Big Investors are Trading DaVita and More

We track filings from hedge funds and many other large investors not because it’s always a good idea to copy these moves, but because the stocks that these market players are buying can be used as the results of a screen. Retail investors can look at these stocks and do as much research on them as necessary if they pass a brief overview. 13D and 13G filings occur shortly after an institution takes a large position in a stock or makes significant changes to a large position. Using recent filings, here are five stocks that hedge funds and other notable investors that we track have reported owning:

Warren Buffett’s Berkshire Hathaway has continued to buy shares of DaVita HealthCare Partners Inc (NYSE:DVA) in the new year. The most recent report has the holding company at 13.8 million shares, up from 10.2 million shares at the end of September. As a long-term investor, it’s fairly rare for Buffett to increase his stake in a company by that much, particularly one that he already had over $1 billion invested in (check out more stocks Buffett likes). DaVita operates kidney dialysis centers. The trailing P/E is 20, but sell-side analysts expect considerable earnings growth this year. Net income was up 7% in the company’s most recent quarterly report versus a year earlier, and we think DaVita would have to improve to justify its valuation.

Balyasny Asset Management, which is managed by Dimitry Balyasny, owned just over 5% of Ameristar Casinos, Inc. (NASDAQ:ASCA). See more of Balyasny’s stock picks. Ameristar owns eight casinos, primarily in the central United States, and has a market capitalization of about $880 million. This places it at only 11 times trailing earnings, a lower multiple than some of its larger peers such as Las Vegas Sands Corp. (NYSE:LVS) and Wynn Resorts, Limited (NASDAQ:WYNN). However, earnings were down 15% in the third quarter of 2012 compared to the same period a year ago. We do think that it is worth considering as a value play but we’d need to think there was a good chance Ameristar would rebound this year.

A 13G filed with the SEC has disclosed that Scopia Capital (find Scopia’s stock picks) owns 5.7 million shares of mortgage and vehicle leasing company PHH Corporation (NYSE:PHH), up from 5 million at the end of September 2012. PHH has been reporting negative profits and is a popular short, though its financial statements do show that these losses are shrinking. Analysts are optimistic about this year, and the P/E based on their 2013 target is only 8, but we think it would be a good idea to wait and see if the company can actually get on track towards those profits before considering buying.

Two more stocks that funds reported owning:

Christian Leone’s Luxor Capital increased its stake in commercial real estate REIT American Realty Capital Trust Inc (NASDAQ:ARCT) to a total of 15 million shares, of 9.5% of the shares outstanding. The current dividend yield is 5.7%, based on monthly dividend payments of 6 cents per share (though the company has been publicly traded for less than a year). Funds from operations- which is a better “profitability” metric to use than earnings when analyzing REITs- have been up and the trailing P/FFO multiple is 17. We aren’t sure of it being a good value, but an income investor who likes the dividend yield may be interested in doing more research on the company.

Mitcham Industries, Inc. (NASDAQ:MIND), which is primarily a lessor of seismic and geological equipment, had Ariel Investments report a position of 2.1 million shares, or 16% of the company. Ariel is managed by John Rogers (research Ariel’s favorite stocks). Mitcham’s market capitalization is only $180 million, but about 110,000 shares are traded daily and the current price is about $14 so there is over $1 million in daily dollar volume. After a 41% drop in the stock price in the last year, Mitcham has trailing and forward P/E multiples of 8.

Disclosure: I own no shares of any stocks mentioned in this article.