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 Top 10 States With Fastest Internet Speeds

10 Best Places to Visit in USA in August

Top 10 Cities to Visit Before You Die

Top 10 Genetically Modified Food In the US

15 Highest Grossing Movies Opening Weekend

5 Best Poker Books For Beginners

10 Strategies Hedge Funds Use to Make Huge Returns

Top 10 Fast Food Franchises to Buy

10 Best Places to Visit in Canada

Best Summer Jobs for Teachers

10 Youngest Hedge Fund Billionaires

Top 10 One Hit Wonders of the 90s

Fastest Growing Cities In America

Top 10 U.S. Cities for Freelancers

Top 9 Most Popular Free iPhone Apps

Top 10 Least Expensive Private Business Schools in the US

Top 15 Most Expensive Countries in the World – 2014

Top Businesses to Invest In

Top 5 Things You Might Be Doing Wrong With Your Business

Top 5 Strategic Technology Trends in 2014

Top Rags to Riches Stories

Parenting Behavior That Promotes Future Leaders

Top 5 Mistakes Made by Small Businesses

Top 5 Most Common and Potentially Devastating Financial Blunders

Top 5 Highest Paying Jobs for Web Designers

Top 6 Most Respected Professions that Also Pay Well

Top 5 Pitfalls Investors Should Avoid

Top 6 Lawyers and Policy Makers Under 30

Top 6 New Year’s Resolutions for Entrepreneurs

Top 7 Locations to Check in on Facebook

Top 5 Mistakes made by Rookie eBay Sellers

Top 7 eBook Publishers in 2013

Top 6 Health Industry Trends in 2014

5 Lessons for Entrepreneurs from Seth Godin

Top 5 Success Tips from Jordan Belfort – the Wolf of Wall Street

Best Master’s in Finance Degree Programs

Top 6 Earning Celebrities Over 50

The most expensive sports to play

Top 7 Earning Celebrities Under 25

Best 7 Online Courses to Take: Free Finance MOOCs

Top 6 Bad Habits that Promote Failure

20 Most Valuable Soccer Teams in the World in 2013

12 Most Expensive Countries for Foreign Students

Top 30 Most Influential Women in the World

Top 20 Most Expensive New Year Eve Shows

Top 5 Best Vocational Careers

Top 10 Jobs for 2014 by Salary Gain (Predictions)

Top 5 Digital Trends for 2014

Top 6 Things You Can Do To Increase Your Productivity

Top 9 Trending Smartphones in 2013

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!