consumers will pay more for its trusted brands even during inflation. Russo highlights how Nestlé’s patience and reinvestment mindset produced successes like Nespresso, which took 11 years to break even but is now a $5B+ business with leading margins. Nestlé is now investing heavily to turn around its Health Science/Vitamins business and sees opportunities tied to new consumer trends like GLP-1.
The company is returning to its core playbook of product innovation, marketing, and renovation, with a collaborative retailer approach. Recent initiatives include premiumization in coffee (Nescafé Ice Roast), expansion of e-commerce (now over 25% of sales in the US and China), and a new promotional partnership with Formula 1 to drive top-line growth. Nestlé’s “family” culture of global mobility among executives ensures alignment around long-term value creation, reinforcing why Russo remains highly confident in Nestlé as a compounding franchise.
Nestlé’s culture has also had a history of camaraderie among its professionals, bred from Nestlé’s long-standing practice of moving professionals around global assignments on a regular basis. This provides rising management with a sense of their joint contribution to making Nestlé great, while striving to eliminate the possibility that one professional attempt to claim credit for what are historically truly global projects involving contributions from many participants.
Philip Morris International (PM)
Russo views PM as one of the most remarkable examples in his portfolio of a company with the capacity to reinvest and transform itself. Over the past 14y, PM has invested aggressively (over $14 billion cumulatively) into developing Reduced Risk Products (RRPs) like IQOS, VEEV ONE, and ZYN. IQOS, its flagship heat-not-burn product, is now a major success in Japan — capturing over 50% share in key cities — and is expanding in Western Europe.
Russo stresses that no peer has matched PM’s R&D spending or its willingness to endure early operating losses in pursuit of transformation. The company’s early investments (which once generated $5B in cumulative losses) are now delivering superior returns. As of 2024, nearly 50% of PM’s revenues came from RRPs — a stunning shift for a former combustible cigarette giant.
The regulatory backdrop is improving, with ZYN recently gaining FDA recognition as reduced-risk. PM’s deep investments are creating network effects in its RRPs ecosystem, where scale, retail presence, and consumer loyalty drive competitive advantage. Russo sees PM as having built a durable path to grow nicotine market share in safer formats — aligning both with societal trends and future revenue/profit growth. PM’s capacity to suffer — making $14B+ in RRP investments ahead of peers — positions it as the clear leader in the industry’s future.
Philip Morris celebrates their “capacity to reinvest” mature markets and mature product cash flows into investments in innovation and renovation of their product line up. Philip Morris has underwritten cumulative smoke-free product investments of $14 billion, growing sharply from a smaller base of $2.4 billion in 2015. No other competitor approaches Philip Morris in amount of future-oriented investments.
Berkshire Hathaway (BRK)
For Russo, BRK remains the crown jewel of the Semper Vic portfolio and a model for the “global value” investing philosophy. He draws a parallel between Buffett’s methodical compounding and the snowball metaphor from Alice Schroeder’s biography: Buffett’s snowball of capital and quality businesses continues to grow, both in the U.S. and now increasingly abroad (as seen in the recent Japanese trading house investments).
Russo highlights how Berkshire’s capacity to suffer and avoid agency costs is unparalleled. Buffett famously maintained See’s Candies’ premium retail strategy despite generating operating losses for eight months of the year — understanding that this preserved long-term brand value and customer loyalty. See’s Candies has now returned $2B+ to Berkshire — an illustration of patient capital allocation at its finest.
At today’s scale — with $340B in cash — BRK remains poised to deploy capital globally without short-term pressures. Russo admires how Buffett, Combs, and Weschler continue to hunt for large opportunities and improve operations across key subsidiaries (e.g., GEICO’s improved combined ratio). Russo also welcomes the orderly leadership transition to Greg Abel (effective January 2026), viewing him as a highly competent successor with deep alignment to Berkshire’s enduring culture.
Berkshire Hathaway continues during 2025 to hunt for attractive positions, partial investments in publicly traded companies, as well as the search throughout the world of publicly traded company shares, a continued constant flow of considered investments overseen for the pools of capital overseen so ably by Mr. Weschler and Mr. Combs. Both investors have introduced Berkshire Hathaway to a handful of companies which have played a critical role over the years of their abled service. In addition, both have lent their immense skills to Berkshire Hathaway broadly with their willingness to take on added responsibilities beyond their direct portfolio management duties to help repair and advance businesses in need. Mr. Combs received strong credit for his work on GEICO, whose prospects have been meaningfully restored through investments in technology, reduced labor costs, etc., to the highly unusual, attractive combined ratio of roughly 80 percent! Mr. Weschler has shared Berkshire Hathaway’s responsibilities when asked to weigh in on specific projects, as well as having played such an important role over his tenure with sizable public market investments.
He concludes that Berkshire’s unique ability to balance “less jam today for more jam tomorrow” — prioritizing intrinsic value growth over quarterly optics — makes it an ideal core holding. Russo simply “could not imagine any other portfolio of any size we would prefer” to owning Berkshire as Semper Vic’s largest position.
*Sorry, the letter is not avaiable for download.
Thank you.