Davita Healthcare Partners, Inc. (NYSE:DVA)

CAPS Rating: 4 out of 5

The Company is a provider of dialysis services in the United States for patients suffering from chronic kidney failure, also known as end stage renal disease.

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Member Avatar SubPrime (57.35) Submitted: 7/20/2014 7:35:36 PM : Outperform Start Price: $72.99 DVA Score: +0.39

Best management in the industry.

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Member Avatar tidehunter (< 20) Submitted: 6/11/2014 9:37:52 AM : Outperform Start Price: $71.26 DVA Score: +1.81

A long-term experiment to see if riding on Buffett's coattails really gets me anywhere.

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Member Avatar TMFPencils (99.83) Submitted: 6/10/2014 11:23:38 AM : Outperform Start Price: $71.47 DVA Score: +1.67

If it's good enough for Warren Buffett, it's good enough for me. On a price to free cash flow basis, the stock is actually trading at a low multiple historically (currently 8.5) despite the bump in the share price over the past few months. There is a lot to like with Davita:

** Berkshire Hathaway owns 17.7% of the business, and increased its stake in the first quarter of 2014.

** Consistent growth in sales, cash flow, and earnings.

** Free cash flow more than doubled to $1.16 billion between 2010 to 2013.

** Very experienced management team. Co-chairman and CEO Kent Thiry has been with Davita since 1999.

With a P/E under 20 I feel confident that the stock can continue to beat the market from here on out in the coming years. I'd rather bet with the Oracle of Omaha than against him. Outperform.

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Member Avatar DINEROne (56.72) Submitted: 4/2/2014 6:36:26 PM : Outperform Start Price: $68.84 DVA Score: +2.29

Service need by so many and growing in the future

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Member Avatar BaseBawl (30.46) Submitted: 3/21/2014 8:46:49 AM : Outperform Start Price: $70.29 DVA Score: -0.76

Dialysis by BRK.

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Member Avatar StewpotDrew (33.35) Submitted: 2/2/2014 11:55:36 PM : Outperform Start Price: $64.94 DVA Score: +2.11

DVA is a machine. Basically a duopoly with Fres but DVA is top. Buffett. Aging pop. Gotta filter the blood or ...

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Member Avatar tsunamied (82.93) Submitted: 12/20/2013 10:18:10 AM : Outperform Start Price: $62.10 DVA Score: +9.40

buffett picks work

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Member Avatar PSX5205 (79.42) Submitted: 11/20/2013 10:58:29 PM : Outperform Start Price: $57.79 DVA Score: +17.00

Tagging along with the pros on this one… Technicals look like they have made a great pullback and is a nice entry point at these levels. Bought this is my actual 401k portfolio today for a longer term health care play...

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Member Avatar JohnCLeven (75.89) Submitted: 11/6/2013 2:20:23 PM : Outperform Start Price: $54.06 DVA Score: +24.59

Over the past decade, DVA has consistently generated high ROE (over 30% over past decade, albeit only about 20% in past 5 years), and has consistently grown per-share earnings and cash flows. Per share cash flows from operations have grown from $1.29 in 2003, to $5.61 in 2012 (17.7% annualized).

Qualitatively, DVA and FMS are the dominant low-cost producers in this critical industry, which will only grow over time due to favorable demographics. According to the DVA 10-K, and reiterated by fool LONGREITS, the two companies split about 67% of the market with DVA holding 32% and FMS 35%. The rest of the market is splintered.

Per the earnings call, DVA expects to earn $1.6B to 1.7B in operating cash flow this year. Historically, DVA’s free cash flow typically comes in around 48%-67% of OCF. Therefore, I’d expect free cash flow in the neighborhood of $768m to $1.139B a.k.a $3.71-$5.50 per share.

At $54.06, that means I’m getting a free cash flow yield somewhere between 6.86% and 10.17%. Don’t get overly excited though, because DVA has quite a bit of debt on the books. However, due to the consistency and reliability of DVA’s cash flows, I’m not overly worried about that.

Though I’m not “worried” about it, $38.71 in net debt per share is still a lot, and must be taken into account. Adding that net debt to the share price I get an EV per share of about $93.21. So here’s how I view DVA in a sort of pessimistic sense. You get a DVA equity bond that you can own forever, with a coupon pays about 4%-6% per annum (FCF/EV) and the coupon growth rate will probably grow at (very) roughly 10% annualized for the foreseeable future.

I would roughly value DVA at a minimum of $55 per share, but it’s probably worth more. (Perhaps $75 or more) but it’s really tough to say because it all depends on how many birds will be in the bush in the future. I am humble enough to admit that I don’t know how many birds will be in said bush. Basing investment decisions on overly precise and inflexible calculations of birds in bushes has been a leading cause of economic pain. That’s where margin of safety comes in. If you assume a very pessimistic number of birds in the bush, and the investment STILL looks attractive, then you’re probably on to something special.

Heads you win big, tails you still do ok.

In this case, Heads you get an undervalued company that will grow at 15% per annum (aka a home run), tails you get a fairly priced company that will grow at maybe 10%. (still likely to beat the market) To summarize: mouthwatering economics + dominant business + fair to cheap price = good idea.

No real life position in DVA at this time, but I am long BRK.B, which happens to own a significant portion of DVA.

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Member Avatar TheTrendSetter (99.21) Submitted: 8/15/2013 4:09:23 PM : Outperform Start Price: $56.53 DVA Score: +11.12

Buffet's worst performing pick recently, figure that gives it good upside potential.

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Member Avatar Quick2learn (< 20) Submitted: 7/9/2013 3:50:35 PM : Outperform Start Price: $57.96 DVA Score: +7.12

with warren buffet investing in this stock, and the aging of the country and plenty of obese/sick individuals needing these type of services, it will definitely go up/

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Member Avatar Gtrinvestor (99.76) Submitted: 7/8/2013 1:47:24 PM : Outperform Start Price: $58.54 DVA Score: +5.08

Buffet pick and look at the resume of the new CFO.

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Member Avatar Teacherman333 (51.34) Submitted: 5/26/2013 1:40:17 PM : Outperform Start Price: $64.96 DVA Score: -8.10

For reference point and to allow for comments by others. As of the end of March, 2013.

ROE 14.00%
Trailing PE 29.58
PB 3.49
Div yield N/A

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Member Avatar freecapital (74.02) Submitted: 4/9/2013 8:05:20 PM : Outperform Start Price: $62.88 DVA Score: -9.03

JJ

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Member Avatar CromulentBrad (65.55) Submitted: 3/21/2013 12:09:05 PM : Outperform Start Price: $59.12 DVA Score: -3.18

within 3 years, uncle warren will add this one outright to the berkshire mutual fund.

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Member Avatar hoopdloop (< 20) Submitted: 2/13/2013 3:22:37 PM : Outperform Start Price: $59.36 DVA Score: -6.39

They are the dominant player in their industry with a lot of room to grow, including expanding internationally

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Member Avatar Bartolomo (< 20) Submitted: 1/3/2013 6:55:50 PM : Outperform Start Price: $55.00 DVA Score: -1.83

Warren Buffett has been buying DVA as though it were a cold Coke on a hot day. Fourth quarter 2012 purchases were at least 3.4 million shares, giving him over 14% of shares outstanding and a 33% increase in his position.

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Member Avatar TrunkMonkeys (< 20) Submitted: 10/22/2012 2:37:27 PM : Outperform Start Price: $55.81 DVA Score: -7.02

Expansion into revolutionizing primary care is a cherry on top of a solid business. Good enough for Buffet, good enough for me!

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Member Avatar chk999 (99.97) Submitted: 10/19/2012 11:20:53 AM : Outperform Start Price: $55.58 DVA Score: -4.71

Buffett

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Member Avatar MAURY56 (23.91) Submitted: 3/6/2011 1:26:34 AM : Outperform Start Price: $41.98 DVA Score: +26.66

Tops on Fortune list of most admired companies. Tops in some other list of copanies that train their employees well.

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