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James Li
James Li
Articles (864)  | Author's Website |

Francis Chou Buys Buffett’s DaVita, Spirit and Allegiant in 2nd Quarter

Guru buys medical care company and 2 airlines

August 15, 2018 | About:

Francis Chou (Trades, Portfolio), portfolio manager of Chou America Mutual Funds, disclosed on Tuesday three new buys for the second quarter: DaVita Inc. (NYSE:DVA), Spirit Airlines Inc. (NYSE:SAVE) and Allegiant Travel Co. (NASDAQ:ALGT).

Managing a portfolio of 25 stocks, Chou invests based on several principles, including buying bargains and getting the returns slowly.

DaVita

Chou invested in 140,713 shares of DaVita for an average price of $66.81 per share. With this transaction, the guru increased his equity portfolio 3.74%.

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DaVita provides various lab services for dialysis centers and contracted hospitals in the U.S. The company’s profitability ranks 8 out of 10 on several positive investing signs, including expanding operating margins and a strong Piotroski F-score of 7. DaVita’s operating margin of 13.27% outperforms 78% of global competitors.

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Berkshire Hathaway Inc. (NYSE:BRK.A)(NYSE:BRK.B) CEO Warren Buffett (Trades, Portfolio) owns 38,565,570 shares of DaVita as of quarter-end. Mario Gabelli (Trades, Portfolio), who will be speaking at our next value conference, increased his DaVita holding to 19,163 shares.

Spirit

Chou invested in 50,000 shares of Spirit for an average price of $37.01 per share. With this transaction, the guru increased his equity portfolio 0.7%.

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Spirit offers customizable, a-la-carte flight travel to over 67 destinations in the U.S., Latin America and the Caribbean. The Florida-based airline said on July 25 that revenues for the June quarter increased 21.6% year over year, driven by an 18.9% increase in flight volumes.

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GuruFocus ranks Spirit’s profitability 7 out of 10: even though the company’s three-year EBITDA growth rate underperforms 62% of global competitors, its profit margins and returns on assets are outperforming over 80% of global airlines.

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Allegiant

Chou invested in 4,317 shares of Allegiant for an average price of $154.32 per share. With this transaction, the guru increased his equity portfolio 0.23%.

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Las Vegas-based Allegiant sells air transportation, either on a standalone basis or bundled with air-related services. GuruFocus ranks Allegiant’s profitability 8 out of 10 and lists five positive investing signs, including expanding operating margins, consistent revenue growth and a price-sales ratio near a five-year low.

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Allegiant’s business predictability rank of five stars is on watch primarily due to declining EBITDA per share over the past year.

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Disclosure: No positions.

About the author:

James Li
I am an editorial assistant and researcher at GuruFocus. I have a Master's in Finance from SMU, and I enjoy writing reports on financial trends and investor portfolios. Follow me on Twitter at @JamesLiGuru!

Visit James Li's Website


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