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DaVita HealthCare Partners Inc (DVA): Warren Buffett Adds More Shares to Long-Term Holding with Solid Returns

One of the greatest investors of all time Warren Buffett is bullish on DaVita HealthCare Partners Inc (NYSE:DVA). Mr. Buffett’s Berkshire Hathaway does not actively invest in equities in comparison with other players on the Street, which is why it is important to track its every move closely. In a new filing with the Securities and Exchange Commission, Berkshire reported buying some 944,400 shares of DaVita, raising its position to almost 38.57 million shares. The securities have been bought in several transactions, the average price amounting to $74.11 per share. In this way, Berkshire raised its exposure to the company to 17.94% of the common stock.

Warren Buffett portrait

Warren Buffett first invested in DaVita HealthCare Partners Inc (NYSE:DVA), a $16.3 billion provider of dialysis services, during the fourth quarter of 2011, initially reporting ownership of 2.68 million shares. The position has been consistently increased over the following quarters, while the stock more than doubled in value. This year so far, Berkshire has already reported raising its stake in the company twice. Back in February, the investor bought around 1.20 million shares, taking the stake to 37.2 million. In fact, DaVita is the only healthcare stock in Berkshire’s equity portfolio. The investor also owns 7.11 million shares of CVS Health Corp (NYSE:CVS), which is a drug retailer and is not directly involved in the healthcare sector.

This time, Berkshire purchased more shares of the company on the back of the company reporting its financial results for the third quarter. DaVita posted revenue of $3.25 billion, up from around $3.0 billion for the same period of last year. The company also increased its net income to $0.85 per share, from $0.64 per share. After the company reported its financial results, several analysts reiterated their optimistic prospects for the stock. JP Morgan raised its price target to $85 from $75 with ‘Overweight’ rating and Zacks reiterated its ‘Neutral’ rating with $82 price target.

Aside from Berkshire, other investors own less significant stakes in DaVita HealthCare Partners Inc (NYSE:DVA). For example, David Shaw’s D E Shaw last reported holding 3.78 million shares as of the end of June, down by 21% on the quarter. Moreover, while Berkshire has been purchasing shares, several insiders exercised their options to buy stock and sold a significant amount of shares, such as Kent Thiry, the co-Chairman of DaVita HealthCare Partners Inc (NYSE:DVA), who sold over 344,900 shares a couple of days ago.

With this in mind, as we know, Mr. Buffett prefers to invest in stocks with steady growth opportunities for the long-term and is very careful about risks. This strategy proved to be very efficient, since Berkshire is one of the largest holding companies in the US (and in the world) and the majority of its equity positions have had positive returns over the years. In fact, the only large equity investment that has provided negative returns for Berkshire was the stake in the UK food retailer Tesco PLC (LON:TSCO), which resulted in losses of around $750 million from a $1.7 billion investment. However, Mr. Buffett admitted that this particular investment was a mistake.

Nevertheless, Mr. Buffett is a great investor and for those looking for long-run investment opportunities, it might be a good idea to follow his bullish moves. Moreover, Berkshire today will release its 13F filing, disclosing its equity portfolio for the end of the third quarter and we shall see if Mr. Buffett has made any other interesting moves during the July-September period.

Disclosure: none

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