Is DaVita HealthCare Partners Inc (NYSE:DVA) a good stock to buy right now? We at Insider Monkey like to examine what billionaires and hedge funds think of a company before doing days of research on it. Given their 2 and 20 payment structure, hedge funds have more resources than the average investor. The funds have access to expert networks and get tips from industry insiders. They also have numerous Ivy League graduates and MBAs. Like everyone else, hedge funds perform miserably at times, but their consensus picks have historically outperformed the market after risk adjustments.
DaVita HealthCare Partners Inc (NYSE:DVA) was in 39 hedge funds’ portfolios at the end of September. DVA investors should be aware of a decrease in hedge fund sentiment of late. There were 44 hedge funds in our database with DVA holdings at the end of the previous quarter. At the end of this article we will also compare DVA to other stocks including Equinix Inc (NASDAQ:EQIX), Level 3 Communications, Inc. (NYSE:LVLT), and Telefonica Brasil SA (ADR) (NYSE:VIV) to get a better sense of its popularity.
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According to most shareholders, hedge funds are seen as underperforming, old financial tools of yesteryear. While there are greater than 8000 funds in operation today, Our researchers choose to focus on the leaders of this club, approximately 700 funds. It is estimated that this group of investors handle the lion’s share of the smart money’s total capital, and by monitoring their unrivaled stock picks, Insider Monkey has unearthed a few investment strategies that have historically surpassed the S&P 500 index. Insider Monkey’s small-cap hedge fund strategy outpaced the S&P 500 index by 12 percentage points annually for a decade in their back tests.
Now, let’s check out the fresh action encompassing DaVita HealthCare Partners Inc (NYSE:DVA).
How are hedge funds trading DaVita HealthCare Partners Inc (NYSE:DVA)?
At the end of the third quarter, a total of 39 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -11% from the previous quarter. With hedgies’ capital changing hands, there exists a select group of notable hedge fund managers who were boosting their holdings meaningfully (or already accumulated large positions).
When looking at the institutional investors followed by Insider Monkey, Berkshire Hathaway, managed by Warren Buffett, holds the number one position in DaVita HealthCare Partners Inc (NYSE:DVA). Berkshire Hathaway has a $2.79 billion position in the stock, comprising 2.2% of its 13F portfolio. Sitting at the No. 2 spot is Lone Pine Capital, led by Stephen Mandel, holding a $572.8 million position; 2.3% of its 13F portfolio is allocated to the company. Other members of the smart money that hold long positions consist of John Armitage’s Egerton Capital Limited, Andreas Halvorsen’s Viking Global and D. E. Shaw’s D E Shaw.
Since DaVita HealthCare Partners Inc (NYSE:DVA) has witnessed falling interest from the smart money, logic holds that there is a sect of fund managers who sold off their entire stakes heading into Q4. Interestingly, Glenn Russell Dubin’s Highbridge Capital Management cut the biggest investment of all the hedgies followed by Insider Monkey, worth close to $22.2 million in stock. Matthew Tewksbury’s fund, Stevens Capital Management, also cut its stock, about $12.6 million worth. These transactions are interesting, as aggregate hedge fund interest fell by 5 funds heading into Q4.
Let’s check out hedge fund activity in other stocks – not necessarily in the same industry as DaVita HealthCare Partners Inc (NYSE:DVA) but similarly valued. These stocks are Equinix Inc (NASDAQ:EQIX), Level 3 Communications, Inc. (NYSE:LVLT), Telefonica Brasil SA (ADR) (NYSE:VIV), and AEGON N.V. (ADR) (NYSE:AEG). All of these stocks’ market caps are similar to DVA’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| EQIX | 42 | 3237834 | 1 |
| LVLT | 36 | 3181408 | -7 |
| VIV | 13 | 125302 | -5 |
| AEG | 6 | 12088 | -1 |
As you can see these stocks had an average of 24 hedge funds with bullish positions and the average amount invested in these stocks was $1639 million. That figure was $4826 million in DVA’s case. Equinix Inc (NASDAQ:EQIX) is the most popular stock in this table. On the other hand AEGON N.V. (ADR) (NYSE:AEG) is the least popular one with only 6 bullish hedge fund positions. DaVita HealthCare Partners Inc (NYSE:DVA) is not the most popular stock in this group, but hedge fund interest is still above average. This is a slightly positive signal, but we’d rather spend our time researching stocks that hedge funds are piling on. In this regard EQIX might be a better candidate to consider a long position.
