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Has The Time To Buy Davita Inc (DVA) Arrived?

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Hedge funds and large money managers usually invest with a focus on the long-term horizon and, therefore, short-lived dips on the charts, usually don’t make them change their opinion towards a company. The second half of 2015 and the first few months of this year was a stressful period for hedge funds. However, things have been taking a turn for the better in the second half of this year. Small-cap stocks which hedge funds are usually overweight outperformed the market by double digits and it may be a good time to pay attention to hedge funds’ picks before it is too late. In this article we are going to analyze the hedge fund sentiment towards Davita Inc (NYSE:DVA) to find out whether it was one of their high conviction long-term ideas.

Is Davita Inc (NYSE:DVA) a sound investment now? The smart money is selling. The number of bullish hedge fund positions dropped by 1 in recent months. DVA was in 36 hedge funds’ portfolios at the end of the third quarter of 2016. There were 37 hedge funds in our database with DVA holdings at the end of the previous quarter. The level and the change in hedge fund popularity aren’t the only variables you need to analyze to decipher hedge funds’ perspectives. A stock may witness a boost in popularity but it may still be less popular than similarly priced stocks. That’s why at the end of this article we will examine companies such as Goldcorp Inc. (USA) (NYSE:GG), CenturyLink, Inc. (NYSE:CTL), and Expedia Inc (NASDAQ:EXPE) to gather more data points.

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At Insider Monkey, we’ve developed an investment strategy that has delivered market-beating returns over the past 12 months. Our strategy identifies the 100 best-performing funds of the previous quarter from among the collection of 700+ successful funds that we track in our database, which we accomplish using our returns methodology. We then study the portfolios of those 100 funds using the latest 13F data to uncover the 30 most popular mid-cap stocks (market caps of between $1 billion and $10 billion) among them to hold until the next filing period. This strategy delivered 18% gains over the past 12 months, more than doubling the 8% returns enjoyed by the S&P 500 ETFs.

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How have hedgies been trading Davita Inc (NYSE:DVA)?

Heading into the fourth quarter of 2016, a total of 36 of the hedge funds tracked by Insider Monkey held long positions in this stock, a 3% drop from the second quarter of 2016. With hedgies’ sentiment swirling, there exists an “upper tier” of noteworthy hedge fund managers who were upping their stakes substantially (or already accumulated large positions).
DVA
According to publicly available hedge fund and institutional investor holdings data compiled by Insider Monkey, Warren Buffett’s Berkshire Hathaway has the largest position in Davita Inc (NYSE:DVA), worth close to $2.55 billion, amounting to 2% of its total 13F portfolio. Sitting at the No. 2 spot is D E Shaw, founded by David E. Shaw, holding a $127.1 million position. Other professional money managers with similar optimism consist of Jeffrey Gates’ Gates Capital Management, Jim Simons’ Renaissance Technologies, and Israel Englander’s Millennium Management.

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