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Berkshire Hathaway Continues to Buy DaVita
Posted by: Holly LaFon (IP Logged)
Date: October 19, 2012 11:27AM
The portfolio managers at Warren Buffett’s Berkshire Hathaway Inc. (BRK.A)(BRK.B) have increased the company's stake in DaVita Inc. (DVA) by 0.65% for approximately $110 per share on Oct. 16 and 17, 2012, as reported by GuruFocus Real Time Picks. Berkshire bought 63,928 shares in the transaction, which brought its total current shares owned to 10,547,040.
The DaVita purchase was Berkshire’s fourth in less than a month and brought its ownership of the company to 10.5%. Berkshire initiated a position in DaVita in the fourth quarter of 2011 when the price was at $71 on average. The price has increased 56% since then and reached a new all-time high of $113.48 on Thursday.
Denver-based DaVita is one of the largest kidney dialysis companies in the U.S with a roughly one-third share of the market. It operates 1,884 outpatient dialysis centers in the U.S., where it serves approximately 149,000 patients. In addition, it owns 19 outpatient dialysis centers outside of the U.S.
DaVita is also a rapidly growing company, with an 18.6% revenue per share growth rate, 17.8% EBITDA per share growth rate, and 10.8% free cash flow growth rate annually over the past ten years.
At the end of the second quarter, the company had $1.7 billion cash on its balance sheet, and $4.9 billion in long-term liabilities and debt.
Several of its valuation ratios are at relatively high levels. It has a P/E ratio of 18.46, close to a one-year high; P/B ratio of 4.14, close to a three-year high; and P/S ratio of 1.5, close to a three-year high.
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Guru Discussed: Warren Buffett: Current Portfolio, Stock Picks
Stocks Discussed: BRK.A, BRK.B, DVA,