We recently published a list of Warren Buffett’s 10 Longest-Held Stocks. In this article, we are going to take a look at where DaVita Inc. (NYSE:DVA) stands against other Warren Buffett’s longest-held stocks.
Warren Buffett has cemented his legacy as Wall Street’s most successful investor. During the high-flying stock market of the 1960s, he leveraged his investment partnership to acquire Berkshire Hathaway, a struggling New England textile company at the time. Today, the firm is a vastly different entity, boasting a diverse range of businesses from Geico insurance to BNSF Railway, an equity portfolio exceeding $266 billion, and an enormous cash reserve of $325.2 billion. Decades of strong returns have built Buffett’s unmatched track record. Since he took over in 1965, the company’s shares have delivered an annualized gain of 19.8%.
Buffett has famously stated that his ideal holding period for a stock is “forever”. True to his word, the Oracle of Omaha has held onto some of his favorite stocks for the long haul, allowing them to deliver steady share performance and generate passive income for his portfolio over time. Moreover, market analysts and investors alike have consistently praised Buffett’s disciplined, long-term approach to investing, more so now that his firm has become the latest non-tech firm to surpass a $1 trillion market cap, highlighting Buffett’s stock-picking abilities.
However, despite strong market performance through much of 2024, Buffett seems to have adopted a more defensive stance. Concerned about inflated valuations amid high interest rates and worsening economic conditions, he has offloaded significant holdings in companies whose valuations have surged too high. Billionaire investor David Einhorn of Greenlight Capital echoed this in his hedge fund’s quarterly letter, noting Buffett’s cautious approach:
“One could argue that sitting out bear markets has been the underappreciated reason for his outstanding long-term returns. It is therefore noteworthy to observe that Mr. Buffett is again selling large swaths of his stock portfolio and building enormous cash reserves.”
Over the past two years, Buffett has been an active net seller of stocks. His firm offloaded a total of $36.1 billion in stocks during the third quarter, marking the eighth consecutive quarter in which Berkshire was a net seller of equities. At the company’s annual shareholder meeting in May, Buffett mentioned the possibility of a future rise in the corporate tax rate.
Moreover, in his 2023 letter, Buffett also addresses common questions about Berkshire, including whether the company can continue to achieve the same level of outperformance as in the past:
“There remain only a handful of companies in this country capable of truly moving the needle at Berkshire, and they have been endlessly picked over by us and by others. Some we can value; some we can’t. And, if we can, they have to be attractively priced. Outside the U.S., there are essentially no candidates that are meaningful options for capital deployment at Berkshire. All in all, we have no possibility of eye-popping performance. Nevertheless, managing Berkshire is mostly fun and always interesting. On the positive side, after 59 years of assemblage, the company now owns either a portion or 100% of various businesses that, on a weighted basis, have somewhat better prospects than exist at most large American companies.”
Our Methodology
To create our list of Warren Buffett’s longest-held stocks, we analyzed his Q3 2024 investment portfolio and selected stocks that he has consistently held for the longest duration. These figures were sourced from the Insider Monkey Database.
Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 275% since May 2014, beating its benchmark by 150 percentage points (see more details here).
Clinical laboratory technicians running tests in the comprehensive kidney care services.
DaVita Inc. (NYSE:DVA)
Warren Buffett’s First Major Purchase: 2011
Berkshire Hathaway’s stake in Q3 2024: $5.91 billion
DaVita Inc. (NYSE:DVA) is a leading U.S. provider of kidney dialysis services, operating 2,675 outpatient centers domestically and 367 locations across 11 countries. DaVita Inc. (NYSE:DVA) has long been a favorite in Warren Buffett’s portfolio. Berkshire Hathaway has held a stake in the company since the last quarter of 2011, making it one of Buffett’s enduring picks in the healthcare sector.
The company has been actively expanding its global presence, particularly in Latin America, through strategic acquisitions. In March 2024, DaVita announced a $300 million deal involving four acquisitions from Fresenius Medical Care, enabling entry into the Chilean and Ecuadorian markets, while strengthening operations in Brazil and Colombia.
The kidney dialysis provider reported Q3 adjusted earnings per share of $2.59, missing the $2.72 consensus estimate, while revenue slightly beat expectations at $3.26 billion compared to $3.25 billion. In its U.S. dialysis segment, DaVita Inc. (NYSE:DVA) generated $549 million in operating income on $2.91 billion in revenue and performed 7.35 million dialysis treatments, marking a slight 0.1% drop from the previous quarter. The company also repurchased 2.7 million shares at an average of $147.20 each, closing the quarter with $1.07 billion in cash and cash equivalents.
For the rest of 2024, DaVita Inc. (NYSE:DVA) reaffirmed its guidance for adjusted operating income of $1.91 billion to $2.01 billion and expects adjusted diluted earnings per share between $9.25 and $10.05.
Here’s what Ariel Global Fund mentioned about DaVita Inc. (NYSE:DVA) in its Q1 2024 investor letter:
“Leading provider of dialysis services, DaVita Inc. (NYSE:DVA) outperformed during the period following a top- and bottom-line earnings beat. DaVita is benefitting from cost saving initiatives, early signs of a normalization in patient growth trends on par with pre-pandemic levels, improved leverage and an aggressive share buyback program. The company also recently announced an expansion of its international operations in Latin America, presenting an attractive long-term growth opportunity. Furthermore, management provided a 2024 financial outlook which is well above consensus and anticipates favorable growth. In our view, we believe the market misunderstands the long-term clinical impact of glucagon-like-peptide-1 (GLP-1s) on dialysis and as such, DaVita currently trades at a significant discount relative to our estimate of its intrinsic value.”
Overall, DVA ranks 6th on our list of Warren Buffett’s longest-held stocks. While we acknowledge the potential of DVA, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns, and doing so within a shorter timeframe. If you are looking for an AI stock that is more promising than DVA but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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Disclosure: None. This article is originally published at Insider Monkey.
