Berkshire Hathaway Increases DaVita Healthcare Partners Stake

Berkshire Hathaway, run by Pres. and CEO Warren Buffett, recently added another additional 1,314,170 shares of DaVita Healthcare Partners to the company portfolio this week. The December 9 transaction represents increasing the company stake by 6.77%. With this latest addition, Berkshire Hathaway’s stake in DaVita now totals 36,461,294 shares. The investment company currently owns 17.14% of the company’s outstanding shares.

Ted Weschler submitted the report mentioning the increase in the position. He is one of the two portfolio managers that Warren Buffett hired several years ago. Weschler purchase the shares through a series of transactions between December 5 through December 9, and the prices ranged from $57.11 to $59.87 per share purchase.

Weschler has continuously added to this holding every quarter since the fourth quarter of 2011. At that time, shares traded for an average of $36 per share. Both Berkshire Hathaway and DaVita have come to an agreement that Berkshire will not purchase more than 25% of the outstanding stock without the company’s approval.

DaVita continues to take up the largest share of Ted Weschler’s management capital allotment at Berkshire Hathaway. Once both of the new managers at Buffett’s company outperform the market during 2012 by double-digit margins, Buffett raised the funds that they manage to $5 billion. At Weschler’s average buying price, the stake and DaVita is worth about $1.7 billion, and this represents roughly 34% of his total funds.

“Todd Combs and Ted Weschler, our new investment managers, have proved to be smart, models of integrity, helpful to Berkshire in many ways beyond portfolio management, and a perfect cultural fit,” bragged Buffett in his 2012 annual letter to shareholders.

This kidney care company currently has 2042 outpatient dialysis centers all around the United States, plus 66 centers spread out through 10 other countries. The company merged with HealthCare Partners in November 2012, who was one of the largest physician and medical group network companies in the nation, and they change their name to DaVita Healthcare Partners Inc. at the time.

Over the last five years, this company has grown its per-share revenue at a rate of 11.3%, the free cash flow has risen by 24.1%, the EBITDA has grown by 13% and the book value has increased annually by 17.1%. In 2012, the company also posted a 14.1% ROI and the return on assets was 2.2%. This is a decline from the previous year of 22.3% and 3.3% respectively. Their gross margin was up slightly from 2011 to 31.9% as opposed to 31.2% in the year prior.