Hedge Funds Bought Zillow, DaVita, and More

CITADEL INVESTMENT GROUPWhile the most complete information about hedge fund ownership comes from 13F filings, this data only comes out six to seven weeks after the end of every quarter meaning that it might not be quite up to date by the time it is released to the public. 13D and 13G filings, however, are filed relatively quickly after a hedge fund or other major investor buys up 5% of a company’s outstanding shares (or when it makes changes to a large position). As a result while they don’t provide as complete a picture of what hedge funds are buying (for example, even a large buy in a megacap stock will almost never get a fund to the 5% threshold), investors can still see some of the stocks that top investors are buying and decide if each company is worth doing further research. Here are four recent buys:

Billionaire Ken Griffin’s Citadel Investment Group has reported a position of 1.6 million shares in Zillow Inc (NASDAQ:Z), a real estate sales and rentals website. Citadel’s 13F for the end of September had given the fund’s ownership at about 440,000 shares (check out more of billionaire Ken Griffin’s stock picks), so we can see that Griffin and his team have increased their stake by about 300% in the last two months. The market sees Zillow as a high growth stock: it trades at 50 times consensus earnings for 2013, and that figure includes substantial earnings growth from this year. The company recently revised its revenue guidance downward for the fourth quarter of the year, which had caused its stock price to drop from about $37 to below $24. The stock has recovered a bit since then, to about $27 per share. Zillow has been very acquisitive, recently purchasing rentals information website HotPads to continue a pattern of acquisitions from earlier in the year. There are also concerns about how sustainable its business model is, including suggestions that realtors aren’t viewing it as a valuable tool. We’d avoid the stock.

Berkshire Hathaway has been adding shares of DaVita HealthCare Partners Inc (NYSE:DVA) and now owns nearly 13 million shares, up from a little over 10 million two months ago. It looks to us like the dialysis services provider is getting close to being one of the ten largest holdings in Warren Buffett’s portfolio if it isn’t already (see Warren Buffett’s top stock picks). At a $10 billion market capitalization, DaVita trades at 19 times trailing earnings. In its most recent quarter, it reported that revenue had increased 12% and net income had grown 7% compared to the third quarter of 2011. Buffett’s continued interest is enough to make us consider the stock, though we would like to see a path to a higher growth rate at that multiple.

Marcato Capital, which is run by former Pershing Square employee Richard McGuire, increased its holdings of restaurant company DineEquity Inc (NYSE:DIN), which owns Applebee’s and IHOP, to over 1 million shares. At the beginning of October the fund had owned about 770,000 shares (find more stocks that Marcato owned). DineEquity trades at 15 times forward earnings estimates, which represents a small premium over peer table-service restaurant companies such as Brinker International, Inc. (NYSE:EAT) and Darden Restaurants, Inc. (NYSE:DRI); these two stocks carry forward P/Es of 11 and 12, respectively. Alternatively, DineEquity trades even with McDonald’s Corporation (NYSE:MCD) on a forward earnings basis even though that company has a much stronger brand and quick service restaurants are expected to see better growth in the next several years. As a result we’d consider any of those three stocks better buys. Read more analysis of DineEquity.

Coliseum Capital Management, which had already been a major investor in $340 million market cap home health care provider LHC Group, Inc. (NASDAQ:LHCG), added about 100,000 shares to its position in the company in late November. LHC had been Coliseum’s largest 13F holding by market value at the end of the third quarter, with 2.2 million shares; it’s now getting close to 2.4 million, and co-manager Christopher Shackelton has joined LHC’s Board of Directors. See more of Coliseum’s favorite stocks. LHC trades at 13 times earnings, and we think that the industry has good growth potential thanks to demographics.

blog comments powered by Disqus
Insider Monkey Headlines
Insider Monkey Small Cap Strategy
Insider Monkey Small Cap Strategy

Insider Monkey beat the market by 52 percentage points in 24 months Click to see monthly returns in table format!

Lists

The 10 Countries with the Highest Suicide Rates

The 10 Most Technologically Advanced Countries in the World

The 10 Safest Countries in the World to Live in Peace

The 10 Top Selling Smartphones in the World 2014

The 12 Biggest Shopping Centers in the World

The 10 Friendliest Countries in the World

Qihoo 360 Technology Co Ltd (QIHU), Actavis plc (ACT), Yahoo! Inc. (YHOO) Among 20 Long Ideas from Sohn Canada

The 10 Laziest Countries in the World

The 10 Most Polluted Countries in the World

The 10 Most Dangerous Cities in America 2014

The Top 10 Gold Producing Countries in the World

The 10 Tallest Buildings in the World

The 10 Richest Stand Up Comedians in the World

The 10 Fattest Countries in the World

The 5 Best Summer Jobs for Teens

The 10 Most Religious Countries in the World Keeping the Faith

The 10 Most Educated Countries in the World

The 10 Most Popular Cell Phones in the World

The 10 Drunkest Countries in the World

The 10 Most Expensive Private Schools in the World

The 10 Smallest Countries in the World

Walking Dead Season 5 Spoilers You’ll Wish You Didn’t Know

The 10 Poorest Countries in the World

The 10 Greenest Countries in the World

The Top 10 Countries with the Highest Population in the World

The 10 Most Visited Countries in the World

The Top 10 Star Wars Characters in the Iconic Series

The 10 Most Expensive Android Phones in the World

5 Reasons Why The Illuminati Is Real and a Threat to Society

The 6 Scariest Halloween Costumes Ever Screamed At

The 4 Biggest Hedge Fund Managers in the World Today

The 15 Most Densely Populated Countries in the World

The 10 Biggest Tea Drinking Countries in the World

Top 6 Ways to Improve Your Checkout Process and Close Sales

The 5 Most Profitable Online Businesses You Can Start Today

The 20 Most Profitable Hospitals in the US

The 5 Most Profitable Home Businesses to Start

The 7 Teams that Will Win the Stanley Cup in 2015

The Top 10 Most Expensive Digital Cameras to Snap Stunning Shots With

The 10 Highest Quality Fast Food Restaurants In America Today

The 8 Best Halloween Decorating Ideas to Spook Up Your House

10 Marvel Women that Should Get a Movie Right Now

The 20 Best Remixes of Popular Songs that Will Make You Forget the Originals

7 Most Expensive Cities in the World

5 Least Expensive Cities in the World

10 Celebrities Who Believe In Scientology

10 High Margin Food Products to Build a Business Around

The 10 Most Expensive Clothing Stores in the United States to Get Decked Out At

The 5 Biggest Kickstarter Scams That Swindled Backers’ Donations

The 10 Most Expensive Boarding Schools In the World

Subscribe

Enter your email:

Delivered by FeedBurner

X

Thanks! An email with instructions is sent to !

Your email already exists in our database. Click here to go to your subscriptions

Insider Monkey returned 47.6% in its first year! Wondering How?

Download a complete edition of our newsletter for free!