Moon Capital Management, an investment management company, released its fourth-quarter 2022 investor letter. A copy of the same can be downloaded here. For the year 2022, the S&P 500 declined almost 20%, which was the largest annual decline since the 2008 Great Recession. The fund declined by approximately 7% for the same period. In addition, you can check the top 5 holdings of the fund to know its best picks in 2022.
Moon Capital highlighted stocks like DaVita Inc. (NYSE:DVA) in the Q4 2022 investor letter. Headquartered in Denver, Colorado, DaVita Inc. (NYSE:DVA) is a dialysis service provider. On January 16, 2023, DaVita Inc. (NYSE:DVA) stock closed at $79.03 per share. One-month return of DaVita Inc. (NYSE:DVA) was 9.14%, and its shares lost 32.06% of their value over the last 52 weeks. DaVita Inc. (NYSE:DVA) has a market capitalization of $7.121 billion.
Moon Capital made the following comment about DaVita Inc. (NYSE:DVA) in its Q4 2022 investor letter:
“During the fourth quarter, we purchased shares in DaVita Inc. (NYSE:DVA), a dialysis center operator. For those unfamiliar, kidney dialysis involves the critical removal of toxins, fluids and salts from the blood by artificial means. Roughly 500,000 patients receive kidney dialysis in the U.S., which requires a 3.5-hour treatment three times a week. The only alternatives to the treatments are a kidney transplant or potential fatality. Given the critical nature of its services, demand has little correlation with the overall economy, resulting in a highly recession resistant business.
The U.S. dialysis industry is highly concentrated, with two companies (DaVita and its competitor Fresenius) controlling a combined 80% of the $25 billion market. The dominance of this duopoly provides massive scale advantages, making it incredibly difficult for new entrants to gain profitable market share.
In the past, DaVita’s valuation has been penalized (we view unfairly) because the company generates a significant portion of its operating income from a small percentage of its patients. Of DaVita’s 200,000 patients, approximately 90% qualify for Medicare (or Medicaid), with the remaining 10% covered by a commercial insurance provider. While commercial insurers pay an average of $1,000 per treatment, the federal government’s pay rate for Medicare and Medicaid is only $275 – which is actually less than what it costs DVA to provide the treatment…”(Click here to read the full text)
smart.art/Shutterstock.com
DaVita Inc. (NYSE:DVA) is not on our 30 Most Popular Stocks Among Hedge Funds list. As per our database, 30 hedge fund portfolios held DaVita Inc. (NYSE:DVA) at the end of the third quarter, and 28 in the previous quarter.
We discussed DaVita Inc. (NYSE:DVA) in another article and shared the best stock picks of Warren Buffett. In addition, please check out our hedge fund investor letters Q4 2022 page for more investor letters from hedge funds and other leading investors.
Suggested Articles:
- 14 Countries Where Official Language is English
- 15 Largest Plastic Manufacturing Companies in the World
- 13 Cash Rich Penny Stocks That Hedge Funds Are Buying
Disclosure: None. This article is originally published at Insider Monkey.
