Fund Managers Have Bought Buffalo Wild Wings, DaVita, and More

The most complete picture of what hedge funds own comes in the form of quarterly 13F filings. Even though the information in these filings is somewhat out of date by the time it is made public, it is still possible to use it to earn profits; we have found that the most popular small cap stocks among hedge funds earn an excess return of 18 percentage points per year and we think that other strategies are possible as well. However, we do also track 13D and 13G filings to see what hedge funds and other notable investors have bought recently (these filings are generally required when a major investor owns over 5% of a company, and are filed relatively quickly). Here are five stocks which the filers we track have been buying:

Warren Buffett’s Berkshire Hathaway keeps buying DaVita HealthCare Partners Inc (NYSE:DVA) and is now closing in on 15 million shares of the kidney dialysis services company, which operates both independent dialysis centers and facilities located in hospitals. It was one of Berkshire’s ten largest holdings by market value at the end of December (find Buffett’s favorite stocks). DaVita is priced for growth at a trailing earnings multiple of 23, and in fact sales have been up strongly with a 33% rise last quarter compared to the fourth quarter of 2011. However, earnings growth has lagged and despite Buffett’s involvement we’d be cautious about buying DaVita.

Billionaire Ken Griffin’s Citadel Investment Group increased its holdings of Buffalo Wild Wings (NASDAQ:BWLD) to a total of about 960,000 shares (see Griffin’s stock picks). The fund had owned about 250,000 shares at the end of the fourth quarter. When we looked at Buffalo Wild Wings we saw that while its earnings multiples are high (specifically, the trailing P/E is 27), the same is the case for many other restaurants and while the company has been missing earnings recently its bottom-line growth rate tops many of its peers. While we wouldn’t call it cheap Buffalo Wild Wings may compare favorably with Chipotle and Starbucks, for example.

Here’s another stock Griffin likes: