Buffett Gives DaVita the Thumbs Up

07/10/2013 6:00 am EST


Jim Jubak

Founder and Editor, JubakPicks.com

Stocks were propelled higher Tuesday on investors’ hopes of strong earnings reports later in the week, and they’re not the only ones who are optimistic, writes MoneyShow's Jim Jubak, also of Jubak's Picks.

I guess Warren Buffett’s Berkshire Hathaway (BRK.A) is a bigger short-term risk taker than I am.

Buffett’s company increased its stake in DaVita Healthcare Partners (DVA) by $73.4 million after the stock dropped by almost 6% on July 2 after the US Medicare System proposed cutting its payments for dialysis services by 9.4% in 2014. (For more on the proposal, the drop, and DaVita and its major competitor in the sector, Fresenius, see my post here.) Berkshire Hathaway now owns 15.6 million shares.

In my July 3 post on DaVita, I had recommended waiting to buy because I felt that Wall Street analysts would be busy cutting their earnings estimates on the news until the company reported earnings on August 11. The stock might show further weakness then if the company cuts guidance for the rest of 2013.

DaVita is a member of my Jubak’s Picks portfolio. The shares closed up 2.03% today.

Full disclosure: I don’t own shares of any of the companies mentioned in this post in my personal portfolio. When in 2010 I started the mutual fund I manage, Jubak Global Equity Fund, I liquidated all my individual stock holdings and put the money into the fund. The fund did own shares of DaVita HealthCare Partners as of the end of March. For a full list of the stocks in the fund as of the end of March see the fund’s portfolio here.

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