Buffett’s Berkshire Hathaway Buys More DaVita Stock After Dip

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Buffett’s Berkshire Hathaway Buys More DaVita Stock After Dip
By Mark Hirschey (Work of Mark Hirschey) [CC BY-SA 2.0], via Wikimedia Commons

Warren Buffett’s Berkshire Hathaway Inc. (NYSE:BRK.A) (NYSE:BRK.B) bought over half a million more shares of DaVita HealthCare Partners Inc (NYSE:DVA), after the dialysis provider’s price fell due to fears surrounding reduced Medicare payments.

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Buffett's Berkshire Hathaway Buys More DaVita Stock After Dip

With the latest purchase, Berkshire Hathaway Inc. (NYSE:BRK.A) (NYSE:BRK.B)’s stake in DaVita has been enhanced to 15.6 million shares.

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The Warren Buffett firm now owns close to 15 percent of DaVita HealthCare Partners Inc (NYSE:DVA).

Earlier, Warren Buffett’s Berkshire Hathaway and DaVita agreed not to acquire more than 25 percent of the company. Berkshire also agreed not to push for board seats or seek to buy the company or engage in proxy fights with the company. The so-called standstill agreement is typically arranged by companies seeking to prevent an unsolicited takeover.

DaVita’s Shares Fell

The dialysis provider’s shares had gained nearly 10 percent during the year before last week’s 9.4 percent rate cut from the Centers for Medicare and Medical Services.

The final Medicare rates won’t be determined until October. Any reduction is rates could be phased out over several years.

However, any reduction in rates would likely to trim the dialysis provider’s revenue as the company offers acute inpatient dialysis services in roughly 900 hospitals and related laboratory services throughout the United States.

With several investors trying to replicate Warren Buffett’s investment moves, DaVita HealthCare Partners Inc (NYSE:DVA)’s stock is expected to generate more interest.

Ever since Ted Weschler joined Omaha, Nebraska-based Berkshire Hathaway Inc. (NYSE:BRK.A) (NYSE:BRK.B), the Warren Buffett firm has been showing keen interest in acquiring shares of DaVita.

The largest U.S. operator of dialysis clinics, DaVita Health Care Partners has been a favorite investment of Ted Weschler. Most of the dialysis provider’s 2,000 facilities are in the U.S., where it controls a third of the country’s treatment centers. The aging U.S. population and growing diabetes trend are attracting investors to the dialysis provider’s stocks.

Warren Buffett has been continuously enhancing his stake in DaVita over the past several months. Several investors visualize strategic benefit from DaVita HealthCare Partners Inc (NYSE:DVA) and HCP, Inc. (NYSE:HCP) merger, since integrated care networks are expected to become increasingly important as the country moves towards the implementation of health care reform.

Berkshire Hathaway the Largest Shareholder of DaVita

Since Berkshire Hathaway Inc. (NYSE:BRK.A) (NYSE:BRK.B) started acquiring DaVita shares for the past few months, it has become the largest shareholder of the Denver, Colorado-based health care firm.

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Mani is a Senior Financial Consultant. He has worked in Senior Management role in large banking, financial and information technology organizations. He has provided solutions for major banking and securities firms across the globe in the area of retail, corporate and investment banking. He holds MBA (Finance) and Professional Management Accounting Qualifications. His hobbies are tracking global financial developments and watching sports
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