Insider Monkey maintains a database of quarterly 13F filings from hundreds of hedge funds as well as other notable investors including Warren Buffett’s Berkshire Hathaway (find Buffett’s favorite stocks). One use of these filings is in developing investment strategies, and we have actually found that the most popular small cap stocks among hedge funds earn an average excess return of 18 percentage points per year (learn more about our small cap strategy) and our own portfolio based on this finding outperformed the S&P 500 by 33 percentage points in the last 11 months. We can also use our database to see which stocks specific managers or combinations of specific managers owned recently. Read on for our thoughts on five stocks which both Berkshire and billionaire Stephen Mandel’s Lone Pine Capital (see Mandel’s stock picks) had in their portfolios at the end of the first quarter of 2013.
One stock Buffett has been buying so far this year is DaVita HealthCare Partners Inc (NYSE:DVA), and his holding company owned about 15 million shares of the kidney dialysis center operator at the end of March. DaVita HealthCare Partners Inc (NYSE:DVA) grew its patient related revenue by 12% last quarter compared to the second quarter of 2012 if we exclude the effects of its recent acquisition of HealthCare Partners. Analyst expectations for 2014 imply a forward earnings multiple of 14, so the market is not pricing in much growth beyond that point. D.E. Shaw, managed by billionaire David Shaw, reported a position of 1.8 million shares in its own 13F (check out more stocks D.E. Shaw owns).
Both of these billionaires are also major investors in Liberty Media Corp (NASDAQ:LMCA), according to their most recent filings. Liberty Media Corp (NASDAQ:LMCA), part of John Malone’s media and entertainment empire, became independently publicly traded in January of this year and is up about 30% from its levels at that time. Its operations include the management of the Atlanta Braves and the production of The PBS NewsHour; it also has a stake in Sirius XM Radio Inc (NASDAQ:SIRI).
Between January and March Berkshire more than doubled its stake in Internet registry services company Verisign, Inc. (NASDAQ:VRSN), a long time Lone Pine favorite. The stock plunged last fall on news that it would have trouble increasing its prices in the future to the degree it had wanted (price increases must be approved by regulators) but it is certainly is the kind of “moat” stock Buffett is known to like. Still, it is quite pricy at a valuation of 19 times forward earnings estimates. Value investor Barry Rosenstein’s JANA Partners is another significant shareholder in Verisign, Inc. (NASDAQ:VRSN) (research more stocks JANA likes).