Moon Capital Management, LLC, an investment management company, released its second quarter 2025 investor letter. A copy of the letter can be downloaded here. The S&P 500 index rebounded in the second quarter, achieving a 9.6% return for the first half of the year, while Moon Capital Management’s equity portfolio gained 4%. AI-related stocks led market performance, mitigating geopolitical concerns. Moon Capital holds 10% of its portfolio in technology, significantly less than the S&P 500’s 39%. The firm remains cautious about large AI investments and their potential return on investment. In addition, please check the Strategy’s top five holdings to know its best picks in 2026.
In its Q2 2026 investor letter, Moon Capital Management highlighted DaVita Inc. (NYSE:DVA). DaVita Inc. (NYSE:DVA) is a US-based healthcare company that offers kidney dialysis services for patients suffering from chronic kidney failure. On July 22, 2026, DaVita Inc. (NYSE:DVA) closed at $232.08 per share, reflecting a market capitalization of $14.89 billion. DaVita Inc. (NYSE:DVA) posted a one-month return of 8.77%, while its shares gained 60.31% over the past 52 weeks.
Moon Capital Management stated the following regarding DaVita Inc. (NYSE:DVA) in its Q2 2026 investor update:
“During the second quarter, we exited our position in the kidney dialysis services company DaVita Inc. (NYSE:DVA). While DaVita remains an exceptional operator with a well-established competitive advantage, we concluded that the future opportunity had become less attractive following the significant appreciation in the stock. Over our 3.5-year holding period, we generated a total return of approximately 174%, or roughly 35% annualized.
We originally purchased shares at approximately $72 per share following a selloff triggered by the company’s reduction in its 2023 guidance. At the time, the market was focused primarily on near-term volume concerns, while we believed investors were underestimating the durability of DaVita’s cash generation. Based on the company’s EBITDA outlook, we estimated free cash flow would exceed $1 billion annually, allowing us to purchase the business for less than 7x free cash flow, roughly half of its historical valuation.
A key part of our thesis revolved around DaVita’s ability to use its depressed valuation to create significant per-share value through share repurchases. Although buybacks were temporarily paused while the company prioritized debt reduction, we believed they would eventually resume…” (Click here to read the full text)
DaVita Inc. (NYSE:DVA) is not on our list of 40 Most Popular Stocks Among Hedge Funds Heading Into 2026. According to our database, 52 hedge fund portfolios held DaVita Inc. (NYSE:DVA) at the end of the first quarter, up from 40 in the previous quarter. While we acknowledge the risk and potential of DaVita Inc. (NYSE:DVA) as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than DaVita Inc. (NYSE:DVA) and that has 10,000% upside potential, check out our report about this cheapest AI stock.
In another article, we covered DaVita Inc. (NYSE:DVA) and shared the list of best long-term stocks to buy according to Warren Buffett. In addition, please check out our hedge fund investor letters Q2 2026 page for more investor letters from hedge funds and other leading investors.
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Disclosure: None. This article is originally published at Insider Monkey.
